Nudging for $'s
I recently participated in a terrific Harvard Business Review webinar entitled: "Nudge Your Customers: Reducing Risk With Better Choices." Webinar protagonist and behavioral economist Daniel Goldstein of Yahoo Research and The London Business School offers compelling practical advice on how to “nudge” citizens and customers to perform behaviors that on the surface might appear to contradict their utility-optimizing, economic man, self interest. Goldstein's experimental work follows that of economist Richard Thaler and predictably irrational researcher Dan Ariely.
I can't swear to it, but I believe my extended family got nudges of a kind we'd prefer not to receive on our recent annual vacation to the Outer Banks of North Carolina. Like it's been all summer on the Atlantic, the weather in OBX was hot and humid, with little solace from cloud cover and rain. Wary as always of too much sun as we laid on the beach and lounged by the pool, my family members continually lathered on high protection (and high cost) sun screen.
I prefer my screen as cream in a tube. It's certainly the most economical way to deploy: generally one purchase will hold me for the entire week. And the cream “nudges” me to take serious its application. Alas, cream in the tube was scarce at the convenience stores and grocery markets near us, with expensive pump and aerosol sprays much more prominent. Sprays are inefficient and often fail before dispensing all their meager contents. And spray users seldom rub the lotion into their skin, which is essential for full protection. Even when the packaging doesn't fail, my estimate is that spray offers only one third the applications per unit cost of cream, and probably provides less sun protection as well. By making spray much more visible in store displays, the store owners and sun screen vendors were “nudging” the extra dollars right out of our wallets.
Planning for Trouble
Plans, especially those attempting to coax changes in behavior, often come with unintended consequences. As a personal illustration, my wife and I were recently outwitted by our potty-challenged Wheaten terrier. Hoping to reduce the number of inside “accidents,” we installed a fence in our yard where we could banish the dog at predictable times. Rather than simply do her business outside, though, Mangy takes the opportunity to eat plants and drink standing rain water – both of which encourage additional in-house episodes. So the “supply” of such behavior has actually increased, an unintended consequence of our ill-conceived plan.
A similar unintended response, I believe, will occur following construction of a new bridge linking Corolla of the extreme north of OBX with the mainland, purportedly to reduce travel times from Norfolk/Portsmouth. For those who haven't had the good fortune to visit, the vacation core of the Outer Banks is about a 90 mile stretch of ocean, sound and dunes barrier island heaven situated on the coast of North Carolina, just south of the Virginia border. I naively divide the area into 3 parts: the North, a heavily-used 20 mile stretch with tony towns like Duck and Corolla served by a single-lane road; the most populated Central, with standbys Nags Head, Kitty Hawk and Kill Devil Hills along with ample dual-lane highway capacity; and the lightly-traveled South with sleepy towns like Rodanthe, Salvo and Hatteras, the “Nose of America.”
While Central and South are pretty accessible, the same cannot be said for the North. To get to upscale Corolla, vacationers from the mid-Atlantic must travel south 20 miles beyond to cross a bridge, only to face a 20 trip back up the northern OBX to Corolla. On Saturday check-in days, that can mean an additional 2 hours of travel time. What might be 75 minute trip from Norfolk can easily turn into 3 hours.
To “remedy” the problem, North Carolina has recently approved a new bridge connecting the mainland with Corolla. Travelers to Corolla from the north will shave a noticeable amount of time from their commute when the bridge is complete. The thinking also is that with Corolla vacationers removed from most of the 20 mile single-lane road, traffic will decrease up and down OBX North, where during July and August it now often crawls at 10-20 mph.
Unfortunately, it seems that planners are not giving enough consideration to two important points. First, the 20 miles of the North can never be expanded beyond a single lane road. Nature has guaranteed that. So overall road capacity will remain fixed. Second, the new bridge and the proximity to the Norfolk area will create additional demand for OBX North. Sorry Virginia Beach, you just don't compare to OBX. And just maybe those new “Corollans” will want to head south to experience other OBX pleasures?
We've seen an explosion in popularity of OBX in our 20 years of vacationing there – to the point of almost saturation now. And experience in other Atlantic Ocean states confirms demand creation with enhanced beach access. Hopefully, the planned changes won't turn this delightful area into yet another honky-tonk Atlantic beach resort.
As has been a custom the last five years or so, a few of us trudged down to the Oregon Inlet several days at 4:30 PM to see the catch of the day on boats returning from deep sea fishing. Trophy game fish white and blue marlin and feast-enabling yellow-fin tuna are the big prizes. Mahi-mahi is a good-eating substitute when the former aren't running, while tilefish and amberjack are consolation catches. The boats can virtually assure some action, even if it's not the preferred kind. Captains don't want to send anyone home fishless from the $1700 + tip daily tariff.
I wrote an IM article several years ago detailing teenager “research” of comparative charter boat fishing prowess. Our “scientific” assessment at that time suggested that despite the equalizing effects of weather conditions, water temperature, boat equipment, etc., it still seemed that several captains outperformed their peers pretty consistently. We found no evidence to countervail that observation this year. Two of our over-performers from then shined again in 2010. On our 2-visit sample, Tuna Fever and Carolinian matched the best of the rest one day, and over-delivered tuna on the other. Make your reservations now for prime October tuna-running dates!
In a near future article, I'll offer commentary on this year's OBX reading – a book on sports number crunching and another on psychology. The common theme? Behavior and performance is often not in synch with conventional wisdom. What you think you see is many times what you don't get.