Design Process and Issues

Published in Issue 3, 2011.

Part one of this two-part series discussed behavioral economics as a sub-discipline of economics concerned with how people make decisions.  Behavioral economics concepts are furthered by brain imaging research conducted by those in the field of neuroeconomics.  Also in part one, “Choice Architecture” was introduced as a system for improving group outcomes through strategies that help people overcome their natural short term thinking, including suggestions to address NIMBYism and to increase the likelihood of positive stakeholder meetings.  

In part two, I review behavioral economics and neuroeconomics concepts that can assist designers and planners with stakeholder selection of optimal alternatives, stakeholder acceptance of mitigation measures, understanding large scale proposals, and improving long term decision making. (References to the behavioral economics and neuroeconomics work from researchers Tsversky, Kahneman, Thaler, Sunstein, Gilbert, Bar, Peters, Buchel and Ariely appear at the end of the article.)

Conundrum in the Cornucopia of Alternatives
In stakeholder meetings it can become difficult to gain consensus to eliminate alternatives from consideration.  People resist narrowing down a list of alternatives because they become attached to many of the ideas.  This is loss aversion at work. People often want all or many of the alternatives kept on the table, even though in the end, only one or a few can be implemented.  People also resist narrowing down the list of alternatives even though the window of opportunity for some of the best alternatives may be lost while multiple alternatives are still being explored.

Another factor is ownership bias, which applies to ideas as well as tangible things.  People are reluctant to part with ideas, especially their own.  This can make it difficult to take alternatives off the table.

“Choice Architecture” solutions for narrowing down alternatives:

• Utilize ranking systems to assist stakeholders in focusing on feasible alternatives, but take care to avoid peer pressure that could result in good alternatives being de-selected. For example, the very common “dot” exercise can result in peer pressure as people see others placing dots and are influenced by the opinions of others.  
• Instead, create evaluation matrices for the various alternatives in order to quantify short and long-term impacts.  This will aid in overcoming exaggerated fear associated with loss aversion, status quo bias and ownership bias.  (As explained in part one, loss aversion is a basic human heuristic: people hate losing something they have, so much so that losing something makes them twice as unhappy as the happiness they experienced when they first obtained that same thing.  Status quo bias is an extension of loss aversion.  People generally try to maintain their current situation, whatever it is, and will put up with significant inconvenience to avoid potential loss presented by change.  Ownership bias results from people’s attachment to the things they have, including objects as well as ideas.)
• Remind participants of the costs of keeping infeasible alternatives open, including the possibility that some of the best alternatives may be lost if decisions are not made timely.  This approach uses loss aversion as a tool in the process of winnowing alternatives.

  Lowest Common Denominator – Why Groups Choose Sub-optimal Alternatives
People tend to make choices based on comparisons of like things, and they tend to avoid trying to compare things that are dissimilar -- the “relativity” heuristic.  People will generally choose the “best” of several similar alternatives, and discard an outlier, which may actually be the best alternative.  Designers and planners need to take great care in structuring proposed alternatives so as to use the relativity heuristic productively.

Choice Architecture solutions to arrive at optimal decisions:

• Craft the presentation. Ensure that in the range of alternatives being examined, you have not created a likely front runner solely because it is the best of several similar alternatives, leaving a better but “unique” or different alternative as an orphan that will be discarded.
• Establish clear criteria to eliminate sub-optimal alternatives early in the process.
• Utilize “mapping” in the stakeholder process – provide overviews of the decision-making process to help participants understand when different levels of decisions will be made.  For example, use a a large flip chart agenda to cue participants as to when 1) ideas will be generated; 2) priorities and preferences will be identified; 3 )preliminary choices will be made;  and 4) final choices will be selected.

In the Eye of the Beholder – “Reasonable” Mitigation Proposals
Stakeholder groups often reject what appear to be reasonable alternatives.  Due to loss aversion, people value the things they have more than they value the things that someone else has.  This is demonstrated by the delta (difference) between what someone is willing to accept in payment for a thing versus what another person is willing to pay for that same thing, also referred to as WTA/WTP.  

