Depending on how mindful you are at the time, we routinely notice these things and wonder ‘why?’ Why does it seem so hard for most of us to act in keeping with our good intentions?
With this question in mind, I’ve keenly consumed every book on behavioural economics (BE) I could get my hands on over the past decade. From pop-economics airport reads through to books by Nobel Prize winners that have helped to change the way we understand human behaviour: Nudge, Thinking Fast and Slow and Predictably Irrational.
Time off for good BE
When my interest started to play a bigger part in the consulting work I do in my role at Folk, I thought I’d swot up at the Behavioural Economics program at Harvard Business School in Boston.
After spending time listening to some of the leaders in the field – the likes of Dan Ariely, Max Bazerman, Francesa Gino, John Beshears, David Liabson and others – I reflected on two questions. Firstly, has my understanding of the behavioural factors that drive some of these puzzling and surprising behaviours improved? Probably, yes. At least, better than when I started.
Secondly, and more pointedly, has my judgement and decision making as an individual improved markedly as a result? Not so much, it turns out. I just notice some of these puzzling and surprising behaviours a bit more than I used to.
I work my way through most days happily noticing pretty much every documented bias in my own thinking at one point or another. If there’s a mental shortcut, I’ll take it. It turns out my favourite sport is still jumping to conclusions
What I have learnt is that behavioural economics is much more useful for organisations that want to help people make better decisions.
Whether it’s our health and wellbeing, not making a bad situation worse, or even saving for retirement, behavioural economics can be a powerful tool – particularly when trying to help people who seem to habitually act in a way that seems at odds with their own best interests.
There are many documented examples where a well-designed choice-architecture or relatively simple and low-cost intervention (or ‘nudge’) can have a positive effect to the benefit of all – the individual, people around them and society as a whole.
BETA, the Behavioural Economics Team of the Australian Government, is working to bring this thinking and capability to policy development and service delivery across government, and has done some interesting work around recruitment bias in the public service, retirement savings and more. Folk have been working with BETA recently to help them improve awareness and understanding of BE across the Australian Public Service.
In this and other projects I’m very lucky to work with organisations – across health, education, employment, social services and justice – whose purpose is to help people in a whole range of life circumstances.
So, to the question. Behavioural economics – while eye-opening, often fascinating – isn’t the answer to every problem. But, in the right hands at the right time, it can be a powerful tool in helping organisations and individuals alike, better align good intentions with good decisions.