By Default – The Power of Default Setting

Have you used the power of default setting in your business? Post GDPR it is time to stop and think through the default settings you may have used earlier.


Manas Ingle

Role: Manas is a guest bloggers at Kinant. Opinions expressed are his own and not necessarily those of Kinant.
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In 2003, Eric Johnson and Don Goldstein conducted a survey where people were given two default choices,

  1. People were informed that the default was not to be an organ donor (Opt- in) and
  2. The other set of people were told that the default was to be an organ donor (Opt-out).

The result of this survey was surprising. In the first default choice where people had to opt-in to be an organ donor, only 42% of people opted-in or choose to become an organ donor. Whereas when people had to opt-out and make a decision that they do not want to be an organ donor, only 12% of people opted-out, 82% of people choose to remain as organ donors.

All the major countries in European Union have laws and regulation relating to organ donation and it is exciting to see that countries with default opt-out option have an average of 97.55% of organ donors.

Below is a chart which clearly shows the difference between the numbers of organ donors in countries where default is opt-out and the numbers of organ donors in countries where default is opt-in.

Opt-Out Vs Opt-In Consent Explicit Consent (opt-in, gold) and Presumed Consent (opt-out, blue)

This study demonstrates one fact that presumed consent accompanied with an option of opting out works far more efficiently, sticks to people and develops adherent behaviour in people.

The primary question that has to be answered here is why do default rules stick?

Before moving ahead and answering this question let’s take another example to understand the realms of applicability of default rules in modern day businesses.

Default rule setting has aided a company to capitalise on a subscription-based business model and rule the OTT entertainment segment all across the globe. Netflix provides its services on a subscription-based model where a subscriber gets the first month's service free of cost and the subscriber has to pay only from the second month. The FAQ section on the Netflix website says:

“Try us free for 1 month! If you enjoy your Netflix trial, do nothing and your membership will automatically continue for as long as you choose to remain a member.”

Folks in the industry call it as Negative Option Marketing, where people accept a free product are automatically enrolled as members of the subscription plan which carries a monthly fee.

Recently Paytm a mobile pre-paid instrument in India introduced an option where a user can automate the process of bill payments. A user may now fix a date for bill payment, the Paytm wallet will by default pay the bill on that particular day until a person opts-out.

The point is, default rules or settings makes life easier and simpler. There are many other use cases - Think of SaaS automated renewal, think of moving from free to paid services etc.

Default rules stick because it is an efficient mechanism of making people do something or not do something. They stick due to the power of inertia, it exploiting and thriving on basic human tendencies such as forgetfulness and procrastination.

People generally like things which do not require much effort. Or it is perhaps because someone else has to take a decision.

“.. the preferred approach is to select the default rule that reflects what most people would choose if they were adequately informed”. -- N.Craig Smith . Smart Defaults: From Hidden persuaders to adaptive helpers.

Default rules have existed even in law. For example, copyright ownership rests with the employer, in the employer-employee relationship, unless otherwise specifically agreed upon. The Hindu Succession Act, 1956 has some default settings unless and until a person executes a Will.

With the new General Data Protection Regulations (GDPR), which becomes effective end May 2018 in European Union, the active consent, ie. Active opt-in from a data subject is required to use personally identifiable information. This sure has wide repercussions in various business models.