Similarly, once a person has a particular object they don’t want to give it up, but if they don’t already have that same object they do not necessarily feel the need to obtain it.  This bias is true to such an extent that losing something makes people approximately twice as unhappy as the happiness they experienced when they first obtained that same thing.

Due to WTA/WTP, if community members or stakeholders perceive that a proposed plan or project will cause a loss to themselves or the community, the mitigation offered must be significantly more valuable than the perceived loss in order to be viewed as equitable.  

Secondly, people care about fairness, so much so that they will decline an offer of free money if they feel the offer is unfair. This has been demonstrated through behavioral economics experiments such as “the ultimatum game” in which one participant (the proposer) will receive a portion of $10 if he or she is able to get acceptance of the offer from the other participant (the responder).  The proposer selects the amount to be offered and the responder must either accept or reject the offer – no other communication is allowed.  If the responder rejects the offer, neither person receives any money.

In theory the responder should accept any offer above zero since the responder will receive nothing if they reject the offer; however, in practice, responders are influenced by “fairness” and will reject offers they deem to be too low, or “not fair.”  Neuroscientists observe through brain imaging that rejection of unfair offers is the result of a strong, negative emotional response rather than a deliberative thought process.  Emotional responses are not likely to be swayed by logic.

Designers and planners should take special care in situations where there seems to be  tradeoffs between people’s welfare that could trigger emotional responses. Two examples: 1) an action that benefits one person at the expense of others; or 2) a situation in which stakeholders believe there are limits to how much someone should be allowed to benefit at a cost to other people.  

The reference heuristic also plays a role in the evaluation of fairness because the current status quo (whatever it is in any given situation) becomes a reference point for the then-current participants to be “entitled” to an existing favorable arrangement.   So for example, changing access or cost of access for current beneficiaries of a public good or service (such as a public park) may be viewed as less “fair” than restricting access or increasing cost of access for those not presently in the equation.

Choice Architecture solutions for presentation and acceptance of mitigation proposals:

•    Establishing value for mitigation:  To overcome the WTP/WTA differential, any proposed mitigation has to be at least twice as good as the status quo to be seen as “equal” to status quo by stakeholders.  For example, if a new building project requires removal of a historic structure, mitigation to relocate that historic structure AND to improve the exterior facade of another historic building might be seen as equitable.  

•    Designers and planners need to take care when crafting mitigation measures to ensure the mitigation addresses anyone who will lose their current rights of access, or who will experience increased costs. Consider grandfathering in those who already have access or a favorable cost structure.  For example, funding building improvements at a community center through increased fees for future residents, while maintaining current fees for those who already participate, may be viewed as more fair than increasing fees for everyone.

•    Take care in structuring proposed mitigation; draft or “frame” mitigation to illustrate fairness.

Too Big to Grasp:  Why Stakeholders Reject Large Scale Proposals
When it comes to public-policy decisions, people exhibit predictable, but seemingly illogical, biases. They value a smaller scale service, such as upgrading emergency medical service equipment more than a larger public good, such as improving disaster preparedness.  Due to the relativity heuristic, human reaction to large dollar amounts or less tangible outcomes is generally less supportive because people generally have little experience to allow them place the large scale alternative in context. Scope insensitivity is a significant factor that must be taken into account in preparing information for public design and planning processes.

Choice Architecture Solutions to Scope Insensitivity:

• Present large scale proposals as itemized breakouts that include smaller scale specific projects that stakeholders can relate to.
• Frame each specific project or component as an essential part of the larger scope proposal.
• Utilize loss aversion to call attention to what will be lost if the comprehensive proposal is not adopted.

