Use Of Default Options Research Articles

Nudges for responsible finance? A survey of interventions targeted at financial decision making

AbstractIn a comprehensive review, we investigate how nudges can help financial decisionmakers allocate funds according to ethical considerations to promote sustainable development. We begin by identifying the main nudge frameworks and highlighting their many similarities, including the use of default options, making information more salient, and manipulating the framing of incentives. While nudges have been used in personal finance primarily to promote saving for retirement or avoiding credit card debt, they can also encourage socially responsible investment (SRI). We propose potential nudges in SRI and provide a primer on nudge implementation by reviewing methods for selecting effective nudges and ensuring their ethical acceptability.

Default options: a powerful behavioral tool to increase COVID-19 contact tracing app acceptance in Latin America?

AbstractGiven the rates of transmission of COVID-19, relying only on manual contact tracing might be infeasible to control the epidemic without sustained costly lockdowns or rapid vaccination efforts. In the first study of its kind in Latin America, we find through a phone survey of a nationally representative sample of ten countries that an opt-out regime (automatic installation) increases self-reported intention to accept a contact tracing app with exposure notification by 22 percentage points compared to an opt-in regime (voluntary installation). This effect is triple the size and of opposite sign of the effect found in Europe and the United States, potentially due to lower concerns regarding privacy and lower levels of interpersonal trust. We see that an opt-out regime is more effective in increasing willingness to accept for those who do not trust the government or do not use their smartphones for financial transactions. The local severity of the pandemic does not affect our results, but feeling personally at risk increases intent to accept such apps in general. These results can shed light on the use of default options not only for contact tracing apps but in public health overall in the context of a pandemic in Latin America.

Using insights from behavioral economics to nudge individuals towards healthier choices when eating out: A restaurant experiment

Using a controlled experiment in a restaurant with naturally occurring clients, this study investigates how nudging can be used to design menus that guide consumers to make healthier choices. It examines the use of default options, focusing specifically on two types of defaults that can be found when ordering food in a restaurant: automatic and standard defaults. Both types of defaults significantly affected choices, but did not adversely impact the satisfaction of individual choices. The results suggest that menu design could effectively use non-informational strategies such as nudging to promote healthier individual choices without restricting the offer or reducing satisfaction.

Default and naive diversification heuristics in annuity choice

Retirement income stream products are difficult for consumers to choose because of their high perceived risk, irreversibility, high expenditure, little opportunity for social learning and distant consequences. Prior literature is unclear about consumers’ use of heuristics in decumulation decisions or whether sociodemographics can help identify vulnerable consumers. In the context of Australia’s retirement income arrangements, we examine choices of life annuities and phased withdrawal products, and identify use of default options and the diversification (1/ n or 50:50) heuristic using a novel finite mixture modelling approach. The innovative feature of this approach is that it captures the very specific allocation pattern associated with choices based on deterministic decision rules, namely pronounced spikes at the locations of the particular heuristics with little mass in their surroundings. We show that more than 30% of decumulation choices rely on these two heuristics, and that cognitive and product knowledge limitations contribute to using such heuristics. The results have implications for public policy on decumulation of retirement savings, regulation of product disclosures and providers of annuity and phased withdrawal products. More generally, our model has the potential to provide better understanding of the use of heuristics in consumer decisions.

Helping South Africans achieve a better income in retirement: a critical evaluation of the impact of treasury proposals

Retirement income security is an issue relevant to the majority of South Africans, many of whom are financially inexperienced and illiterate. South Africa has a sophisticated retirement industry offering a very wide range of choice of annuity products, but these are often not designed to optimise choices by rather unsophisticated investors. This article provides an overview of issues in the South African income withdrawal market, as well as policy remedies proposed by National Treasury to deal with these issues. The aim of this paper is to provide a critical analysis of these policy proposals, using a behaviourally informed framework to financial regulation (Barr, Mullainathan & Shafir, 2008). It recognises that policy remedies need to take into account the realities of how people make retirement income decisions, and how the institutional environment impacts on this. The results of the research suggest that the main policy proposal – simplifying the retirement income withdrawal landscape through the use of default options – is only a partial solution to the problem of unsophisticated consumers who must make several challenging decisions. The research contributes to the literature by providing a more complete, integrated view of the factors that shape retirement income withdrawal decisions and offers practitioners several insights into appropriate reform of the retirement income market.

Using default options within the electronic health record to increase the prescribing of generic-equivalent medications: a quasi-experimental study.

