Assignment: Nudge theory and recycling – Behavioural Economics experiment plan

The Casual Link to Opportunity

Assignment: Nudge theory and recycling – Behavioural Economics experiment plan

9 January 2020 Uncategorized 0

Semester 2-2019 – QUT

EFN428 Behavioural Economics

Task: The Research Essay

This assessment comprises of two parts:

1) a short proposal document detailing the selected topic and outline, upon which students will receive feedback.

2) a 2000 word research essay.

You are to select your own research topic. 

“Recycling nudging – when do intentions and outcomes diverge”

Alternate essay title: “Thank you for not recycling.”

By Adam Atkins, QUT

1.    Outline:

Given the opportunity would you as a consumer place a used drink bottle into a ubiquitous yellow lid recycling bin or into the common unmarked or red lid garbage waste bin?

If you had drink bottle in your hands now, how much out of your way would you go a to find a nearby recycling bin? Would you hoard it for a container refund scheme, or not care and just dispose of it? Could your preferences be changed with new information?

If you had to sort waste, how careful would you be which bin it goes into, if you knew what happened after you disposed of the item, and what the consequences were?

This proposed experiment essay’s hypothesis is that

  1. there is a normal distribution of preferences in recycling common items:
  1. Most subjects are within 2 standard deviations of the average and will preferring to recycle items when not too inconvenient.
    1. A few enthusiasts will be recycle no matter what, and for example use container deposits refund schemes.
    1. A few will be indifferent to what bin is used.
    1. A few may be aware of the problems with recycling and make decisions accordingly.
  • Given new information, that these preferences distribution with shift to either to more or less recycling depending on the new information given.

This experiment plan aims to test the hypothesis with a control group and two treatment groups and a simulated waste sorting exercise.

2. Literature review

The guiding philosophy for this experiment is “Nudge Theory” made famous by Richard Thaler and Cass Sunstein the book “Nudge.” One of the essential theses of this book is that real human are not the mythical homo econimicus that economists imagine. Instead, “that each of us thinks and chooses unfailingly well, and thus fits within the textbook picture of human beings offered by economists” (Thaler, Cussman 2008 p7-8.).

Behavioural economics challenges the notion that humans are perfectly rational interest maximising economic agents. Human do things for reasons that are not always explainable with economic theory. In the absence of totally rational economic agents we do observes cognitive biases in human behaviour. These biases include heuristics – mental shortcuts that are good enough for the cognitive effort used.

In the past 30 years it has become accepted cultural practice that people should recycle where possible. In 2014 a national report stated 60% of waste in Australia is sent for recycling (ABC 2014). This pro-recycling notion is the dominant narrative in waste management. There was a panic that landfill space would run out, and something had to be done to reduce waste to ostensibly save the local and national environment. Government and community educational campaigns were very successful at changing practices from very little to significant majority of potentially recyclable items going to recycling schemes. Virtually all Australian local municipal governments provide recycling bins, with trucks to collect potentially recyclable items, and take the items away for processing. The cultural change has been so successful that people report a positive feeling when they put a recyclable item into a recycling bin, and a negative feeling when there is no recycling bin to deposit an item into.

In 2018 and 2019 a number of investigative journalism pieces and articles emerged highlighting that the economics of recycling. This came to public attention with the ABC Corners report after China refused to accept any more Australian recyclable waste. Some pieces covered that many items such as plastic containers and glass were in fact not recycled. The glass was wasted and stored, too expensive to actually recycle into remade glass, or disposed of in dumps. That plastic containers and bottles were not remade into new bottles, but were instead shipped to China or Malaysia and simply burned, creating noxious fumes.

Economic analysis of the recycling industry revealed that many items were in fact not recycled. That there was no commercial industry that could do recycling without significant government support. Further and more shocking was that the process of recycling meant consuming large amounts of fuel/energy, water, land, money, human resource and time, and that all of this was wasted for a net negative impact  to the environment. The economics did not stack up and it was perversely better for the environment to send potentially recyclable items to landfill like common waste.

This experiment seeks to test the following biases:

Anchoring – are people more likely to anchor their responses based on the treatment ie with new information provided that provides an anchor?

