Plant Services - August 2008 - (Page 7) FROM THE EDITOR The Nudge A powerful tool for modifying human behavior A You can overcome the bias toward the short term by s experts in facts and figures, managers, engineers converting time frames. The government can offer you tax and economists tend to assume people will do what’s credits this year for improving your energy efficiency partly best for them providing they’re incentivized to perbecause it can expect to get them back by taxing your inform or punished if they don’t. Sure, we know we should be creased profits. Meanwhile, you can borrow the cost of the nice and explain everything, but once expectations are clear, improvement, pay back the loan with some of the savings why wouldn’t they simply do what makes sense? and still generate a positive cash flow from the investment. But, of course, they don’t. That is, if you can convince your boss and find the money. According to “Nudge,” a new book on economics by UniAnyone who is watching the price of oil, the Dow Jones inversity of Chicago Economist Richard Thaler and Law Produstrial average or the current global economy can’t help but fessor Cass Sunstein, that’s because the rational choice often marvel at the power of herd mentality, made obvious lately by comes in third behind going with the flow (herd mentality) the skittishness of the herds. And like a bunch of college kids and doing nothing (maintaining the status quo). The authors with stunning hangovers, going with the flow is about the only say we should consider these and similar identified aspects excuse the perpetrators have come up with for the subprime of human psychology when we want to guide the behavior mortgage fiasco. of others (and by implication, ourselves). Out of sight, out of mind. How much of the One key is to harness the power of the deAnyone real-world fuel economy advantage of a hybrid fault condition. The now-classic example is is due to its technology, and how much comes increasing people’s participation in their emwatching the of a ployers’ 401(k) plans by changing them from price of oil can’t from the behavior-modification effectOwnprominent miles-per-gallon display? opt-in to opt-out. This not only makes getting help but marvel ers are claiming 50 mpg and more, but when out or staying out a matter of changing the at the power of Car & Driver magazine drove a Prius as they status quo, it implies that the herd has opted in. And it’s raised participation rates from herd mentality. would any other test car, it delivered 42 mpg. In this month’s Energy Expert column 50% to more than 90%. A similar approach (p. 62), Peter Garforth emphasizes the imporhas been taken in Spain with organ donation: tance of making energy visible, for instance, by displaying opt out or you’re automatically a donor. natural gas consumption in dollars per day instead of cfm. Tax collectors in Minnesota, frustrated by the number of The U.K.’s conservative Tory party leader David Cameron last-minute and late returns, improved the response by switchwants household gas and electricity bills to include a section ing from threatening people with fines to to publicizing statisat the bottom that tells whether the homeowner is using tics on the number of residents who had already filed. more or less energy than his or her neighbors, combining I imagine the U.S. Internal Revenue Service would have a visibility with pressure to join the herd. lot harder time collecting income taxes if more people were Take advantage of people’s willingness to do the right writing checks instead of filing to collect a refund of their thing by also making it the easiest, most popular and most overpayments. But you don’t have to look far to find othobvious option. Chances are they’ll take you up on it. erwise intelligent people deliberately overpaying so they’ll have something to put toward their post-holiday credit card bills, using one irrational behavior to support another. If those credit card purchases were tagged with the prices people actually pay (with interest) when they carry a card PAUL STUDEBAKER, CMRP balance, would it affect their buying decisions? Maybe so, EDITOR IN CHIEF but people are notoriously poor at comparing long-term pstudebaker@putman.net costs to short-term benefits, or vice-versa. (630) 467-1300 ext. 433 www.PLANTSERVICES.com 7 August 2008 http://www.PLANTSERVICES.com
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