Low-value services, such as prescribing brand-name medications that have existing generic equivalents, contribute to unnecessary health care spending. To evaluate the association of an intervention by using the electronic health record with provider prescription of generic-equivalent medications. Quasi-experimental study. General internal medicine (IM) (n= 2) and family medicine (FM) (n= 2) clinics at the University of Pennsylvania from June 2011 to September 2012. Attending physicians (IM, n= 38; FM, n= 17) and residents (IM, n= 166; FM, n= 34). In January 2012, the default in the electronic health record was changed for IM providers from displaying brand and generic medications to displaying initially only generics, with the ability to opt out. Monthly prescriptions of brand-name and generic-equivalent β-blockers, statins, and proton-pump inhibitors. During the preintervention period, FM providers had slightly higher rates of generic medication prescribing (range, 80.8% to 85.5%) than did IM providers (range, 75.4% to 79.6%), but both groups had similar trends. In the postintervention period relative to the preintervention period, IM providers had an increase in generic prescribing compared with FM providers for all 3 medications combined (5.4 percentage points [95% CI, 2.2 to 8.7 percentage points]; P< 0.001), β-blockers (10.5 percentage points [CI, 5.8 to 15.2 percentage points]; P< 0.001), and statins (4.0 percentage points [CI, 0.4 to 7.6 percentage points]; P= 0.002). Results for proton-pump inhibitors (2.1 percentage points [CI, -3.7 to 8.0 percentage points]; P= 0.47) were not significant. Subset analyses revealed similar findings for attending physicians. Among residents, however, results were imprecise, with wide CIs. Observational single-center evaluation, comparison groups that represented different specialties, and a small subset of medication classes studied. The use of default options was an effective method to increase the odds of prescribing generic medication equivalents for β-blockers and statins. U.S. Department of Veterans Affairs and Robert Wood Johnson Foundation.

Default and 1/N Heuristics in Annuity Choice

Retirement income stream products are difficult for consumers to choose because of their high perceived risk, irreversibility, and high expenditure; little opportunity for social learning; and distant consequences. Yet many countries have shifted more responsibility for these choices to consumers, increasing their likelihood of using suboptimal heuristics without carefully evaluating alternatives. Prior literature is unclear about consumers’ use of heuristics in decu-mulation decisions or whether sociodemographics can help identify vulnerable consumers. The purpose of this paper is to address some of these gaps by examining choices of life annui-ties and phased withdrawal products and identifying use of default options and the diversifica-tion (1/n or 50:50) heuristic using a novel finite mixture modeling approach. We show that more than 30% of decumulation choices rely on these two heuristics and that cognitive and product knowledge limitations contribute to using such heuristics. The results have implica-tions for public policy on decumulation of retirement savings, regulation of product disclo-sures, and marketing of annuity and phased withdrawal products. More generally, the model we develop and apply has the potential to provide better understanding of the use of heuristics in consumer decisions.

Aiding Decision Making to Reduce the Impacts of Climate Change

Utilizing theory and empirical insights from psychology and behavioural economics, this paper examines individuals’ cognitive and motivational barriers to adopting climate change adaptation and mitigation measures that increase consumer welfare. We explore various strategies that take into account the simplified decision-making processes used by individuals and resulting biases. We make these points by working through two examples: (1) investments in energy efficiency products and new technology and (2) adaptation measures to reduce property damage from future floods and hurricanes. In both cases there is a reluctance to undertake these measures due to high and certain upfront costs, delayed and probabilistic benefits, and behavioural biases related to this asymmetry. The use of choice architecture through framing and the use of default options coupled with short-term incentives and long-term contracts can encourage greater investment in these measures.

Aiding Decision-Making to Reduce the Impacts of Climate Change

Utilizing theory and empirical insights from psychology and behavioral economics, this paper examines individuals’ cognitive and motivational barriers to adopting climate change adaptation and mitigation measures that increase consumer welfare. We then propose strategies that take into account the simplified decision-making processes used by individuals and resulting biases. We make these points by working through two examples: (1) investments in energy efficiency products and new technology and (2) adaptation measures to reduce property damage from future floods and hurricanes. In both cases there is a reluctance to undertake these measures due to high and certain upfront costs, delayed and probabilistic benefits and behavioral biases related to this asymmetry. The use of choice architecture through framing and the use of default options coupled with short-term incentives and long-term contracts can encourage greater investment in these measures.

