Nudging menu design for healthier food choices.

Nudging menu design for healthier food choices.

Jessica and Jack had just been seated at their favourite restaurant. They enjoyed the ambiance of the restaurant, the service and the quality of the food. They ate in the restaurant every couple of months as a treat. When the waiter handed Jessica and Jack their menus the noticed a few small changes, the low-calorie had been moved to the top of menu. They wondered why but continued their evening like normal without thinking about it any further.

Small and discrete changes to a menu or choice architecture can significantly impact the sales of a restaurant (Magrini & Kim, 2016). In the psychology literature, the manipulation of choice architecture is known as ‘nudging’. Nudges are subtle change to the choice architecture that make positive decisions (e.g., healthy eating) easier to make. Choice architecture is not limited to, but can take the form of the layout of a tax form, organ donation form, layout of a menu, placing of a food item on a shop floor, or the design of a pay-slip. The design of choice architecture depends on what the designers intend to achieve.

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In the restaurant business, small changes to choice architecture can make significant changes to income, bringing in a lot of extra money to the restaurant. Restaurants can change their menus to promote the sales of the ‘special-dishes-of-the-day’, to increase the sales of healthy food, or to increase revenue. In one study by Gothenburg University in Sweden researchers studied the effects of changing menu design in a fifty-two-seat restaurant in the city centre (Gravert & Kurz, 2017). Over the course of three weeks customers arriving during a two-hour lunch break were randomly presented with two different menus. One of the two menus offered a meat dish and a fish dish with a note on the menu saying that a vegetarian option was available upon request. The second menu offered a vegetarian dish and a fish dish, with a note stating that a meat dish was available upon request. Despite the meat, fish and vegetarian dishes having the same prices (around 13 USD or 110 SEK) the slight inconvenience of ordering the meat dish significantly decreased the share of the dishes sold at lunch. The results of this study clearly show that slight changes in the menu can promote the sales of vegetarian dishes.

In 2014, the United States Food and Drug Administration produced a rule with the aim of reduce obesity levels, the Menu Calorie Labelling Rule. This rule requires large food service chains to post calorie information next to all food items on menus. Shortly, after beginning to use this rule the sales of healthier foods significantly improved. Nudging by putting calorie information next to the dishes significantly nudged customers towards eating healthier than they would otherwise eat.

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Another study of the use of nudging for the promotion of healthy eating at Cornell University examined the effect of menu design on 200 college students (Mancino, 2009). The researchers at Cornell University simply added green stickers next to the healthy food choices on the menu, which was enough to increase the sales of healthy dishes.

Furthermore, another way that nudging has been used in menu design to increase the sales of certain dishes was assessed by Wansink and Love (2014). Wansink and Love analysed 373 descriptions of dishes on menus. They found that there are four simple ways to use the description of dish to nudge consumers into healthy eating: (i) the use of sensory names describing texture, smell or taste (e.g., Crispy Snow Pease, Fork-tender Beef Stew), (ii) the use geographic names to create an image of a geographic area that is associated with the food (e.g., Southwestern Tex-Mex Salad, Georgia Peach Tart), (iii) the use nostalgic names that allude to tradition, family or national origin (e.g., Oktoberfest Red Cabbage), and (iv) the use of brand names (e.g., Jack Daniels BBQ Ribs).

These studies of the use of nudging have all found that nudging can be used in different ways to promote the sales of healthy food – dishes can be rearranged on the menu with a note to customers to ask for information about the dish that is not being promoted, calorie information can be positioned next to each dish, green stickers can indicate which dishes are healthy, and descriptions can be used to tactically promote a dish. These studies all show that like Jessica and Jack when we sit down at a table to choose our food in a restaurant we may not notice subtle nudges that can have a big impact on the way we eat. Nudging can be a step forward in promoting healthy eating to reduce obesity levels.

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How do investors prefer to save for their pensions: the 1/N heuristic.

How do investors prefer to save for their pensions: the 1/N heuristic.

Mark and Harvey were sat having coffee in their regular café that they visited every Thursday for breakfast before work. They discussed the latest football results and eventually ended up on the subjects of retirement. Harvey had never got around to starting an investment for his retirement so wanted to ask Mark for advice. Mark simply suggested that Harvey allocate his retirement investments equally across several funds, explaining that this reduce risk.

Saving or investing for retirement is one of the most important decisions that a person can make in their lifetime. Picking the right pension plan and / or allocating resources to the right fund(s) is crucial for enjoying their retirement years. Pension plans and retirement schemes differ from country-to-country. In some pension schemes investors have the choice of how to allocate their funds. When planning for their retirement individuals with a pension plan that allows them to allocate resources to different funds must choose how to invest their money. One popular strategy for making decisions about how to allocated resources is to use the 1/N heuristic (Benartzi & Thaler, 2001). The 1/N heuristic removes the confusion and stress of weighing up the pros and cons of how to invest resources and simply states that a given amount of resources should be divided equally between ‘x’ funds, for example, when a sum of £100,000 is to be invested this would be distributed into £20,000 into 5 different funds.

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In the Swedish pension system investors have the option of deciding how to invest 2.5% of their income. They can allocate 2.5% of their income to either a stock or interest fund (Hedesstrom et al., 2007). Once an individual makes the decision to invest part of their income they receive a brochure with 655 potential funds, they are then required to decide which of the funds they’d like to invest in. In 2004 researchers at Goteborg University analysed 392 investment decisions. The researchers found that investors used at least 5 different heuristics and biases to make their decisions. Investors had a tendency to avoid funds with extreme high and low risks (extremeness aversion – Simonson & Tversky, 1992), a tendency to select the default option (default bias – Johnson et al., 1992), to choose many funds in an attempt to seek maximal variety (diversification heuristic – Read & Loewenstein, 1995), to select domestic funds (home bias – Kilka & Weber, 2000), and to use the 1/N heuristic (Benartzi & Thaler, 2001).

A larger study of more than half a million pension plan participants in Defined Contribution pension plans from the records of the Vanguard Group investigated the use of the 1/N heuristic (Huberman & Jiang, 2004). They found that when deciding how to allocate pension funds participants tended to use the 1/N to divide their funds over 3 or 4 funds.

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A third study of 1000 people examined how Dutch citizens planned for their retirement (Van Rooij et al., 2007). After analysing retirement decisions the results of this study revealed that Dutch citizens are risk-averse and considered themselves to be financially unsophisticated. When given the option these investors used one three strategies (i) the default bias, (ii) the 1/N heuristic, or were susceptible to (iii) framing.

So, depending on what country you work in and decide to retire to there are many different ways to prepare for your retirement. Since most of us, like Harvey, are not financial experts when given complex important decisions to make for our retirement we choose to avoid risk by allocating our money equally across several funds by using the 1/N strategy. When planning for retirement the 1/N heuristic can be an effective and useful way to decrease risk and ensure a substantial retirement fund.

So, depending on what country you work in and decide to retire to there are many different ways to prepare for your retirement. Since most of us, like Harvey, are not financial experts when given complex important decisions to make for our retirement we choose to avoid risk by allocating our money equally across several funds by using the 1/N strategy. When planning for retirement the 1/N heuristic can be an effective and useful way to decrease risk and ensure a substantial retirement fund.