June 26,2020 Change Management

Ethical Nudging

Ethical Nudging

Ethical Considerations

Richard Thaler and Cass Sunstein paid great attention to ethical nudging and the work of philosopher John Stuart Mill. Specifically, his work “On Liberty.”  Mill’s argues that the government cannot coerce people to protect said people from themselves. The government can only exercise power if they are to hurt someone else. Nudge theory adopts the same philosophy that people must maintain the free will to decide their own decisions.

Libertarian paternalism became their term for the theory prior to nudge theory. It constitutes an approach to explore the decision process. Then the paternalistic guidance to frame the decision in the believed the best interest of the decision-maker. Then the libertarian considerations that free will on making a decision is absolute to ensure ethical choice design.

Framing decisions can be art. The architectural design of choices can influence outcomes significantly. These choices can be made to be more appealing by design and skew the outcomes based on their influence.  The overarching ethical concern during choice architecture focuses on who the decision designed to benefit. For it to be ethical the decision must be framed in the best interest of the decision-maker, not the institution designing the choice.


Manipulation occurs once the decision benefits only the choice architect and not the decision-maker. Take for example when an organization decides to change its health care plan. The organization encourages high deductible because it saves money for the company. However, the high deductible plan is a worse economical plan that the regular health plan.

To influence the decision, the company changes its annual enrollment form to autoselect the high deductible plan. To further encourage this enrollment, the company also offers a cashback bonus for individuals that enroll in the plan. Lastly, the company creates fiction in the regular sign up process by mandating that everyone not enrolled in the high deductible plan will have to get a physical exam prior to being enrolled.

The main issue captured in this hypothetical scenario is the cross over from a nudge to manipulation. Once the decision is designed for the interest of the company at the expense of the employee there is no recovery. As Thaler and Sunstein captured this in their phrasing of using nudges for good or for evil.

Ethical Nudging

Great choice architecture and nudging begin with empathy. Putting yourself in their role clarifies what is in their best interest. The second factor centers on how to align the interests of the organization with their self-interest.

As mentioned, you do not want to manipulate, nor appear to be manipulative. This will destroy any present or future change initiative. During the designing choices stage, you will want to give this significant consideration. You will want to heavily vet the decision through organizational thinkers and your organization’s Ethics officer.

An extra risk mitigation step is to engage an external thought leader to consult on the implications of the designed nudge. This brings forward an outside opinion to view the situation. They provide validation on where the nudge is pointing. Lastly, a consultant can objectively determine if the nudge is in the employee’s best interest.


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