labels

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1) Cass Sunstein writes in the Wall Street Journal about new money-saving regulations.

2) Disney creates scarcity with its content.

3) New MPG labels for cars will include information about greenhouse gases.

4) A call for the Indian government to think about behavioral economics.

5) Traffic light interest rates – A heuristic for microfinance loans.

6) The U.K. government wants to make digital delivery a default. Hat tip Amol Agrawal.

7) Choice Architecture in the Wild Pt. 12 by Jonathan McDonald.

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You’re in a car dealership looking to buy a new car. Chances are, you’re going to look at the sticker in the backseat window. You know, the one with the fuel efficiency numbers. But you won’t look for too long. Say 20-30 seconds, tops. Of the following two labels, which one is going to help you figure out the fuel tank’s consequences for the environment and your wallet?

The Environmental Protection Agency hopes you said the first one, which tries to highlight the pocketbook impact better, and adds new details about environmental friendliness. As part of window sticker requirements starting in 2012, the agency is looking to make some changes. The agency is considering swapping the bottom sticker for the top one.

Now consider this sticker, which the EPA is also considering.

The same information that’s on the first label is all there, but of course, there’s now that giant letter grade that’s supposed to sum up fuel and environmental specs for the car in comparison to all other models (cars, trucks, and SUVS) on the market. Reports the NYT:

The highest grade, A+, with fuel economy rated as equivalent to 117 miles per gallon and up, would be for “zero emission” electric cars. Plug-in hybrid electric cars (59 to 116 m.p.g. equivalent) would get an A, and some conventional hybrids, like the Toyota Prius and Ford Fusion, would get an A-. Other hybrids, like the Nissan Altima, Ford Escape and Toyota Camry, would receive a B+.

On the positive side, a school-like grading system is one that everyone is intimately familiar with and, therefore, requires no additional explanation (no grade inflation jokes, please). On the negative side, because grades are so closely tied to education, interpreting them with automobiles is more complicated. In school, everyone wants an A. In a showroom, everyone probably doesn’t want an A. Fuel consumption and environmental friendliness are only two of a host of dimensions buyers will consider. Maybe fuel efficiency is my top priority. Or maybe my top priority is actually a car with lots of towing power, although I’m happy to get the one that sips the least gas. Since the sticker only comes with a grade, and not pictures (or even names would be ok) of other cars with similar grades, I don’t know how heavily to factor it in my decision. Yes, a shopper can go dig up the kinds of details about A+ vs. B+ cars as reported in the New York Times, but the point is if it’s not on the sticker, it’s likely to be ignored.

The EPA hasn’t decided which sticker to have automakers adopt. If you have thoughts, you can let the EPA know here. Hat tip: Colin Manuel.

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Alan Schwartz reports on the labeling of waste and recycling bins at a local hospital. One is for “mixed paper”; another is for “Glass – plastic – aluminum. The third, a trash bin, is not labeled “trash” or “waste,” however. Rather, it’s a nice reminder to make sure you’re not throwing out mixed paper, glass, plastic or aluminum.

Addendum: This photo is a nice example of what we’d like to post more of on our Twitter page.

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In anticipation of a ban against using words such as “light” or “mild” on cigarette labels and ads, tobacco companies have lightened package colors to convey the same message…All Salem packages used to be the same shade of green, but now packages previously called “lights” are a lighter green and white, and “ultra lights” are a pale gray and white.

Full story in USA Today.

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We’re thinking of starting a running series, beware of labels. How’s this for a first entry?

Three McDonald’s meals, including Chicken McNuggets, carrying the Weight Watchers logo will be sold in the fast food chain in New Zealand from this week and will be introduced into Australia in the next few months…

So far, the Fillet-O-Fish, with 18g of fat and 380 calories; Chicken McNuggets, with 29g of fat and 485 calories; and Sweet Chilli Seared Chicken Wrap, with 18.8g of fat and 404 calories, have been approved by Weight Watchers.

Look for the Weight Watchers seal of approval in the U.S. too.

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Assorted links

1) Richard Thaler and George Osborne in the Guardian. U.K. pilot recycling programs to replace fines with rewards are showing results.

2) A new study finds calorie labeling for a hypothetical McDonald’s meal reduces calorie consumption. One key difference from past studies: People aren’t ordering meals for themselves. Parents are ordering meals for their children. Hat tip: Patti Hunter.

3) Crayola’s law says that the number of Crayola colors doubles every 28 years. How much faster do children who color with the original box of crayons finish compared to those with the mega 120-color box? Hat tip: Christopher Daggett.

4) A web-based version of Dustin Hoffman’s mason jars. Hat tip: Elliot Crosby-McCullough.

