FEATURE6 February 2019

How ‘sludge’ joined our vocabulary

x All content on Research Live and in Impact magazine is editorially independent from sponsorship or other commercial arrangements.
Find out more about advertising and sponsorship.

Behavioural economics FMCG Features Impact Media Retail Travel

From pressure selling to hidden add-ons, companies are profiting from people’s innate traits and fallibilities. Crawford Hollingworth reflects on the concept of sludge, looking at what regulators are doing to crack down on the behaviour.

Scrabble-tiles

Ten years on from the conceptualisation of ‘nudge’ by Richard Thaler and Cass Sunstein, with the publication of their bestselling book of that title, the word is established in our vocabulary. As an evolutionary development, ‘sludge’ is becoming recognised as its antonym. Thaler and Sunstein asked that people ‘nudge for good’, but it’s clear that companies and organisations don’t always do this. They can – and are – taking advantage of innate consumer traits and fallibilities, such as inertia and inattention. They do this knowing they can profit from consumer weaknesses and biases, but in ways that hurt, rather than promote, consumer welfare.

Sludge has been coined to label, shame and, increasingly, regulate against this sort of behaviour. It includes hidden add-ons, long and confusing fine print, complex subscriptions, or bureaucratic red tape and paperwork.

Thaler recently defined two types of sludge: one discourages behaviour that is in a person’s best interest, such as claiming a tax rebate; the other encourages ...