Behavioural Economics is about “changing behaviour without changing minds”. It is about nudging individuals, groups or institutions toward desired actions without going down the well-worn knowledge = awareness = change route. For leaders it is useful not just to identify ways to shift behaviour but also to understand why, often despite best efforts, behaviours sometimes refuse to budge.
As part of our leadership programme, Connect, we heard from two proponents and practitioners of Behavioural Economics: Henry Ashworth CEO of the Portman Group and formerly in No. 10’s Nudge Unit, and Ram Prasad Co-Founder of Final Mile, a consultancy which combines Behavioural Economics with design and cognitive neuroscience to tackle its diverse clients’ challenges. Between them, Ram and Henry offered rich and varied examples of nudge in practice, and a persuasive case for how Connect members might use such approaches in their roles and organisations. While these were mostly met with intrigue and interest, there was an undercurrent of concern – if nudging aims to avoid consciously engaging with those it seeks to change is it manipulation of a dark, underhand, unethical kind?
Before tackling this moral question, what is Behaviour Economics?
Behavioural Economics is based on a model of decision-making quite different to the notion of rational beings making individual choices in isolation of each other and based on facts. During their sessions Ram and Henry drew attention to the many realities of decision-making that inform behavioural economics: below are six.
Reality #1 – Most everyday actions are thoughtless Anyone who has driven home but can’t remember much about the journey will understand how complex tasks like navigating a car through traffic are tackled largely at an unconscious level. If we want to change these automatic actions there are two schools of thought: 1) make the behaviour conscious then alter it; 2) change non-conscious behaviours at a non-conscious level. It goes without saying behavioural economists favour the latter.
Ten people per day were being killed on Mumbai’s suburban railway lines when Final Mile were hired to ‘stop people crossing the tracks’.
After studying the behaviour of those most likely to be hit – young men from low-income communities living close to the tracks – Final Mile realised that the job was to help people cross safely. Stopping crossing was unrealistic. One of the prompts to non-conscious decision-making they introduced were sets of parallel yellow lines on tracks at popular crossing spots. Like the lines near exits on British motorways these improved people’s ability to do something humans find hard – judging the speed of large moving objects and thus to cross safely, all without people consciously knowing what the lines were for.
Reality #2 – Many decisions are made using rules of thumb We humans simply don’t have time to think deeply about every choice we make so we employ heuristics help us. In Nudge: Improving decisions about health, wealth and happiness, authors Thaler & Sunstein list three common types of decision-making shortcuts:
Anchoring: using what we do know to make judgements about what we don’t.
Availability: using the visibility of things as a proxy for their ubiquity.
Representativeness: making judgements based on perceived similarities.
All are useful yet all can lead us astray.
For example, you are statistically more likely to die taking a selfie or due to falling airplane parts than by a shark attack but shark attacks appear disproportionally in films and the media so we misjudge their likelihood. This happens in more mundane settings too, like the workplace, and is something experts in an area are equally prone to.
Reality #3 – All decisions are emotional In his book Into the Silent Land: Travels in Neuropsychology, Neuropsychologist Paul Brok describes a patient with damage to the emotional centres in his brain, who can list the pros and cons of different appointment times but is unable to make a decision between them. Despite the prevalence of metaphors likening our brains to computers we cannot make even simple decisions without emotion.
Ram showed the difference between traditional signage telling people that crossing train tracks is dangerous from around the world – typically red or black capitals saying “Danger!” – and the images used in their work in Mumbai. The image of a terrified man about to be hit by a train (below) was designed to make people feel danger not think it in the setting where the decision to cross is made.
Reality #4 – Defaults often override decisions Changing defaults is a well-known Nudge technique with the most famous example organ donation: in Spain where national schemes demand people opt out the sign up rate is three times higher than in the UK where people have to opt in. This notion has been applied to pensions most recently in the UK and reflects how we often take the path of least resistance separate to any views we may hold.