Decisions for Today vs. Ten Years from Now
Due to hyperbolic discounting, a.k. a. reward delay discounting, on average people naturally choose immediate rewards over longer term gains.  Bar, a neuroeconomist, observes that immediate and delayed rewards stimulate different parts of the brain, with immediate rewards triggering the brain’s emotional centers, while delayed rewards trigger areas of the brain dealing with reason.  

Emotions related to short term rewards win out disproportionately to reason-centered long term solutions.  For example, if you ask people who are not already committed to a regular exercise regimen whether they want to be healthy they will say “yes.”  If you ask them to pick an activity for today and one for next week, they will elect to PLAN to exercise next week and will select the immediate gratification of watching television or shopping for today. Alternatives that won’t yield results for years or decades are even more challenging due to reward delay discounting.  
Choice Architecture Solutions for Long-Term Decision Making
Expanding on neuroeconomics research by others, Bar postulates on how to counteract reward delay discounting by cueing people to imagine specific desired future events tied to their personal goals.  

According to neuroeconomists Peters and Buchel, when test participants were asked to visualize future events related to their receipt of future rewards, they were much less likely to choose short term rewards over long term goals and rewards.  In preparation for this experiment, individual participants were asked about their personal plans and goals.  Participants provided examples such as  vacations, weddings, education, or social and family events.  When the researchers cued the participants to  imagine one of these  personally relevant future goals or events, the areas of their brains associated with long term memory were activated in addition to the areas of the brain associated with decision making and predictions.  

The key concept for those designing public decision systems is that “appreciating the value of future rewards and the benefit of acting to obtain them relies on our ability to imagine the relevant future.”   

Here is a series of recommendations for designers and planners to help stakeholders focus on long term choices in the design of projects:

• Survey stakeholders about their future goals that might be supported through your design project (e.g. physical fiss, social interaction, family interaction, etc.)

• Help stakeholders imagine personally relevant future events and conditions as part of your design or planning process.
• Help stakeholders visualize the relevant future your plan or project proposes through drawings, photographs, video, computer simulation, etc.
• Most importantly, make it relevant to the stakeholders’ lives through association with the goals they stated at the outset.

Behavioral economics and neuroeconomics research provide much needed insight into seemingly irrational stakeholder responses and decisions.  Designers and planners can utilize “choice architecture” concepts and methods to obtain improved outcomes that result in more positive and productive stakeholder meetings as well as better long-term decisions. Improved decision making by the stakeholders in the design process results in better designed projects for the long-term.

Kathleen M. Fox is a registered landscape architect,  Fellow of the American Society of Landscape Architects, and executive director of the Ohio Cultural Facilities Commission.  A 2002 Loeb Fellow at the Harvard Graduate School of Design, she also holds a graduate certificate in Alternative Dispute Resolution from Capital University Law School and is author of the research paper Utilizing Behavioral Economics to Improve Public and Private Decision Systems in Community Planning and Development.  She can be reached at:  kfox@post.harvard.edu.          

References:

Dan Ariely. Predictably Irrational: The Hidden Forces That Shape Our Decisions. New York:
Harper Collins Publishers, 2008.

Moshe Bar. ”Wait for the Second Marshmallow? Future‐Oriented Thinking and Delayed Reward
Discounting in the Brain.” Neuron 66, 66, April 15, 2010.

Daniel Gilbert. Stumbling on Happiness.  New York:  Vintage Books, 2007.

Kurt Lewin. Field Theory in Social Science: Selected Theoretical Papers. New York: Harper &
Row, 1951.

Moshe Bar. ”Wait for the Second Marshmallow? Future‐Oriented Thinking and Delayed Reward
Discounting in the Brain.” Neuron 66, 66, April 15, 2010.

Daniel Gilbert. Stumbling on Happiness.  New York:  Vintage Books, 2007.

Jan Peters and Christian Buchel. “Episodic Future Thinking Reduces Reward Delay Discounting
through an Enhancement of Prefrontal‐Mediotemporal Interactions.” Neuron 66, 138–148,
April 15, 2010

Richard Thaler and Cass Sunstein. Nudge: Improving Decisions About Health, Wealth, and
Happiness. New Haven, CT: Yale University Press, 2008.

