Our ability to make choices is fundamental to our sense of ourselves as human beings, and essential to the political values of freedom-protecting nations. Whom we love; where we work; how we spend our time; what we buy; such choices define us in the eyes of ourselves and others, and much blood and ink has been spilt to establish and protect our rights to make them freely.
In this major new book, Choosing Not to Choose, he presents his most complete argument yet for how we should understand the value of choice, and when and how we should enable people to choose not to choose.
Deciding by default
When people choose not to choose, they often favor, and rely on, default rules.
Default rules often turn out to be decisive.
So, why, exactly, are defaults so ‘sticky,’ in the sense that people tend not to alter them, even if it is easy for them to do so?
There is no question that the desire to make one’s own decisions helps to define the human species. In many contexts, people want to exercise their choice-making muscles. People insist on active choosing, in part because they trust themselves more than others and in part because they want to use their autonomy and strengthen those muscles. Often they want to learn; many people are suspicious of default rules. But whether or not people notice them, such rules are omnipresent, and life could not be navigated without them. When people celebrate active choosing, it is often against a background set by defaults, which make choosing both manageable and feasible.
Defaults in action: Taxi Tips
In a number of cities, taxicabs have installed a credit card touchscreen. The screen sometimes suggests three possible tips by making them visible and easily available for customers to select with a quick ‘touch.’ In New York City, the suggested amounts are usually 20 percent, 25 percent, or 30 percent for rides of more than $15. People are free to give a larger tip, a smaller tip, or no tip at all, but it is easiest just to touch one of the three conspicuous options.
The touchscreen makes everything simpler and faster, but it also creates a set of defaults. Any tip requires some kind of effort. But the touchscreen does, in a sense, establish default tips. To depart from them, customers have to do at least a little bit of extra thinking and some extra work, and for that reason it might be expected that the defaults will affect the tips that the drivers receive. Do they?
Do people give lower tips when presented with lower defaults? Do higher defaults reduce tips?
The economists Kareem Haggag and Giovanni Paci compiled data on more than 13 million New York taxi rides. The main finding was that the higher default tips led to significant increases–by an average of more than 10 percent. If a driver makes $6,000 in tips in a year, the higher defaults lead to a $600 raise–and the taxi industry as a whole will receive many millions of dollars of additional revenue annually.
Notably, the relatively high defaults also had an unintended side effect: Customers were 1.7 percent more likely to tip zero. Apparently some people get mad and give nothing.
The central finding is clear, and it is that default tips have a significant impact. In any city, taxi drivers can obtain a nice raise if their company installs touchscreens that take credit card and suggest tips that are higher that the current norm.