Be Your Own Choice Architect

In their insightful book, Nudge: The Final Edition, authors Richard H. Thaler and Cass R. Sunstein talk about individuals who can be labelled as “choice architects” because of the power they wield through simple actions. They explain by giving the example of a director of food services for a chain of schools, who could affect the food choice of children by simply rearranging the food items at the display counter of the cafés. In a way, she could nudge children into eating certain food items.

This festive season, when you will no doubt go out with your shopping bag or log into your favourite app, be ready to encounter several similar “nudges” that might entice you to choose or buy certain items. One of the ways to navigate through this maze of nudges is to create some of your own.

Explaining “choice architecture” in more detail further in the book, the authors elaborate on how there was a higher possibility of making people behave or follow a certain course of action by not just nudging them in a certain direction, but also ensuring that the nudges make it easy for them to follow it. “If you want to encourage some action or activity, Make It Easy,” they say. So, don’t just be the “choice architect” for yourself, but while formulating those nudges, ensure they are easy to follow, too.

First, make a list of what you plan to buy to get past the shelves of nudges beckoning at you. Get into the details while making it. Don’t just include the expensive item heads like a consumer good or house repair, but also the smaller ones like all the items you’ll need for the string of festivals round the corner, the gifts you plan to buy for your loved ones for the different occasions, the items you plan to cook or order, and so on.

Second, bifurcate the list as per your needs and wants. You may want to get the most expensive lighting for your home, but diyas with some stringed bulbs is all you may need to make your home look beautiful. But don’t forget to assess the needs of each of the family members—from a pair of spectacles for the oldest member to the first cycle for the youngest.

Third, recalibrate your budget by taking into account all the extra funds you can lay your hands on. But don’t just allocate everything to your spending list, keep a percentage for your saving as well. All the shopping you did all year round (there was a time when most households went on a spending spree only during festival time, but that’s not the case anymore) may help you trim that spending list to fit into your budget. For instance, you may have already picked up a dress fit for the festivities a few months ago because you liked it then but couldn’t find an occasion to wear it.

Fourth, make another list—one of don’ts. Don’t dip into the savings part. If you fall short of money, when it comes to spending, don’t be in a hurry to borrow. Assess if you can repay the debt before taking one. If you are already in debt, prioritise repaying before everything else.

Making your own list of nudges doesn’t mean you don’t indulge yourself this festive season. The key is in striking the right balance but that can happen only if you are in control. How you spend and what you spend on are deeply personal decisions but being the “choice architect” for yourself can “make it easy” for you and ensure this year’s festive spending does not result into financial distress.

Nidhi Sinha, Editor­, Outlook Money