30 November 2021

Positive effects of nudges – and negative spillovers


Attention is a limited resource: Nudges and other policy interventions often aim to help people make better choices by drawing their attention to specific decisions and foster deliberate, active decision-making. As a result, the people may withdraw cognitive resources from other tasks, with detrimental consequences for the quality of their choices.

Do nudges cause people to do better in some domains of their lives, but worse in others? That was the research question that Steffen Altmann, Andreas Grunewald, and Jonas Radbruch asked and now have the answer for in the paper Interventions and Cognitive Spillovers. Forthcoming in he Review of Economic Studies.

Steffen explains:

"We show that the policies aimed at nudging people in a certain direction may cause people to do worse in other domains of their lives. We document the existence of such negative cognitive spillovers in a series of lab and online experiments. Participants in the experiments face two cognitively demanding tasks. We study two interventions that nudge people to pay attention to one of the tasks. We find that the interventions indeed lead participants to make more active and better choices in the targeted choice domain. But the policies cause participants to withdraw cognitive resources from the other task, with detrimental consequences for the quality of their choices.

We further analyze the conditions under which negative spillovers on other choices arise, and what determines their strength. For example, the interventions trigger stronger negative spillovers for individuals with lower cognitive abilities and for more complex choices – i.e., exactly in those environments and for those subgroups of the population for which they are commonly designed.

It is very important to note that the results do not speak against the use of nudges, but instead call for comprehensive evaluations of the direct *and* indirect effects of policy interventions."

Follow @SteffenAltmann, @AndreasGrunewa3, and @JonasRadbruch if you feel intrigued, wanting more of the same.