Amos Tversky and Daniel Kahneman. “Judgement Under Uncertainty: Heuristics and Biases.” Science 185 (1974): 1124‐31

Published in Issue 2, 2011

Designers and planners increasingly work on complicated, multi-stakeholder projects. NIMBYism (Not In My Backyard) is rampant, while public and private clients seek results that satisfy all constituencies. Understanding stakeholder expectations and needs is critical to project success. Behavioral economics, a sub-discipline of economics that focuses on how people actually behave (as opposed to the prevailing “rational actor” economic theories that propose how people should behave), provides insights and approaches to help designers and planners better understand stakeholders’ perspectives and achieve successful outcomes. Behavioral economics research has been further supported by neuroeconomics research, which utilizes brain imaging to uncover brain activity that underlies human responses.  By explaining basic behavioral economics and neuoreconomics  concepts as they apply to design projects, I hope to give designers more tools to aid in understanding how people react to design and planning problems in their communities.

Basic research in behavioral economics, led by Tsversky and Kahneman, shows that humans adopt sensible “rules of thumb” or heuristics to aid in decision making.  People are faced with too many decisions on a daily basis; deliberating every one of them would result in mental gridlock, so people make many decisions on “auto pilot” through the use of heuristics that simplify their lives. Although essential, use of heuristics increases the likelihood of short term rather than long term outcomes.  Designers and planners can use insights about human heuristics to aid in crafting stakeholder input processes that achieve better long term outcomes. (References to the behavioral economics and neuroeconomics work from researchers Tsversky, Kahneman, Thaler, Sunstein, Gilbert, Bar, Peters, Buchel and Ariely appear at the end of the article.)

Behavioral economists Thaler and Sunstein propose packaging behavioral concepts into a framework of “Choice Architecture,” or asymmetric paternalism, to aid in improved decision making.  Choice Architecture is not architecture as planners and designers think of it in the built environment, but rather, it involves designing how choices are presented to people in order to obtain the best long-term outcomes. 

Some people argue that purposeful presentation of information should not be used to influence decisions; however, virtually every choice that people make is already organized in a way that will predispose them to a particular choice, whether the organization of the choices is accidental, or instead is thoughtful and intentional. Proponents of Choice Architecture argue that people will be influenced by how things are presented, so the presentation should be structured toward arriving at the best long term-outcomes.

According to Thaler and Sunstein, the Choice Architect is responsible for organizing the context in which people make decisions.  Every aspect of how choices are presented to people affects the decisions they make.   To achieve positive results, all default choices must set people in the best direction, while still allowing individuals to make a change if they request to do so.

Designers who learn to employ behavioral economics concepts and become “choice architects” can add significant value to their projects through improved stakeholder interaction and decision-making.

Are NIMBY’s Normal? 
Why do stakeholder groups dislike or distrust new projects and other changes in their environment?  People are naturally fearful of potential negative impacts on property values, property rights, traffic, safety, schools, and the livability of their homes and neighborhoods.  According to behavioral economists, this fear arises out of a basic human heuristic, Loss Aversion. People hate losing something they have, so much so that losing something makes people twice as unhappy as the happiness they experienced when they first obtained that same thing.

Loss Aversion contributes to another human heuristic called status quo bias. People have a tendency to want to maintain their current situation, whatever it is. For example, most teachers would observe that students tend to sit in the same seats in class, even when seats are not assigned. This is a simple example of a bias that humans employ for much more important matters, and people will put up with a significant amount of inconvenience or other costs in order to avoid the potential loss presented by a change. 

