Published in Issue 2, 2011
Designers and planners increasingly work on complicated, multi-stakeholder projects. Behavioral economics, a sub-discipline of economics that focuses on how people actually behave (as opposed to the prevailing “rational actor” economic theories that propose how people should behave), provides insights and approaches to help designers and planners better understand stakeholders’ perspectives and achieve successful outcomes.
Published in Issue 2, 2011
Designers and planners increasingly work on complicated, multi-stakeholder projects. NIMBYism (Not In My Backyard) is rampant, while public and private clients seek results that satisfy all constituencies. Understanding stakeholder expectations and needs is critical to project success. Behavioral economics, a sub-discipline of economics that focuses on how people actually behave (as opposed to the prevailing “rational actor” economic theories that propose how people should behave), provides insights and approaches to help designers and planners better understand stakeholders’ perspectives and achieve successful outcomes. Behavioral economics research has been further supported by neuroeconomics research, which utilizes brain imaging to uncover brain activity that underlies human responses. By explaining basic behavioral economics and neuoreconomics concepts as they apply to design projects, I hope to give designers more tools to aid in understanding how people react to design and planning problems in their communities.
Basic research in behavioral economics, led by Tsversky and Kahneman, shows that humans adopt sensible “rules of thumb” or heuristics to aid in decision making. People are faced with too many decisions on a daily basis; deliberating every one of them would result in mental gridlock, so people make many decisions on “auto pilot” through the use of heuristics that simplify their lives. Although essential, use of heuristics increases the likelihood of short term rather than long term outcomes. Designers and planners can use insights about human heuristics to aid in crafting stakeholder input processes that achieve better long term outcomes. (References to the behavioral economics and neuroeconomics work from researchers Tsversky, Kahneman, Thaler, Sunstein, Gilbert, Bar, Peters, Buchel and Ariely appear at the end of the article.)
Behavioral economists Thaler and Sunstein propose packaging behavioral concepts into a framework of “Choice Architecture,” or asymmetric paternalism, to aid in improved decision making. Choice Architecture is not architecture as planners and designers think of it in the built environment, but rather, it involves designing how choices are presented to people in order to obtain the best long-term outcomes.
Some people argue that purposeful presentation of information should not be used to influence decisions; however, virtually every choice that people make is already organized in a way that will predispose them to a particular choice, whether the organization of the choices is accidental, or instead is thoughtful and intentional. Proponents of Choice Architecture argue that people will be influenced by how things are presented, so the presentation should be structured toward arriving at the best long term-outcomes.
According to Thaler and Sunstein, the Choice Architect is responsible for organizing the context in which people make decisions. Every aspect of how choices are presented to people affects the decisions they make. To achieve positive results, all default choices must set people in the best direction, while still allowing individuals to make a change if they request to do so.
Designers who learn to employ behavioral economics concepts and become “choice architects” can add significant value to their projects through improved stakeholder interaction and decision-making.
Are NIMBY’s Normal?
Why do stakeholder groups dislike or distrust new projects and other changes in their environment? People are naturally fearful of potential negative impacts on property values, property rights, traffic, safety, schools, and the livability of their homes and neighborhoods. According to behavioral economists, this fear arises out of a basic human heuristic, Loss Aversion. People hate losing something they have, so much so that losing something makes people twice as unhappy as the happiness they experienced when they first obtained that same thing.
Loss Aversion contributes to another human heuristic called status quo bias. People have a tendency to want to maintain their current situation, whatever it is. For example, most teachers would observe that students tend to sit in the same seats in class, even when seats are not assigned. This is a simple example of a bias that humans employ for much more important matters, and people will put up with a significant amount of inconvenience or other costs in order to avoid the potential loss presented by a change.
The Ownership Bias or Endowment Effect also plays into NIMBYism. According to Ariely, people become attached to the things they have and the more work they put into something, the more ownership they begin to feel. This has been dubbed, tongue in cheek, “the IKEA effect” because pride of ownership rises proportionally with the difficulty in assembling the furniture. It’s easy to see how a strong sense of ownership develops when people invest significant time and effort in making a place their home.
NIMBYism is also affected by Virtual Ownership Bias. People can begin to feel ownership of something before they actually own it. You see this at work at an auction, where the bidders begin to imagine themselves as the owner of an item they are bidding on. The longer they are engaged in the auction, the more they imagine themselves owning the item, and the more intensely they feel about bidding to win it. This concept also translates to people’s feelings about their neighborhood park, and from there, resistance to any proposed changes to the park. Likewise, virtual ownership takes hold over vacant land in a community, even if that open land is actually owned by someone else who has plans for future development; the virtual ownership phenomenon explains the otherwise irrational resistance to development by the neighborhood or community.
Impact Bias also plays a role in NIMBYism by escalating people’s fears about new proposals. According to Gilbert, impact bias is the heuristic that causes stakeholders to substantially overestimate the negative effect that a given change will have on them and their level of satisfaction or happiness.
“Choice Architecture” Solutions to NIMBYism
A number of behavioral economics concepts can be employed to help alleviate NIMBYism. Here are three:
• Structure stakeholder processes: Identify in advance the issues that are most likely to trigger “loss aversion” and “ownership bias.” Prepare information that will assist participants in understanding what will be GAINED by potential changes.
• Utilize framing: Framing is the proven psychological concept that the choices people make partially depend upon the way in which the choices are stated, or “framed.” Two proposals of identical quantitative value will yield very different responses, on average, due solely to how the choices are worded and presented. In general, people will respond to the choice that appears to offer the most gain or the least loss. Frame a call to action for adoption of something new by framing the status quo as a “loss,” thus showing the need for change.
