The Surprising Power of Disclosure

Research has shown that introducing small changes to decision architecture can significantly influence people’s choices, a technique known as nudging. Today, nudging is arguably the most prominent technique in applied behavioral science. It is usually contrasted with traditional approaches to influencing behavior that focus on providing information (education), economic incentives, or government legislation and enforcement.

The simplest and best-known nudge is setting defaults, pre-set courses of action that take effect if nothing is specified by the decision-maker. Auto-enrollment in pensions, for example, is an effective nudge to get people to join retirement savings plans. But defaults can also be used without the interest of the decision-maker in mind, as we often experience in commercial settings, such as subscriptions to marketing emails.

Critics of the nudge approach have questioned not only their efficacy but also identified ethical challenges. One area of concern relates to individuals’ autonomy. Nudges take advantage of people’s biases. Defaults are only effective because people are prone to inertia or inaction. Thus, nudges can weaken individual agency. In addition, because they often operate on a relatively unconscious level, they also lack transparency. Nudges like defaults influence people "behind their backs."

How can behavioral scientists, companies, and policymakers overcome this shortcoming? One straightforward solution is disclosure: informing decision-makers that they are being nudged. But will the effects of nudges like defaults remain? After all, it may be the hidden influence of nudges that make them so effective in the first place. Once people realize they have been nudged, they may resist because they perceive the nudge as a manipulation or limitation to their freedom of choice.

In recent years, research on the effects of disclosure has accumulated, particularly for default nudges. For example, in a study on defaults that used options to nudge people to donate versus keeping a bonus, some participants saw a disclosure like this: “How choice options are presented may affect people’s choices. In the current presentation format one of the options [e.g. to donate the bonus] is pre-selected and will be chosen unless you change it. Presenting choice options in this way could, relative to other presentation formats, result in a higher likelihood to donate the bonus.”

New research by Hendrik Bruns and his colleagues looks at this emerging body of evidence with a meta-analytical approach, pooling together 23 published studies. These studies were conducted in a range of domains, such as health, food, the environment, and finance.

Their results do not support the view that nudges need to be covert to produce the desired effects. With respect to non-behavioral outcomes, such as perceptions or intentions, disclosure makes no difference overall. When it comes to actual choices, the analysis even reveals that transparency increases the effect of nudges on behavioral outcomes. This is encouraging, because it suggests that the ethics of nudges can be improved without a downside. Unfortunately, most (17 out of 23) studies in the meta analysis employed default nudges, which limits the generalizability of the research. Research on disclosure for a greater variety of nudges will be needed before we can draw conclusions beyond defaults.