Feb 20, 2018

Exploit Explained: The Default Effect

{This post is part of the Archive of Human Exploits}

If you've seen something like the above, you have a clue as to the huge importance of the default effect. Simply put, most people are lazy (sloth, the seventh deadly sin) and will choose inaction over action in most situations.  Trained persuaders know all about this human exploit, so they work hard to ensure they are the 'inaction option' where such a thing is possible. That's how you get appeals like the one above.

The default effect is so powerful that it's the driving force behind applications of behavioral economics in public policy. Nobel Laureate Richard Thaler and Harvard Professor Cass Sunstein coined the term "nudge," a persuasion method that gently pushes people toward what are deemed good choices primarily using default effects. "Human beings often suffer from inertia," Professor Sunstein writes in a 2017 article for Bloomberg. "Even if it is easy to go, or to change the default, they just don’t move. We take the path of least resistance."

As a case in point, Professor Sunstein describes a recent legal case (he's a law professor):
The sad tale began in 2000, when a telemarketing firm, Suntasia Marketing, persuaded hundreds of thousands of consumers to pay a monthly fee for subscriptions that were essentially worthless. Telemarketers called people out of the blue and said (falsely) that they represented the consumer’s bank. They reported good news, to the effect that the consumer had won a reward, consisting of (for example) a subscription to a “buyer’s club,” which would offer consumer gasoline and airline rebates. On average, consumers paid Suntasia $239 over the course of their subscriptions, and received nothing in return. 
In 2007, the Federal Trade Commission sued Suntasia. In response, the court directed the company to notify its subscribers of their right to cancel. According to the court’s order, subscribers who had been enrolled for six months or less would receive a letter saying that they would be canceled by default -- but adding that they could continue if they wished (by letter or phone call). Those who had been enrolled for more than six months would receive a letter saying that their subscriptions would continue by default -- but adding that they could cancel if they wished (also by letter or phone).
Did the default rule matter? Absolutely.
When subscriptions were canceled by default, almost everyone ended up canceling -- a stunning 99.8 percent. But when people were merely notified of their right to cancel, most people ignored the letter and so continued to subscribe (about 63.2 percent).
What's ironic is that in attempting to punish of the most heinous scams in the telemarketing business, the FTC permitted Suntasia to use another telemarketing scam it had explicitly banned: negative options. According to the FTC, this term encompasses a broad category of "commercial transactions in which sellers interpret a customer’s failure to take an affirmative action, either to reject an offer or cancel an agreement, as assent to be charged for goods or services." Yet that is exactly the method the FTC directed Suntasia to use to determine if its longer-term customers should keep getting charged.

The default effect is both powerful and non-obvious. Trained persuaders take note. Buyers beware. Here's a little extra motivation for the latter (because, inertia) ...

In his book Originals: How Non-Conformists Move the World, Adam Grant claims that one of the most telling tests of whether someone is an original thinker is if he or she changes the default Web browser. In a study of customer-service agents he references in the book, it was shown original thinkers favored Web browsers that (at the time) required action to use. That is, they were more likely to use installation-required browsers such as Firefox or Chrome over default browsers  such as Internet Explorer (PC) and Safari (Mac).

One could extend this hypothesis to email clients as well. If you're still using an AOL address, for example, you're probably not an original thinker. However, this also implies a solution. If you want to be more original, or maybe just perceived as such, you can install and use a non-default browser like Google Chrome, which is my preference. (See what I did there?)

Oh, and pro tip: Always click "no" when messages like the one at the top of this post pop up.

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