The Portman Group is the responsibility body for the UK drinks industry and Henry talked about its interest in defaults. Working with restaurants and bars to reduce the Alcohol By Volumn (ABV) of house wines (often the default choice) and to make the ‘standard’ glass size 175ml could reduce the level of alcohol in the typical glass of house wine by 45%. Reducing the alcohol in cans of super-strength lagers and ciders, by reducing the can size or the ABV of the liquid, could equally reduce the units of alcohol consumed by the subgroup of ‘problem’ drinkers who mostly buy them.
These types of approaches are not uncontentious and driving them through involves collaboration with government, manufacturers, retailers, other industry associations and more. They illustrate, however, alternatives to traditional public health approaches based on notions of ‘education’ and ‘choice’.
Reality #5 – We discount the future and avoid loss Ram talked about a vaccination program in rural India that improved rates of attendance by parents – and thus vaccinations of children – by promising a gift of lentils to those who attended. This worked better than previous messages that talked more directly about the health and social benefits of vaccination and supports the notion that nudges work best when they focus on the near-term. While this could be seen as getting people to do the ‘right’ thing for the ‘wrong’ reason it could equally be viewed as a strong example of a cost-effective evidence based solution.
Henry and Ram coupled this notion with the concept of loss aversion. Put simply those who are going to lose something tend to fight harder to maintain the status quo than those with more to gain, thus using fear of loss can be more motivating than the possibility of a gain.
Reality #6 – We go with the Herd Just as physical settings (yellow lines on a railway track) shape our behaviour so do social settings and Behavioural Economists often use approaches that leverage group behaviours and norms. In his book Herd: How to change mass behaviour by harnessing our true nature, Mark Earls talks about the primate’s ultimately social nature, highlighting its important role in our own evolution.
During our Big Change debate, the heart-rending photo of a three-year old Syrian boy being lifted by a Turkish border guard from the sea on the holiday island of Kos was mentioned more than once. The step change in opinion across Europe publication of this photo led to would not have been possible unless we are connected, social creatures, attuned to each other.
There are many well documented examples that show how revealing social norms – what ‘most people’ do or believe – can positively influence behaviours as diverse as anti-social drinking, tax compliance, keeping appointments at the doctors surgery and more. However, this example from Colombia stands out for its inspired and effective use of the strong identity football fans feel to promote a seemingly unrelated behaviour, organ Of course there is much more to Behavioural Economics than this and below we’ve listed some sources to investigate where appetites have been whetted.
Of course nudging is not easy. It involves identifying the behaviour to be changed through patient microscopic observation of reality. It involves letting go of assumptions and framing the behavioural challenge in a way that there are reasons for why people behave they way they do other than ignorance. Approaches cannot simply be lifted wholesale from one context and applied to another. Developing nudges involves prototyping, testing and reiterating them in real life settings, as nudges cannot be researched in standard qualitative or quantitative ways.
But is it Nudging moral? Behavioural Economics attempts to meet people where they are, to understand how we really make decisions not impose on us a rational-choice model of decision-making even Mr Spock struggled to live up to (but then he was half human). It offers tools and approaches to influence the choices people make, many of which work at an unconscious level and all of which can be seen as forms of manipulation. But aren’t all approaches to change manipulation and isn’t manipulation a neutral term which only becomes dark and irredeemable where they reflect the intentions of the manipulators?
Written by Helen Trevaskis. Alongside helping Wavelength design Connect, Helen is Co-Founder of 3C Collective, a social enterprise which designs and commercialises innovative hygiene solutions for those living in slums.
Further Reading on Behavioural Economics: Inside the Nudge Unit: How small changes can make a big difference, by David Halpern. Published by WH Allen. Nudge: Improving decisions about health, wealth and happiness, by Richard H. Thaler & Cass R. Sunstein. Published by Penguin. Predictably Irrational: The hidden forces that shape our decisions, by Dan Ariely. Published by Harper Collins. Free download on practicalities of using Behavioural Economics within Public Policy