The Power of Default Choices: Paper Summary

In order to figure out how defaults affect our decision-making, the researchers conducted a literature review of 58 default studies, with a sample totalling 73,675 subjects. The selected studies came from journals including Science, Journal of Marketing Research, and Quarterly Journal of Economics. Together, they present a varied landscape of default choices across fields.

Defaults have an undeniable effect on choices. When an option is preselected, the chances of that option being chosen go up by 0.63–0.68 standard deviations. In studies with a binary outcome, this means the default choice gets an impressive boost of 27.24%.

But as you might expect, defaults aren’t universally effective. Most studies showed the positive impact of defaults, but a handful remained inconclusive about their effectiveness. Two studies even recorded negative results from the use of defaults, though this was a rarity.

And defaults aren’t equally useful everywhere. Their effectiveness depends on the sector in which they were implemented. For example, the study found that defaults were more impactful in consumer-centric domains than environmental spheres. 

In the end, the researchers settled on two key factors in the success of defaults: The concept of endorsement comes into play when defaults are seen as implicit nudges. This can steer decision-makers towards the preferred choice. Second, the principle of endowment reinforced defaults that matched the status quo – and we’re always inclined to stick with the status quo.

The results of this study are pertinent to policymakers, business leaders, and anyone keen on shaping societal outcomes. The key takeaways included:

The Power of Defaults: Knowing the significant influence of defaults can help us to change a wide variety of policies. For example, if a government wants to get more residents to use green energy, the environmentally-friendly option can be set as the default option.

Consumer vs. Environmental Domains: The different results in the consumer domain and the environment domain suggest that different strategies should be used spending on the context at hand. Businesses in consumer sectors can effectively use defaults to guide consumer behavior. But those in environmental domains might need to rethink their strategies, as defaults might not be as influential.

Beyond Just Setting Defaults: Endorsement and endowment make defaults more powerful.  It’s not enough to simply set a default. It needs to be framed so that it taps into the familiar or comes as a respected recommendation.

Defaults have a significant influence on the choices we make. We’re far more likely to become organ donors or enroll in savings programs when the choice is pre-selected for us. However, defaults aren’t all equally effective. Their impact hinges on how and when they’re presented to decision-makers.

In our efforts towards a better world, choice architects should strive to design defaults that mind the findings of the past – not every default will see similar results.