The Ownership Bias or Endowment Effect also plays into NIMBYism.  According to Ariely, people become attached to the things they have and the more work they put into something, the more ownership they begin to feel. This has been dubbed, tongue in cheek, “the IKEA effect” because pride of ownership rises proportionally with the difficulty in assembling the furniture.  It’s easy to see how a strong sense of ownership develops when people invest significant time and effort in making a place their home. 

NIMBYism is also affected by Virtual Ownership Bias. People can begin to feel ownership of something before they actually own it. You see this at work at an auction, where the bidders begin to imagine themselves as the owner of an item they are bidding on. The longer they are engaged in the auction, the more they imagine themselves owning the item, and the more intensely they feel about bidding to win it. This concept also translates to people’s feelings about their neighborhood park, and from there, resistance to any proposed changes to the park.  Likewise, virtual ownership takes hold over vacant land in a community, even if that open land is actually owned by someone else who has plans for future development; the virtual ownership phenomenon explains the otherwise irrational resistance to development by the neighborhood or community.

Impact Bias also plays a role in NIMBYism by escalating people’s fears about new proposals.  According to Gilbert, impact bias is the heuristic that causes stakeholders to substantially overestimate the negative effect that a given change will have on them and their level of satisfaction or happiness.

“Choice Architecture” Solutions to NIMBYism
 A number of behavioral economics concepts can be employed to help alleviate NIMBYism. Here are three:

•    Structure stakeholder processes:  Identify in advance the issues that are most likely to trigger “loss aversion” and “ownership bias.” Prepare information that will assist participants in understanding what will be GAINED by potential changes. 

•    Utilize framing:  Framing is the proven psychological concept that the choices people make partially depend upon the way in which the choices are stated, or “framed.” Two proposals of identical quantitative value will yield very different responses, on average, due solely to how the choices are worded and presented. In general, people will respond to the choice that appears to offer the most gain or the least loss.  Frame a call to action for adoption of something new by framing the status quo as a “loss,” thus showing the need for change.

•    Start public engagement early:  Start working with stakeholders before negative opinions and coalitions solidify.  Some clients want to avoid the unpleasantness of stakeholder input, so they wait until their plan is ready or the design completed.  They are then disappointed with a less than positive reception from stakeholder groups or the public to the already completed plan.  Instead, create stakeholder ownership in the project by involving people early in the process.  This uses ownership bias in service to the project and can help minimize impact bias by allowing stakeholders time to understand the nature of the changes.

When Stakeholder Meetings Go Bad, They Get Worse
What causes difficult stakeholder meetings to devolve into even more challenging circumstances?  People are influenced by the actions of others, and they are influenced by their own inferences about others people’s likely views or actions, a concept called Herd Mentality.  For example, peer pressure causes people to give different answers to the same questions, depending upon the method for collecting responses. When responses are solicited publicly, such as by raising hands or asking for vocalized “yes’s” or “no’s,” there is much more conformity in the results when compared with use of written surveys or other anonymous methods.  So, if there are vocal participants who are unhappy, they can sway the attitudes and opinions of others in the group.

Another contributor to devolving stakeholder meetings is the Availability Heuristic.  People assess the likelihood of risks based upon how many examples come easily to their minds. Recent events, particularly dramatic events, heavily influence people’s assessment of any given risk.  Personal experiences of negative events or close affiliation with a person who experienced a negative event also increase a person’s assessment of the importance and likelihood of that risk.  Biased perceptions about risks can inappropriately influence how communities respond to challenges,  allocate resources or plan future development.  So for example, if a community has experienced a number of recent fatal traffic accidents, then any proposal that is perceived as increasing traffic may be opposed by the community just due to the community's knowledge of those fatal accidents.

Expectations Alter Opinions.  A person’s prior knowledge of an experience they are about to have modifies their brain activity, causing their experience to be altered from what it would have been if they had not had the information in advance.  The result is that if a person expects something to be good, the odds are that they will experience it positively; likewise, if they expect it to be bad, they will experience it as bad.