• Start public engagement early: Start working with stakeholders before negative opinions and coalitions solidify. Some clients want to avoid the unpleasantness of stakeholder input, so they wait until their plan is ready or the design completed. They are then disappointed with a less than positive reception from stakeholder groups or the public to the already completed plan. Instead, create stakeholder ownership in the project by involving people early in the process. This uses ownership bias in service to the project and can help minimize impact bias by allowing stakeholders time to understand the nature of the changes.
When Stakeholder Meetings Go Bad, They Get Worse
What causes difficult stakeholder meetings to devolve into even more challenging circumstances? People are influenced by the actions of others, and they are influenced by their own inferences about others people’s likely views or actions, a concept called Herd Mentality. For example, peer pressure causes people to give different answers to the same questions, depending upon the method for collecting responses. When responses are solicited publicly, such as by raising hands or asking for vocalized “yes’s” or “no’s,” there is much more conformity in the results when compared with use of written surveys or other anonymous methods. So, if there are vocal participants who are unhappy, they can sway the attitudes and opinions of others in the group.
Another contributor to devolving stakeholder meetings is the Availability Heuristic. People assess the likelihood of risks based upon how many examples come easily to their minds. Recent events, particularly dramatic events, heavily influence people’s assessment of any given risk. Personal experiences of negative events or close affiliation with a person who experienced a negative event also increase a person’s assessment of the importance and likelihood of that risk. Biased perceptions about risks can inappropriately influence how communities respond to challenges, allocate resources or plan future development. So for example, if a community has experienced a number of recent fatal traffic accidents, then any proposal that is perceived as increasing traffic may be opposed by the community just due to the community's knowledge of those fatal accidents.
Expectations Alter Opinions. A person’s prior knowledge of an experience they are about to have modifies their brain activity, causing their experience to be altered from what it would have been if they had not had the information in advance. The result is that if a person expects something to be good, the odds are that they will experience it positively; likewise, if they expect it to be bad, they will experience it as bad.
“Choice Architecture” Solutions for Positive Stakeholder Meetings
Here are a set of behavioral economics ideas for better meetings:
• Intention is a motivator. Obtain a better meeting turnout through advance contact with stakeholders you believe are essential to a good process; request a statement of intent to participate from potential participants. By asking people to state their intention to participate, you will increase the likelihood that they will attend. Likewise, by asking participants to write down their reasons for participating, designers can gain important insights while stakeholders reinforce to themselves what is important to them.
• Help potential participants overcome small roadblocks to attendance through use of Channel Factors. For example, the person who said they will attend a public meeting is even more likely to attend if you ask them to look at a map and locate the meeting site in relation to where they live or work, then trace the route they would take to get to the meeting. This activity is simplified through technology such as on line maps.
• Set a positive expectation at the beginning. “Frame” the introductory information in a positive light with regard to your goals. Ask one or two representatives of the stakeholder group, who you know will be positive, to speak about the importance of the meeting and their own enthusiasm about it.
• Provide information about who supports the initiative (e.g., names of community leaders, groups, or statistics about the percentage of supporters). This will help stakeholders approach the subject more positively.
• Avoid negative peer pressure—obtain input anonymously. Use paper surveys or feed-back methods rather than a show of hands or voice vote when you want to measure uninfluenced opinions.
• Priming results from simple, sometimes seemingly irrelevant cues such as furniture and objects. For example, on average, people behave more competitively, less cooperatively and less generously when they are in a room set up like a business environment with, for example, boardroom tables and briefcases. When designing a process to achieve cooperation from the stakeholders, select non-competitive meeting locations, settings, furniture and other visual cues (such as briefcases). Avoid hierarchical room set ups, such as business settings with boardroom tables, raised daises, etc. that might cue participants to behave competitively.
• Avoid creating factions. Take care if you use “break out” sessions. Peer pressure within small groups can cause the members of each small group to align in support of a particular viewpoint. These differing small-group viewpoints are consistently defended when the small groups are brought together into a larger group. Some facilitators favor processes such as World Café, where the members of small discussion tables are rotated after each question or discussion item so that factions are less likely to form or become entrenched.
In the next issue of Research Design Connections, we will examine how the choice architect can help groups select optimal alternatives, arrive at acceptance of mitigation measures, and better understand large scale proposals and long-term outcomes.
Kathleen M. Fox is a registered landscape architect, Fellow of the American Society of Landscape Architects, and executive director of the Ohio Cultural Facilities Commission. A 2002 Loeb Fellow at the Harvard Graduate School of Design, she also holds a graduate certificate in Alternative Dispute Resolution from Capital University Law School and is author of the research paper Utilizing Behavioral Economics to Improve Public and Private Decision Systems in Community Planning and Development. She can be reached at: firstname.lastname@example.org.
Dan Ariely. Predictably Irrational: The Hidden Forces That Shape Our Decisions. New York:
Harper Collins Publishers, 2008.
Moshe Bar. ”Wait for the Second Marshmallow? Future‐Oriented Thinking and Delayed Reward
Discounting in the Brain.” Neuron 66, 66, April 15, 2010.
Daniel Gilbert. Stumbling on Happiness. New York: Vintage Books, 2007.
Kurt Lewin. Field Theory in Social Science: Selected Theoretical Papers. New York: Harper &
Jan Peters and Christian Buchel. “Episodic Future Thinking Reduces Reward Delay Discounting
through an Enhancement of Prefrontal‐Mediotemporal Interactions.” Neuron 66, 138–148,
April 15, 2010
Richard Thaler and Cass Sunstein. Nudge: Improving Decisions About Health, Wealth, and
Happiness. New Haven, CT: Yale University Press, 2008.
Amos Tversky and Daniel Kahneman. “Judgement Under Uncertainty: Heuristics and Biases.” Science 185 (1974): 1124‐31