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1) Many readers pointed to a story on a study about the effect of posting calories in fast food restaurants. Customers noticed the signs and thought they influenced their orders. But they actually ordered food with more calories. Reader Paul Zurawski wonders if customers would have eaten healthier if they had been asked to sign a receipt acknowledging their choices and calorie counts.

2) The top ten annoying alarm clocks. Clocky is No. 1. Hat tip: Daniel Lee.

3) Google’s PowerMeter now works with a handheld device that starts at about $200. What this means is that you would not need a utility company to install a smart meter in your building. Hat tip: Christopher Daggett.

4) The San Francisco airport has begun selling carbon offsets at the electronic check-in kiosks. Philip Frankenfeld has many catchy slogans for this nudge including “Pay dime. Help clime” and “You are now free to roam around the carbon”.

Addendum 5) A vase that lets you know when your flower needs watering. As water evaporates, the vase tilts. Hat tip: John Gibbard.

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Nudges abound

Over the last few days, lots of links and brief observations have poured into the blog. Some highlights are below.

Parking: Paul Sweeney observes that the parking spaces in Florence are the size of a smart car, making them unwelcome to hulking sedans and trucks. (Of course the streets are much narrower too!) If cities want to reduce driving in their urban cores, why not paint the parking space lines closer together?

Alarm clocks: Who knew all the ways these would turn out to be nudges? First, there was the alarm clock that hides under the bed when it goes off; then there was the alarm clock that donates to an organization you despite each time you hit the snooze button; now there is the alarm clock that won’t stop buzzing until you do thirty reps with it. It’s shaped like a dumbbell. Maybe it will one day come in different weights. (Hat tip: Adora Tsang)

Spending: We’re not sure nudging spending by anyone carrying around massive credit card debt should be a government policy goal, but Dan Newman thinks federal tax cuts/rebates/refunds – pick your favorite description – should come as debit cards ($2,000, he says) instead of checks. That way, none of it could be socked away in a bank. The Obama administration has considered this idea, but thinks it is not yet logistically feasible. It was tried after Katrina, but getting cards out to tens of thousands in a few cities is much different than getting them to tens of millions in cities everywhere.

Vending machines: The University of Virginia has created a vending machine that uses the traffic light system to label various food options. The machine still sells junk food like chips and soda, but it adds a 5-cent surcharge for each one, which is donated to a children’s fitness clinic. The University’s provost told Governing magazine that year-to-year sales of green light items increased by more than 16 percent, while red light items fell by 5 percent. Apparently the clinic got the proceeds, $7,000, in nickels.

Star Trek: Ok, so this one isn’t a nudge. We weren’t the only ones who drew a link between Econs and Vulcans. So did Princeton political economy professor Uwe Reinhardt, who calls traditional economics Spockonomics.

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Over at the CL&P Blog, Jeff Sovern has more thoughts on nudges in mortgage agreements. (Earlier post is here.)

Suppose after stating the monthly payments, and especially the maximum payments under an adjustable mortgage, what would happen if the disclosure statement explicitly asked “Are you sure you can make these payments on time?  If you can’t, you may lost your home.” Or is that going from a nudge to an annoying nag–and if so, would that be bad? The late payment fee is already required to be in the “Federal Box” set of disclosures, and so won’t be far away from the statement of when payments are due, but the regulations could be amended to require that it be right next to the notice of when payments are due, just as with the credit card statement.

Before diving into the effects of one sentence’s construction or placement on a page, it’s worth stepping back for a minute. The point of Sovern’s comments, and other like them, is that clearer disclosure in the mortgage industry would be better. More disclosure would be nice too. More disclosure is one common refrain among mortgage industry reformers. And let’s not savage the government too much. Disclosure is an concept it has looked into. The question is what does better disclosure look like? To put the question another way: Should a mortgage, like a refrigerator, a car or even a box of cereal, come with a label? Is a label the best form of disclosure – as opposed to an Excel-style spreadsheet or a brief executive summary? The FTC has considered a hybrid of these two approaches already. See here for the prototype.

To Nudge blog readers: What information would you put on a mortgage label? How would you design it? Is the interest rate amount and structure the most important information? Perhaps conflicts of interest between broker and other parties?

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David Leonhardt’s “Budgets Behaving Badly” column from yesterday’s New York Times is a must-read for Nudge enthusiasts interested in how behavioral economics can be applied to public policy. One of the ideas in the column, also discussed in Nudge, is the redesign of fuel economy stickers. Another potential area for redesigned labels is food packaging, which one Nudge reader thought could benefit from a traffic light theme.

The Cancer Council of New South Wales in Australia is currently pushing the traffic light idea to help people make better nutritional decision making, following some field tests and surveys involving breakfast cereal, crispbread, and lasagna. (Hat tip to Stephen Laniel for pointing us to the study, which is here.)

Continue reading the post here.

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