The Default Effect

Many decisions are presented to us with an option that has already been chosen. A new phone arrives with its settings already in place, and a website may automatically sign us up for its newsletter. This preselected choice is called the default. Research shows that people tend to stay with the default, even when changing it would take only a moment. Economists and psychologists call this the default effect.

One of the best-known examples involves organ donation. [A] In a 2003 study, Eric Johnson and Daniel Goldstein compared countries in Europe that use different systems. [B] In some countries, people become organ donors only if they sign up, while in others, everyone is a donor unless they choose to opt out. [C] In Germany, which uses the first system, only about 12 percent of people had agreed to be donors. [D] In neighboring Austria, which uses the second system, the figure was over 99 percent.

Why are defaults so powerful? One explanation is that making a decision requires effort, and people often prefer to avoid it. Another is that people may see the default as a recommendation from experts. Whatever the reason, the effect is now used deliberately. Many companies, for example, automatically enroll new employees in retirement savings plans, and the share of workers who save has risen sharply as a result.