Status quo bias – Will subjects maintain the status quo of the dominant recycling narrative and have the same preferences outcome no matter the treatment?

Herd mentality – will test subject do what they perceive everyone else to be doing, assuming everyone else is recycling as safety in numbers?

3.     Idea:

The proposed method of testing the hypothesis is a computer simulation with volunteers recruited from the public. The test subjects are expected to be random, pedestrians in a busy public location such as the Queen Street Mall in Brisbane City, Queensland Australia. The idea is to test what subject’s current preferences are, and then test if these preferences change after the treatment.

4.     Incentives

The incentives consist of:

  • A show up fee of $10 and
  • An election on where to allocate an additional $10.

A standard minimum show up fee is proposed as $10.

The election is for the conclusion of the experiment. The test subjects will be asked to make the following choice elections:

  1. To donate $10 to a tree planting charity, that is an option not related to recycling;
  2. An opportunity to send $10 as a donation to a pro-recycling cause with the goals of recycling more items or;
  3. An opportunity to send $10 as a donation to a pro-waste management cause, with the goals to reduce waste in water, energy etc from wasteful recycling activities, and thereby be better for the environment.

The election of the test subject will also be recorded as an additional data point.

c. Design:

Each experiment is intended to run for 20 minutes per test subject.

  • 5 minutes to sign documentary consent, fill in a brief survey on age, sex and postcode.
  • In brief on what the experiment actions are and how to participate.
    • That this is an experiment on recycling.
    • No harm is expected to be caused to them.
    • The experiment was approved by the ethics committee.
  • 5 minutes of Module A.
  • 1 minute information, if part of treatment group 1 or 2.
    • Given with an information card for them to read, and the experiment assistant to read the card out loud in a neutral voice.
  • 5 minutes of module B.
  • Election choice.

During the experiment a computer simulation will be given to interact with where participants are asked to sort simulated waste items into either a virtual red lid garbage bin or a virtual yellow lid recycling bin.

Items are either:

  1. Non-recyclable waste – food scraps, plastic wrapping, sanitary waste etc.
  2. Potentially recyclable waste – glass bottles, plastic bottles, plastic containers etc.
  3. More recyclable waste – metal cans, clean paper, clean cardboard etc.

The experiment will run with two modules:

  • Module A: for 5 minutes the waste items are presented as a representative picture or icon, at random at varying speeds. If the test subject is too slow, the default is for the item to the bottom of the screen, missed.
  • No less than 30 sequences of any item will be presented, for a total of at least 90 choices, so that there is at least 90 of any item shown.
    • Test subjects sort the items into either red of yellow bins and we measure what the subject’s default recycling preferences are. The intent of Module A is to establish a baseline distribution for each test subject.
  • Module B: for 5 minutes the items are presented in repeated series of three at a time, at varying speeds. If the test subject is too slow, the default is for the item to the bottom of the screen, missed.
    • Three items of non-recyclable, 3 items of potentially recyclable and 3 items of more recyclable items.
    • The subjects could send all three repeated items to the same bin, or send some more or less to either bin.
    • No less than 30 sequences of each item will be presented, for a total of at least 90 choices, so that there is at least 30 of any item shown.

Treatment groups

Test subjects will be randomly assigned into three treatment groups.

  • The test group 1 has a session of module A, then presented with new information.
    • The new information is positively supporting of more recycling.
      • It will be presented that while items such as glass and plastic bottles might not have been recycled enough lately, a new technique is available where these inert waste items would be used somehow such as crushed and added to concrete to build new hospitals in developing countries etc.
        • Testing Anchor bias.
      • That 90% of people will recycle wherever possible
        • Testing Herd Mentality.
    • Test group 1 will then do module B.
    • We will see if there is any change in preferences.
    • We will see what election they make.
      • Assumed to be either pro-recycling or plant trees.
  • The test group 2 has a session of module A, then presented with new information.
    • The new information is critical of recycling as actually bad for the environment. It explains that recycling has largely been a hoax on the public and does much more harm than good.
      • Testing Anchor bias – will the new information anchor outcomes.
    • That while metal cans and paper are usually recycled, very few semi-recyclable items are.
    • That is better for the environment to dump into properly management waste management facilities, like landfill.
    • Any item that is not clean is just not recycled.
    • That to actually recycle potentially recyclable items it would be much more expensive that their taxes must be increased.
    • That given this exposes that 50% of people are recycling less out of care for the environment.
      • Testing herd mentality.
    • We will see what election they make.
      • Assumed to be either pro-waste management or plant trees.
  • The test group 3 are the control group. They are is given module A and then module B. They do not receive an information treatment.
    • We will observe what preferences they have in module A, and if these are repeated or different in module B.
      • Testing status Quo Bias.
    • We will see what election they make.

