The Elements of Choice by Eric J Johnson

They actually did just a little bit better than chance, and they were actually making sizable financial mistakes. Now, what's interesting about that is when we gave that choice to people, they actually didn't do very well. You have to figure out what the premium is, the fact you'll pay it 12 times a year, think about copays, think about deductibles. And what was interesting is that most of the people making those decisions had very little or no experience making health insurance decisions. Johnson: We became interested in how people made health insurance decisions, and we were doing this about the time when the Affordable Care Act was first implemented, or as many people call it, Obamacare. And that really was one of the first examples of choice architecture. You could use that, how you frame the choice in a way to get people to pick the option that was better for them, that, in fact, you would take what looks like a weakness and make it a strength.

And this was usually taken as evidence that people weren't so good decision-makers. And interestingly, they would often choose different things. Johnson: I studied decision-making for a lot of years, and a way that we studied this was we would show people a choice, framed one way, described one way, or give them the same choice but described differently. And choice architecture is the study of how those people, those designers, influence our choices.ĬBS: How has choice architecture evolved? Those people, who I call designers, have influenced what it is you will choose. In either case, somebody has actually made a set of decisions about how to present that choice to you. It might have been buying a ticket on an airline website or talking to your spouse about where to go out for dinner. I teach marketing in a course called Behavioral Economics and Decision-Making.

I'm the Norman Eig Professor of Business at Columbia Business School. Watch the video above and read the transcript below.Įric J. Johnson shares insights from his research into how the structure of choices affects outcomes. In this video, Columbia Business School’s Norman Eig Professor of Business Eric J.

The Elements of Choice by Eric J Johnson