The Power of Defaults

A reminder that defaults matter a lot

Hi friends,

Did you know that Google pays Apple over $10B a year to remain the default search engine on iOS? To uderstand why, let’s talk about the default effect.

The below chart shows the organ donation consseveralr a number of countries in Europe. What’s striking is that countries that one would imagine are fairly similar such as Denmark and Sweden have large differences in consent rates.

What might explain these differences?

In countries such as Denmark and Netherlands, organ donation consent is “opt-in”, meaning people have to fill in a form and check a box to choose to donate their organs. In countries such as Austria and Sweden, organ donation consent is presumed. People who don’t want to donate their organs have to essentially fill out a form to “opt out”, meaning by default people consent to donate their organs.

The large difference in organ consent rates is essentially caused by a difference in defaults in the two sets of countries and illustrates the default effect.

Now if you’re getting worried about your free will, fret noseverale a number of reasons for the default effect — some of which are quite rational.

Choosing something that isn’t the default requires some effort. And we all know that people are generally lazy and don’t want to put in the effort.

The effort required could vary from a lot (such as having to fill out a form and mailing it in to change something) to almost nothing (such as changing something from the default option on a dropdown while filling out a form online).

In general, “laziness” aside, it is rational for a user to stick with the default if the incremental benefit from switching is less than the effort required to do so.

An area where this plays out is default apps on phones. For example, Google Maps is widely regarded as being better than Apple Maps on iOS, but Apple Maps comes pre-installed on iOS and is the default. Unsurprisingly, it was used almost 3x as often as Google Maps¹ on the iPhone over a year after launch.

One thing to note is that when it initially launched, Apple Maps was so bad that many users felt the need to install Google Maps. As it has continued to improve, even though Google Maps might still be better since the gap has narrowed, the “cost” to switch is about the same as it was before, it makes sense for fewer new iOS users to make that switch because the cost is the same but the benefit from the switch is less for them, so one can imagine over time, less and less new iPhone users will feel the need to download Google Maps.

Often the default (especially if the person with a choice trusts the intermediary providing the options) is viewed as the recommended option. In such a situation, switching away from the option might be deemed risky, in that the person making a decision might feel that they aren’t considering some factors that the knowledgeable party made when setting the default.

This factor tends to be particularly important when people decide between choices that they aren’t very familiar with or are complex or when the party presenting the choices is trustworthy.

Additionally, people tend to view the default option as the base case (or “already in the bag”). If outcomes are uncertain and switching to another option could lead to a gain or a loss, then people tend to be more averse to the potential loss from the switch, and so tend to stick with the default.

Over time, it’s possible that the way defaults are set can change the meaning of the choices themselves, and so over time lead to even more people choosing the default option, thus re-enforcing the default effect.

Going back to the organ donor example presented at the start, the chart below shows how people in an opt-in country perceive donating their organs relative to those in an opt-out country. As you can see, in the opt-out country, donating organs is viewed as not a big deal. But in the opt-in country, it’s viewed as a very generous act, akin to giving away half your wealth. Other options are viewed similarly, indicating that cultural and other differences are minimal.

What this essentially shows is that because of the default effect, the actual actions associated with the default are over time viewed as less substantial. In such a way, the setting of the default has actually over time changed people’s views of whether a certain act was a big deal or not.

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The default can clearly nudge people and influence their choices. As one might imagine, it has been and can be used both for good and bad.

Given the default effect, here are some things for product builders to keep in mind when building products:

To end with, here’s an anecdote from a recent filing on just how much defaults matter.

Google is believed to spend upwards of $8–10B a year on being the default search engine on iOS. That’s not all. In fact, on mobile, Google contracts with Apple, Samsung, Motorola, most browsers, and three US telecom carriers — AT&T, Verizon, and T-Mobile to ensure its search engine is set as the default and comes preinstalled on new phones.

Per the justice department, they’re doing so to maintain their search dominance:

In fact, a few years after the move from Apple’s default change from Apple Maps to Google Maps, Google did an internal analysis on what the impact of Apple switching the search engine on iOS would be, and the answer was a lot (but redacted from us), which is why the started to pay the $8–10B sum to ensure they remain the default.

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