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Green Nudging: a gentle push towards a sustainable environment

On 2nd May 2019, together with the Green Light for Business association, BBias held the event called “Green Nudging: a gentle push towards a sustainable environment”. As it was many times remarked during the event, occasions like this one are very important to deepen concepts that we might not be familiar with and to raise awareness on topics that are getting more and more relevant and urgent. As we heard from many participants, it was also a first possibility to understand what nudging practically means and what are its potential applications. In particular, we saw the “green” application of nudges through the presentation of two firms, Patagonia and Too Good To Go.green_nudgind_event_pic

In the first part of the event, Giovanna D’Adda (assistant professor at the Department of Economics of “Università degli Studi di Milano”) introduced and briefly explained the concept behind nudging: an alteration of the choice architecture that gently pushes people towards certain (positive) behaviours. The attention was also partially drawn on the ethical debate concerning nudges: as a matter of fact, many are sceptical about their application, since they think that nudging limits the set of possible choices, hence the freedom of choice. However, it was clearly explained how nudges actually leverage on behavioural biases that are common to most of us, without actually restricting the set of choices, so maintaining freedom. Notice though that this debate is currently going on and, if properly faced, it can be much more complex than how it was just presented. We proceeded understanding how the standard economic model does not fit and explain the actual functioning of the “real” world. In fact, we have behavioural biases that limit us; the most important categories of these systematic deviations are: bounded rationality, bounded will power and bounded self-interest. Briefly, bounded rationality refers to the fact that we have a limited cognitive capacity and therefore we cannot use in the best way possible all the information we receive: this violates the classical principle for which the more information we get, the better our choices will be. Bounded will power is the concept for which we always plan to do something (go to the gym, for example), but we always end up procrastinating, since we are not strong enough to impose to ourselves self-control. Finally, bounded self-interest is a way to say that individuals are not purely selfish, but they care about each other. Nudges leverage exactly on these limitations and possibly help individuals in reaching what they want. Drawing the conclusions of her intervention, professor D’Adda remarked how behavioural biases affect significantly resources consumption. As a matter of fact, consumption choices are frequently based on habits, they are sort of an automatic processes. The firm Amphiro started producing showers with a display that shows how many litres of water are consumed while taking the shower. This produces a remarkable reduction in the water consumption because it somehow resets the reference point for consumers: while before people did not have any clue on their water consumption, with the adoption of this device consumers perceive every litre as a loss and consequently they tend to consume less. Another example of nudge is the one of putting the default option of printers on front and back, with the consequence of reducing the usage of paper. People commonly do not change the default options and hence, with the adoption of this simple trick, they unconsciously save more paper.

Next, the two firms presented their goals and the way they exploit nudges to reach their environmentalist goals. Michele Martinotti (marketing manager) introduced Too Good To Go, a firm whose aim is to reduce food waste, one of the main causes of pollution in the world. Moreover, food waste is a social and economic issue. Practically, Too Good To Go is an app that allows to order unused food from restaurants and supermarkets. Their mission is to empower and inspire everyone to take action against food waste. The way the firm “nudges” people is by reframing the information set: in Denmark, the supermarkets will put the sentence “often good after” right next to the classical “best before” date. “Best before” does not mean that it has to be thrown away after that date; however, the use of that sentence gives a negative framing to the problem, highlighting the negativity of consuming the product after that date. Instead, by writing “often good after”, there is a positive framing of the problem, therefore underlining the importance of checking the product (that might be still good) before throwing it away. Next, the firm Patagonia, an outdoor clothing brand, was presented by Stefano Bassi (sales associate). The activist company is well-known for its social purpose; they claim “we’re in business to save our home planet”. The reputation of a trusted and honest business allowed the impressive growth of the company, that is now making the difference inside the industry (being a relevant part of it). The way they “nudge” people is through advertising the fact that buying their products means also contributing to a good cause: a clear example of this is the famous campaign “1% for the planet”. In this way, buying the product produces a higher degree of satisfaction on those who are concerned with environmental issues. In the end, the more people buy their product, the higher is the 1% contribution to the planet.

To sum up, behavioural biases influence our environmental decisions. Therefore, policies that incorporate behavioural insights through nudges can be effective in facing the environmental problem. However, as noted by the guests, there are still little incentives for firms to invest on the research of new helpful nudges. We will not see firms investing in lab experiments in order to understand what nudges to implement or which strategies might be useful for achieving their goals. The consequence is that the academic world and the business world are not as connected as they should be and therefore they cannot help each other. Trying to solve this lack of connection might be useful in order to make easier the challenge that we face daily: reducing waste and pollution and saving the environment.

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