Sugar-Coated Sleight of Hand

Phony outrage broke out in the office this morning when we learned that some snack manufacturers had achieved the feat of producing lower-calorie candy bars by simply reducing their size. The smaller bars contain the same proportion of sugar and fat as their high-calorie counterparts – and cost the same price – but there is simply less of it in the package.  At first glance, it seems like another example of marketing sleight of hand. From a behavioural economics perspective, however, the candy-makers may actually be doing consumers a favour. Continue reading

The Auto-Enrolment ‘Nudge’

A discussion about the desirability of nudging techniques became very heated at a recent investor seminar on behavioural finance. Policymakers ‘nudge’ when they encourage people to make particular choices by employing techniques drawn from behavioural psychology. For instance, changing the default status in the company pension scheme for new employees from out-unless-opted-in to in-unless-opted-out tends to increase the participation rate. Indeed, this was precisely the issue that stirred delegates’ emotions. Continue reading