 “Choice Architecture” Solutions for Positive Stakeholder Meetings
Here are a set of behavioral economics ideas for better meetings:

•    Intention is a motivator.  Obtain a better meeting turnout through advance contact with stakeholders you believe are essential to a good process; request a statement of intent to participate from potential participants. By asking people to state their intention to participate, you will increase the likelihood that they will attend.  Likewise, by asking participants to write down their reasons for participating, designers can gain important insights while stakeholders reinforce to themselves what is important to them.

•    Help potential participants overcome small roadblocks to attendance through use of Channel  Factors.  For example, the person who said they will attend a public meeting is even more likely to attend if you ask them to look at a map and locate the meeting site in relation to where they live or work, then trace the route they would take to get to the meeting.  This activity is simplified through technology such as on line maps.

•    Set a positive expectation at the beginning. “Frame” the introductory information in a positive light with regard to your goals.  Ask one or two representatives of the stakeholder group, who you know will be positive, to speak about the importance of the meeting and their own enthusiasm about it.

•    Provide information about who supports the initiative (e.g., names of community leaders, groups, or statistics about the percentage of supporters).  This will help stakeholders approach the subject more positively.

•    Avoid negative peer pressure—obtain input anonymously. Use paper surveys or feed-back methods rather than a show of hands or voice vote when you want to measure uninfluenced opinions.

•    Priming results from simple, sometimes seemingly irrelevant cues such as furniture and objects.  For example, on average, people behave more competitively, less cooperatively and less generously when they are in a room set up like a business environment with, for example, boardroom tables and briefcases.  When designing a process to achieve cooperation from the stakeholders, select non-competitive meeting locations, settings, furniture and other visual cues (such as briefcases).  Avoid hierarchical room set ups, such as business settings with boardroom tables, raised daises, etc. that might cue participants to behave competitively.

•    Avoid creating factions.  Take care if you use “break out” sessions. Peer pressure within small groups can cause the members of each small group to align in support of a particular viewpoint.  These differing small-group viewpoints are consistently defended when the small groups are brought together into a larger group.  Some facilitators favor processes such as World Café, where the members of small discussion tables are rotated after each question or discussion item so that factions are less likely to form or become entrenched.

In the next issue of Research Design Connections, we will examine how the choice architect can help groups select optimal alternatives, arrive at acceptance of mitigation measures, and better understand large scale proposals and long-term outcomes.

Kathleen M. Fox is a registered landscape architect,  Fellow of the American Society of Landscape Architects, and executive director of the Ohio Cultural Facilities Commission.  A 2002 Loeb Fellow at the Harvard Graduate School of Design, she also holds a graduate certificate in Alternative Dispute Resolution from Capital University Law School and is author of the research paper Utilizing Behavioral Economics to Improve Public and Private Decision Systems in Community Planning and Development.  She can be reached at:  kfox@post.harvard.edu.    

References:

Dan Ariely. Predictably Irrational: The Hidden Forces That Shape Our Decisions. New York:
Harper Collins Publishers, 2008.

Moshe Bar. ”Wait for the Second Marshmallow? Future‐Oriented Thinking and Delayed Reward
Discounting in the Brain.” Neuron 66, 66, April 15, 2010.

Daniel Gilbert. Stumbling on Happiness.  New York:  Vintage Books, 2007.

Kurt Lewin. Field Theory in Social Science: Selected Theoretical Papers. New York: Harper &
Row, 1951.

Jan Peters and Christian Buchel. “Episodic Future Thinking Reduces Reward Delay Discounting
through an Enhancement of Prefrontal‐Mediotemporal Interactions.” Neuron 66, 138–148,
April 15, 2010

Richard Thaler and Cass Sunstein. Nudge: Improving Decisions About Health, Wealth, and
Happiness. New Haven, CT: Yale University Press, 2008.

Amos Tversky and Daniel Kahneman. “Judgement Under Uncertainty: Heuristics and Biases.” Science 185 (1974): 1124‐31