Supported Housing and the Lamppost—or Supported Housing in the Spotlight?: In Reply

Back to table of contents Previous article Next article LettersFull AccessSupported Housing and the Lamppost—or Supported Housing in the Spotlight?: In ReplyKim Hopper, Ph.D.Kim HopperSearch for more papers by this author, Ph.D.Published Online:1 Jul 2012https://doi.org/10.1176/appi.ps.20120p720aAboutSectionsPDF/EPUB ToolsAdd to favoritesDownload CitationsTrack Citations ShareShare onFacebookTwitterLinked InEmail In Reply: Padgett's observations are well taken. I agree: supported housing is a step “in the right direction”; that is why I tried to bracket an inquiry into its limits within a pair of tributes to its achievements.But that said, in sociological terms, abeyance denotes a function, not a facility, and “control over the poor” is too loaded a characterization for the range of institutions that historically have served that function. (Intact families and regular work, as Piven and Cloward [1] pointed out some time ago, also serve important “social control” functions.) Not all abeyance institutions confine or consign to second-class citizenship. Prisons do both miserably and stigmatize for life. But think instead of the G.I. Bill, the Civilian Conservation Corps during the Depression, or, for that matter, intentional communities and religious orders. Some offer a liminal time-out that prepares one for a better equipped second try. Others supply nonmarket alternative livelihoods that revolve around and contribute to collective life. Still others, like the beguinages, make inventive use of default options. Founded in the aftermath of population growth and ruinous wars in 12th century Europe, these segregated communities of “surplus” unmarriageable women managed not only to thrive but to reproduce themselves over the centuries by attracting new recruits to what became valued academies of learning (2). (I had the good fortune to meet the last surviving resident of one in Kortrijk, Belgium.)The problem with mental health versions of abeyance is that, devised as stop-gap expediencies and assigned what many consider essential “dirty work” (3,4), their day-to-day operations tend to escape scrutiny and their effects (by design or default) go uninterrogated. So one might (as Padgett does) read “visible edifices” as “ironic commentary” on the industry's benighted view of social integration. New York's hulking “adult homes” come to mind. But there are other “congregate settings”—Dorothy Day Apartments in West Harlem, for example—that offer striking evidence of effective designs that integrate secure housing with neighborhood benefit (in Harlem, early childhood learning, tutoring, and arts programs).More to the point, social segregation is a question not of place but of participatory parity—social arrangements that permit adult members of society to interact with one another as peers (5). And so a more tempered version of my screed would have inquired into tacit assumptions behind largely invisible scatter-site housing to ask what less happy purposes might they serve. In any event, Padgett's letter gives me an opportunity to correct a misimpression: mine was meant as backhanded compliment, not frontal assault.References1 Piven FF , Cloward RA : Regulating the Poor. New York, Random House, 1971 Google Scholar2 Mizruchi EH : Regulating Society. Chicago, University of Chicago Press, 1987 Google Scholar3 Hughes EC : Good people and dirty work. Social Problems 10:3–11, 1962 Crossref, Google Scholar4 Scull AT : Decarceration: Community Treatment and the Deviant. Englewood Cliffs, NJ, Prentice-Hall, 1977 Google Scholar5 Fraser N : Justice Interruptus. New York, Routledge, 1997 Google Scholar FiguresReferencesCited byDetailsCited ByNone Volume 63Issue 7 July 2012Pages 720-721 Metrics PDF download History Published online 1 July 2012 Published in print 1 July 2012

Information to Members of Dc Pension Plans: Conceptual Framework and International Trends

In recent years, the shift towards defined contribution (DC) pension plans has been a key trend in the field of private pension provision. In this context, where a wide range of options may potentially be available to individual plan members, it is crucial to ensure that they have the information necessary to make appropriate choices. Based on the findings of an IOPS survey, this paper offers a conceptual framework for considering information provision within the context of the pension system and related factors (such as the range of choices offered to individuals, the use of default options, the level of financial literacy, etc). It goes on describing the different general approaches followed across countries regarding the information to be given to members and the role played by the supervisory authority in this context. After a classification of the information documents used, a detailed description of the evidence collected follows, focusing on specific contents of the information directed to members: pension projections, investments and returns, costs, contributions paid. Finally, the paper identifies common wisdom and good practices, stressing the complementary relationship between information and financial education and the importance of (and information signals provided by) default options. The conclusions indicate aspects of the matter that deserve further work.

The use of toxicologic data in mechanistic risk assessment: 1,3-butadiene as a case study.

