Architecture

I like that feeling of walking into an old home and wondering "what were they thinking when they put a door there?" or "I have to walk through one bedroom to get to another?" because well there is something satisfying about knowing that people build houses without really thinking about what living in them is going to be like.  This gets messier as the architecture gets bigger, of course.  Cities are notoriously unplanned.  Take Seattle's use of the street designations "east, west, north and south" which don't seem to have anything to do with the actualities of East, West, North and South.  Or have Portland's use of a zero in front of some addresses on the west side of the river creating situations in which there is both a 17 southwest Whitaker and a 017 southwest Whitaker... good luck with that one, mapquest.

Well, there's a book for these problems, as there always is.  The kind authors of Nudge are suggesting a new profession, "choice architect".  That's right.  Folks who think about the way choices are offered to people.  Much of the bulk of their work has to do with setting a reasonable default choice in front of people.  For instance, when building a home, most people want a separate entrance to each bedroom so builders go ahead and build it that way unless you say otherwise.  Most people want to save money for retirement but are too lazy to do so on their own, so if as an employer you (by default) put 5% of their money in an IRA and match that amount with company funds, you'll find that very few people opt-out although very few would opt-in if they had to say, fill out a piece of paper even though it meant the difference between living under a bridge or a roof at age 72.

According to the book, when feedback is delayed or difficult to interpret, people are ill equipped to make good choices and/or learn from their bad choices.  That is, when you get lost for the 3rd time trying to find 023 Hamilton street, you realize that you should probably try and figure out what's going on.  But, if you get bankrupted by a variable rate house mortgage seven years after you signed up for it and it's your first and only house loan (because now you're penniless) then it's fairly hard to glean much from the situation except seven years ago it would have been nice to have your mortgage fully explained to you in plain English.  Thus choices that are infrequent and/or complicated (marriage, mortgages, college loans) should be looked at very carefully by choice architects.  They recommend, in the case of mortgages, that the default be the standard 30 year fixed rate loan because that's what works for most people and if folks want something else they can opt-out of the standard and into whatever they want.

Here's the rub.  No choice can be presented in a neutral way.  If you choose a 30 year loan as the default, then that biases folks towards that type of loan.  Suppose mortgage companies were in charge of picking what the default choice was and they had less than altruistic motives.  Well, unsurprisingly they might choose something that leaves you broke and them wealthy.  So they pepper the book with an idea they call "paternalistic libertarianism" which boils down to choice architecture that funnels people towards what is generally most advantageous to themselves while still allowing them to make whatever choice they want, should they desire to buck the trend.

Neat book.  You should read it.  Everyone else is doing it.  Oh yeah.  Turns out one of the best marketing tools is to mention how many other people use your product.  Duh.