Psychology research - scarcity and defaults

This was one of my two senior psychology research projects at Swarthmore, which I conducted under the guidance of Prof. Barry Schwartz.

Abstract

Does being primed with scarcity cause people to choose defaults more often? Using a computer game to prime scarcity, and a hypothetical company initiation checklist to evaluate how many options the participant opts out of, this study shows that people do indeed tend to opt-out less when they are primed with scarcity.

Introduction

Researchers and policymakers have begun to devote attention toward libertarian paternalism, or soft paternalism, as a decision-making framework that uses psychological methods to encourage groups to make decisions for the general good, without coercion (Sunstein & Thaler, 2003). This is accomplished via the careful selection of default options, taking advantage of people’s psychological tendency toward the default. Thus people can be encouraged to become organ donors by having the option be to opt-out, rather than opt-in (McKenzie, Liersch, & Finkelstein, 2006).

Having less self-control resources has been shown to affect one’s ability to make these sorts of free-will decisions (Baumeister et al. 2008). Poverty, in particular, has a variety of negative effects on cognition, such as having limited cognitive capacity (Mani et al., 2013), being more prone toward economically undesirable behaviors such as overborrowing (Shah, Mullainathan, & Shafir, 2012) and failure to enroll in assistance programs (Bertrand, Mullainathan, & Shafir, 2004). The question, then, is whether economic scarcity causes people to opt more for the default. If this is the case, then libertarian paternalistic policies, will disproportionately affect people currently undergoing money issues, or are living in poverty.

Method

This study used the methodology of Mullainathan & Shafir (2013) to prime scarcity in the lab, specifically, a game they developed called “Angry Blueberries”. In this game, the participant is randomly assigned to one of four conditions. Two are “scarce” conditions, where the player is given only three blueberries to shoot per level, and thirty overall, and two are “rich” conditions, where the player is given fifteen blueberries per level, and one hundred overall. Within each pair, half of the participants are assigned to the borrowing condition, where they are allowed to use more than their allotted number of blueberries per level, at the cost of twice the number of blueberries from their total. This is useful if a player wants to attempt to clear a level and earn the level-clear bonus. The other half are not given the option to borrow from future levels.

After the game, participants completed an online survey that was framed as a corporate entry survey, giving the participant eight options to opt-out of, such as subscription to the company newsletter, and willingness to work overtime.

Experiment

Forty subjects were recruited using Amazon Mechanical Turk, for $2 payment each. The average age was 31.3 years, and 19 of the subjects were male, and 21 were female.

Due to small sample size, the borrowing and not borrowing conditions were grouped together to form two conditions—scarce, and rich. Participants were randomly assigned a condition by the game server. The data between the Angry Blueberries game was matched with the survey results.

A paired t-test revealed that scarce participants (N=24, mean ± SD, 6.5 ± 3.04) did not significantly opt-out differently than rich participants (N=13, 8.46 ± 2.85), with t(47)=-1.60, p=0.12. The possibility existed that grouping borrowing and non-borrowing groups together affected the data, so to maximize the possibility of discovering an effect, a second t-test was performed between the borrowing conditions of both groups. This was because the scarce-borrowing condition was hypothesized to cause the most cognitive load, since not only did the player have to mind the limited ammunition, but also had to mentally consider the possibility of going “into debt” in order to take risks. The rich-borrowing condition was hypothesized to be the least cognitively loaded, because the rich player, distracted and eager to finish the experiment, could simply shoot mindlessly and waste all 100 blueberries. In this scenario, a suggestive difference was found between scarce-borrowing (N=16, 6.06 ± 2.98) and rich-borrowing (N=8, 9.25 ± 3.06), with t(24)=-1.92, p=0.07. The rich-borrowing participants were more likely to opt-out of more defaults than the scarce-borrowing participants.

Discussion

The major difficulty of analyzing the data is the small sample size. Even though the computer generated the conditions evenly, the participants in the rich condition were much more likely to drop out of the experiment. Their Angry Blueberry game took much longer, since they had three times as many blueberries to expend. This resulted in there being nearly twice as many scarce participants as rich ones, and could also bias the participants toward those who need the payment more, or who are less pressed for time.

Another question is whether the scarce condition participants were being primed with scarcity, or whether the rich condition participants were being primed with abundance. A control condition where the participant proceeds directly to the checklist could clarify this.

The results are suggestive, however, and the possibility of people under scarce conditions “going with the flow” with opt-out forms is unsurprising, given the research showing how people in poverty fail to enroll in economic assistance programs (Bertrand et al., 2004). The question of further research is whether this affects poor people in serious ways—for example, with legal documents, tax options, or moral issues such as organ donation.

References

Baumeister, R. F., Sparks, E. A., Stillman, T. F., & Vohs, K. D. (2008). Free will in consumer behavior: Self-control, ego depletion, and choice. Journal of Consumer Psychology, 18(1), 4–13. doi:10.1016/j.jcps.2007.10.002

Bertrand, M., Mullainathan, S., & Shafir, E. (2004). A Behavioral-Economics View of Poverty. American Economic Review, 94(2), 419–423. doi:10.1257/0002828041302019

Mani, A., Mullainathan, S., Shafir, E., & Zhao, J. (2013). Poverty Impedes Cognitive Function. Science, 341(6149), 976–980. doi:10.1126/science.1238041

McKenzie, C. R. M., Liersch, M. J., & Finkelstein, S. R. (2006). Recommendations Implicit in Policy Defaults. Psychological Science, 17(5), 414–420. doi:10.1111/j.1467-9280.2006.01721.x

Mullainathan, S., & Shafir, E. (2013). Scarcity: Why Having Too Little Means So Much. Macmillan.

Shah, A. K., Mullainathan, S., & Shafir, E. (2012). Some Consequences of Having Too Little. Science, 338(6107), 682–685. doi:10.1126/science.1222426

Sunstein, C. R., & Thaler, R. H. (2003). Libertarian Paternalism Is Not an Oxymoron. The University of Chicago Law Review, 70(4), 1159–1202. doi:10.2307/1600573

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