Monday, April 6, 2009

Psycho-strategy of Obama money men...

The behavioral science behind Barack Obama’s fundraising strategy

April 6, 2009 by nudgeblog

During the 2008 presidential campaign, you may remember a unique fundraising strategy by the Barack Obama campaign. About a week or so before the end of each quarter, just before fundraising totals were to be reported to the Federal Election Committee, the campaign would unveil the following offer: A donation of any size, given before the end of the quarter, would enter the donor in a contest from which five people would win the opportunity to sit down for an intimate dinner with the candidate himself.

It just so happens that this strategy comes straight out of the lessons in Nudge. One common bias among humans is the tendency to overestimate tiny probabilities. This bias explains why lottery tickets are so popular. People think the odds of winning are slim - but they don’t think they are as slim as they actually are! By tying fundraising to a common bias, the Obama campaign was able to create a terrific nudge. It helps, of course, to have a candidate whom lots of people want to have dinner with. Still, don’t be surprised if this becomes a staple of fundraising strategies for all candidates in the future.

That’s just one of the tidbits recently unveiled in a terrific Time Magazine piece about a “behavioral dream team” that advised the campaign, including Richard Thaler and Cass Sunstein. Some of the other ideas will be familiar to Nudge blog readers like automatic 401(k) enrollment, incremental tax rebates instead of a single lump sum, and prompting people to take action by telling them that lots of other people are already doing so.

Other tidbits of interest to readers:

Obama has a community organizer’s appreciation for human motivation, and his rhetoric often sounds as if it’s straight out of a behavioral textbook. He has also read Nudge, which inspired him to pick his friend Sunstein — best known as a constitutional scholar — to run the Office of Information and Regulatory Affairs, the obscure but influential corner of the Office of Management and Budget where federal regulations are reviewed and rewritten. “Cass is one of the people in the Administration he knows best,” says Thaler, the founder of behavioral economics and co-author of Nudge. “He knew what he was doing when he gave Cass that job.”

We’ve written about the influence of social norms and cues on voting. The most consistent result from literature about how to increase voter turnout rates is that personal contact makes the biggest impact; far more than direct mail, email and texting, and phone calls. Personal contact is expensive, but Obama had an army of volunteers that lowered its cost dramatically. Personal contact isn’t the only get-out-the-vote strategy, though.

In a 2005 study, Alan Gerber of Yale got Michigan voters to increase their turnout an amazing 8.6% with a single peer-pressure mailer that listed the previous voting records of their neighbors and noted that a follow-up would be sent indicating who voted this time. (The Obama campaign actually priced out a similar mailer but decided not to risk a backlash.)

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