Default Options to Foster Policy Ratings and their Attractiveness on People's Preferences

Default Options to Foster Policy Ratings and their Attractiveness on People's Preferences

Mohammed Ziaul Hoque (University of Chittagong, Chittagong, Bangladesh)
Copyright: © 2017 |Pages: 22
DOI: 10.4018/IJABE.2017010101
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Abstract

The present study explains how default choices are easy when compared with the alternate and free choices based on three survey design. In doing so, the study examines the effects of the default option on people's preferences towards various issues concerning governmental and marketing policy. Three-hundred respondents were randomly selected and interviewed with the structured questionnaire. To test the hypotheses of the study, the study has used the tools of descriptive statistics, combined means, and correlation of the data. The results of the study show that status-quo-labelled (current) policies are preferred over a change of setting, but negatively phrased policies do not show this status quo (SQ) effect. The results also demonstrate that the default setting, or SQ, has enhanced a policy's rating and attractiveness over the free and active choice. If people have to choose a policy when there is no default available, they experience difficulty in choosing and it takes them more time. In the case of the free choice option, people report more pros and cons of the policy issue than in the SQ and NSQ setting.
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1. Introduction

Each and every day, we make decisions ranging from investments in the business to meal preparations in the household. Unfortunately, we often make mistakes and choose poorly. The reason is that, as human beings, we all are vulnerable to various biases that can lead us astray. Our mistakes may make us poorer and less healthy than under optimal decision-making, and the ultimate results may be driven by bad decisions concerning education, consumption, personal finance, health care, mortgages, credit cards, household, and even environmental protection. Therefore, Sunstein and Thaler (2003) suggest the coercive policy1 or libertarian paternalism2 as a useful way to make a good decision and maximise people’s welfare. But such arguments have been challenged in Behavioural Economics’ (BE) fields as paradox about freedom of choice and paternalism. Wright and Ginsburg (2012) state that actively choosing is good for people although they may make some mistakes. On the other hand, in most cases, people do not want active choice because they are frightened to make mistakes due to biases and lack of information (Coupe & Noury, 2004). Again, Sunstein (2014) says that the active choice may be too difficult for some people, so the government should provide easier choices. Default is an improved choice (Moshinsky and Bar-Hillel, 2014); that’s why, people may choose the default for its easier and effortless acceptance (Johnson et al., 2002). Consequently, institutions and agents are extending their hands to promote active choice for human well-being using the default choice.

In the fields of psychology, economics, political science, and sociology, default options are a rich field of study. To organise a default policy measure, we need to consider one or more options, of which some are pre-selected. These pre-selected options are presented as default or status quo or current baseline that affect people’s decision-making processes. Most people perceive default options as the authorities’ recommendations and believe that any deviation from this reference may harm their welfare. The result in a preference for default options (DOs) is called status quo bias (SQB). It is a cognitive bias that encourages people to prefer the most obvious choice alternative, which in many cases is the current state of affairs. Thus, DOs tend to diminish people’s active thinking and often are considered the ‘easy type of choice’. That’s why; currently, governments and private organisations are considering the use of some type of the default rule instead of active choice, although active choice should be more effective for people who do not like paternalism and do like the freedom of choice. In addition, Thaler and Sunstein (2008) recommend an alternative option, the choice architecture, which nudges people in beneficial directions without restricting freedom of choice. One powerful kind of nudge is ‘default’ that is likely to be adopted by most individuals, organisations, and governments in many hot issues such as organ donation, healthy food choice, government policy choice, etc.

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