The National Research Council (NRC) recently published a report. Science and Judgment in Risk Assessment, that critiqued the current approaches to characterizing human cancer risks from exposure to chemicals. One issue raised in the report relates to the use of default options for quantitation of cancer risks. Default options are general guidelines that can be used for risk assessment when specific information about a chemical is absent. Research on 1,3-butadiene represents an interesting case study in which existing knowledge on this chemical indicates that two default options may no longer be tenable: (1) humans are as sensitive as the most sensitive animal species, and (2) the rate of metabolism is a function of body surface area rather than inherent species differences in metabolic capacity. Butadiene, a major commodity chemical used in the production of synthetic rubber, is listed as one of 189 hazardous air pollutants under the 1990 Clean Air Act Amendments. Butadiene is a carcinogen in rats and mice, with mice being substantially more sensitive than rats. The extent to which butadiene poses a cancer risk to humans exposed to this chemical is uncertain. Butadiene requires metabolic activation to DNA-reactive epoxides to exert its mutagenic and carcinogenic effects. Research is directed toward obtaining a better understanding of the cancer risks of butadiene in humans by evaluating species-dependent differences in the formation of the toxic butadiene epoxide metabolites, epoxybutene and diepoxybutane. The data include in-vitro studies on butadiene metabolism using tissues from humans, rats, and mice as well as experimental data and physiological model predictions for butadiene in blood and butadiene epoxides in blood, lung, and liver after exposure of rats and mice to inhaled butadiene. The findings suggest that humans are more like rats and less like mice regarding the formation of butadiene epoxides. The research approach employed can be a useful strategy for developing mechanistic and toxicokinetic data to supplant default options used in carcinogen risk assessments for butadiene.

Risk assessment and biological mechanisms: lessons learned, future opportunities

During the past decade, texicological research has been dominated by two themes: investigations to elucidate the mechanisms of action of toxicants and studies to provide information to support improved assessments of human health risks. The conduct of mechanistic investigations was given an early impetus by advances in biochemistry and cell biology and, more recently, by related advances in molecular biology. Research to provide information for improved human health risk assessments was stimulated by the 1983 NAS/NRC report that provided a codified structure for conducting risk assessments. At first glance, it would appear that the two themes are closely related and, indeed, should represent parts of a joined theme. However, examination of the toxicology/risk assessment literature of the past decade indicates that this has not been the case. Reports of mechanistic studies infrequently indicate how the information can be used to provide improved estimates of human risk from exposure to toxicants. If reference is made, it is usually qualitative in nature. Neither is examination of the risk assessment literature reassuring. Mechanistic studies may be cited; however, the final step of the process, risk characterization, is usually dominated by the use of default options grounded in conservative interpretations of generic scientific knowledge. Two examples are reviewed that stand out as illustrations of how mechanistic information can be used to make a difference in risk assessments: (1) consideration of the α 2 u -globulin-mediated mechanism for evaluating male rat data for relevance in assessing human risks of renal cancer and (2) the use of DNA-protein cross-links as an internal dose metric in cross-species extrapolation of nasal cancer risks from inhaled formaldehyde. This paper reviews past experience on these topics and suggests a strategy for increasing the use of mechanistic information in risk assessments. A key component of the strategy is to use the risk assessment process to identify research needs/opportunities that, if addressed, will reduce the use of default options, thereby reducing the uncertainties in risk assessments. Another component of the strategy is to identify a few chemicals anticipated to exert their effect via different mechanisms and whose mechanisms of dosimetry and disease pathogenesis can be investigated in-depth within a risk assessment framework; this identification will create prototype approaches as alternatives to the use of default options that have major impact on the outcome of the risk assessment process.

AQL: A Problem-solving Query Language for Relational Data Bases

AQL is a query language based on a data base management system which uses Codd's relational model of data. It has been designed mainly to be used by the nonspecialist in data processing for interactive problem solving, application building, and simulation. Ease of use is achieved by providing an interface which allows the use of default options, synonyms, and definitions of attributes, inference, and the possibility of interactive completion of the query (i.e., menu). AQL combines the capabilities of the relational model of data with the powerful computational facilities and control structure of the host programming language (i.e., APL). A prototype version of AQL, which has been implemented, is reviewed.

Monitoring experimental results

No matter whether an experiment is a success, a failure, or a mixture of the two, the E needs to see his results immediately to be able to plan his next study. For this purpose, he needs a rapid, simple, relevant analysis of the data. We define a version of this data-summarizing problem and describe a monitor program to solve it. One major decision is what search method and data file organization to use; We use the n-dimensional array method. We specify dependent variables in two parts: first, a measure code like proportion correct, reaction time, etc., and second, a series of coefficients to specify what items will make up the desired dependent measure. Our program is interactive and makes extensive use of default options. Some suggestions are made for the implementation of monitor programs on other hardware.