We then collect and analyse the results of test group 1, test group 2 and test group 3 (control).

Data

·         Participant basic data – age, sex and postcode. Find out if any predictors from these features.

·         Module A and B actions

·         Treatment groups 1, 2, 3. If the control group and treatment groups behave differently.

·         Election donation which cause do the subject donate to?

 

Limitations:

  • The computer simulation is limited by the availability of programming and user interface beautification. The test may be very basic in appearance with a lack of funding. Ideally there would be a picture representation, and then a finger drag and drop on a tablet touch screen computer.
  • At a minimum the participant must be able to look at the item, and determine quickly what category the item is and then decide which bin to put the item. The graphics may be too basic. A drag and drop function would be really nice, but a simple click box may be sufficient, or mouse click.
  • Participants are self-selecting and may not be a representative sample of the population.
  • If the test is conducted at university then subjects are mostly university students.
    • If conducted in public then mostly members of the public with spare time such as retirees ie not busy rushing to or from work.
    • A weekend in a public place might be a preferable time to do the experiment on the assumption people are not rushing and have time to stop for 15 minutes.
  • Participants may unresponsive to the new information between module A and B. Predisposed more one way and unchanging. Status quo bias very strong.
  • That it may be expensive but more beneficial to set up the testing in a public place and recruit random pedestrians to undertake the experiment, such as in a tent in a mall. Easier to run on a university campus.
  • The anti-recycling (pro-waste management) message may not be sufficiently shocking to shift preferences. This message may need to be carefully crafted so that it is potentially persuasive enough to shift preferences.
  • The pro-recycling message may be ineffective since it is assumed the status quo is to be biased in favour of recycling, in hope.
  • It would be interesting to place the items on different sides of the screen, either closer or further away from a particular bin, and see if test subject drag the item to the right bin if it is farther away.
  • It would be interesting to do the same test with tangible waste items hand sorting, rather than a virtual sorting, to see if there is any difference. Placing some bins further away might have some effect.
  • Could collect more survey data from participants. Age, sex and postcode is a minimalist collection.

Expectations:

That the recycling distribution preferences can be measured and that nudging to either more or less recycling can be measured and predicted. Further that the final election on where to send a $10 donation to a recycling or waste management cause will be interesting if it matches the test results.

 

Conclusions

It is expected that the pro-recycling dominant narrative will be influential on test subjects and that there will be a status quo bias towards more than less recycling. What will be fascinating is what change is observed between modules, and what differences are observed between the three treatment groups. It will also be interesting to collect data on the election choices of each participant and if the election matches the treatment or diverges.

It was confronting to learn of the recycling problems and what really occurs after waste is deposited into a recycling bin. Perhaps more research can be conducted on this subject matter. It would be probative if this experiment’s results are replicable in different cities and contexts. It would also be probative for social and environmental benefits if there was positive policy change that in some way results from these research findings.

Bibliography

Richard Thaler, Cass Sunstein (2008) Nudge: Improving Decisions about Health, Wealth, and Happiness, Yale University Press.

Brisbane city council:

https://www.brisbane.qld.gov.au/clean-and-green/rubbish-tips-and-bins/recycling-and-reducing-waste

Articles:

ABC four Corners

https://www.abc.net.au/news/2017-08-07/recycling-companies-forced-to-stockpile-glass-industry-crisis/8778088

The Guardian https://www.theguardian.com/environment/2019/aug/17/plastic-recycling-myth-what-really-happens-your-rubbish

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