Nudging towards sustainability: Small changes, big impact

In the complex landscape of economic development, Vietnam stands at a critical juncture. As a developing country facing severe environmental challenges, the nation needs innovative approaches to sustainability that go beyond traditional policymaking.

Enter behavioural economics – an innovative lens that reveals how subtle interventions can drive meaningful environmental and economic change.

This is a new branch of the economics discipline that draws on other social sciences including psychology and sociology to better understand economic and business decisions.

Behavioural economics challenges the traditional economic assumption that humans always make purely rational decisions. Instead, it recognises that our choices are influenced by psychological, social, and emotional factors. For Vietnamese businesses, this insight opens up various possibilities for sustainable development.

The power of the "nudge"

An "environmental nudge" is a subtle environmental or design intervention that guides people towards more sustainable choices without removing their freedom to choose.

For businesses wanting to become “greener” in their operations, they can consider simple workplace strategies such as placing recycling bins strategically, adding notes near light switches showing CO2 emissions saved by turning off the lights, or designing temperature controls that discourage unnecessary air conditioning.

The power of behavioural economics is that we change people's behaviour by changing the environment. So, these seemingly minor interventions can reduce resource wastage and promote environmental consciousness.

Economic rationale for sustainability

Contrary to the misconception that sustainability is costly, behavioural economics demonstrates that small changes can drive substantial cost savings. Particularly for Vietnamese small and medium enterprises struggling to survive, these strategies offer a dual benefit: reducing expenses while contributing to environmental preservation.

Large firms have even more potential. By investing in green technologies like solar panels, modifying production procedures, and embedding sustainability into corporate culture, they can lead meaningful changes.

A call to action

Developing and developed economies alike are seeking innovative approaches to sustainable development. Behavioural economics offers a universally applicable framework that can be adapted to diverse cultural and economic contexts.

We can learn from each other much easier now with technology and internet connectivity. What works in one context can be adapted and refined for another, creating a global knowledge ecosystem around sustainable practices.

The message for businesses is clear: The most effective sustainability strategies are not about restriction, but about smart design that makes sustainable choices feel natural, rewarding, and intrinsically valuable.

Story: Dr Van Ha, Senior Program Manager of Economics, The Business School, RMIT University Vietnam

Masthead image: SKW – stock.adobe.com | Thumbnail image: Monster Ztudio – stock.adobe.com

Contact Dr Van Ha for deeper insights into:

• Sustainable development
• Development economics
• Foreign direct investment
• Firm performance
• Institutional quality
• Human development and inequality

Please send your media enquiries to communications@rmit.edu.vn.