Can Behavioural Economics Make Us Happy?

Economics was memorably described as ‘the dismal science’ by the Scottish writer and philosopher Thomas Carlyle in the early 19^th Century. So it’s fitting that, in the early 21^st Century there could be lessons on how to be happy from behavioural economics and the behavioural sciences.

Happiness by Design was written by Professor of Behavioural Science at the London School of Economics Paul Dolan. The book is interesting for two main reasons: first, like other books on happiness, it covers a lot of useful research, including Dolan’s own contribution to the work on happiness – he was heavily involved with specifying the measures on happiness which are now included in the work of the Office for National Statistics. 

But Dolan focuses on the personal, showing how to implement findings from the research. The second half of the book includes practical tips to help us be happy. Not by thinking about it, and not by devoting ourselves to 24x7 hedonism (which would be pretty exhausting). Rather, by using insights and techniques from the behavioural sciences. And concentrating on finding the right balance between pleasure and purpose. At the risk of stating the obvious, the book recommends that we spend more time on the things that make us happy, and less time on the things that make us unhappy – happiness comes from what you do, and what you don’t do. Which might even mean chucking in your job if it’s causing unhappiness - although it might be easier to quit the old job than find a new one which will make you happier. Which  probably brings us back to traditional economics. As Thomas Carlyle might agree.

Nudging in The Smoke: Notes, Quotes and Thoughts on the London Behavioural Insights Conference BX2015

For two days this week Behavioural Exchange, the International Behavioural Insights Conference made London the global epicentre of behavioural economics as applied to policy and practice. Or, if you prefer, behavioural science. Or behavioural insight. Or, as Daniel Kahneman memorably (and acerbically put it) when video-linked for a transatlantic interview with Richard Thaler, “applied social psychology.” 

Behaviour Workshops followed the footsteps and soaked up two days of great talks and discussion sessions from some of the greatest names in behavioural economics (and applied social psychology!), with keynote sessions from Thaler and a virtual Kahneman (video linked from New York), as well as Robert Cialdini, Steven Pinker, Dan Ariely, Max Bazerman and Eldar Shafir. Plus a range of parallel sessions featuring experts from fields such as digital behaviours, savings, education, crime, work, obesity, climate change and international development. 

It’s impossible to summarise two such stimulating days - there's a lot of mental processing still going on. In fact, there were so many great quotes that we will be drip-feeding these into the blog over the next few postings.

As a taster, following are a few of the great quotes from Richard Thaler’s conference appearance, starting with his “Two Nudge Mantras”, notably:

1 If you want to nudge people to do something, make it easy.

2 We can’t do evidence-based policy without evidence.”

Another, memorable quote, which he always puts in his book signings,

“Nudge for good.”

And here are a few more,

“It’s good to have policy where, 'if you do nothing, good things happen.'”

“If you get great results, always replicate. If it looks too good to be true, it probably is.”

“So far, nudge units have used a small amount of psychology and virtually no economics.”

“People question the ethics when nudges are used in the public sector, but not when they are used in the private sector...firms and government should operate to the same standards of behaviour.”

“We didn’t invent nudging, it has been around forever. Private companies do it. And we can’t control what people do with it.”

Plenty to engage System 2 and reflect upon there. Speaking of which, here are some initial reflections on the conference.

Most Shocking Admission

A brilliant session on Revealing Preferences, with Dan Ariely on trust and Google’s Chief Economist Hal Varian on the rich data from search, was introduced by the Head of the UK Government Economic Service, Sir Dave Ramsden. After noting how behavioural economics was being incorporated into government economic policy making, he admitted that, in his personal life, he had been using the same bank for the last thirty plus years, ditto his car insurance, until last year. If the government’s chief economist is such a victim of intertia bias and reluctance to switch, it doesn’t portend well for the much-vaunted power of competition and consumer choice to drive market outcomes (a concept dear to HM Treasury)..

Most Terrifying Conference Workshop (Ever!)

One of the parallel sessions, ‘You Are The Doctor’ investigated the how and why of medical errors – crucial, because these occur in around 10% of UK acute hospital admissions, of which up to 75% are caused by cognitive errors and behavioural biases. Workshop delegates played the role of doctor in an emergency room at the end of a long shift. Using video with actors in key roles, and with a prompt card to remind us of the cognitive and behavioural biases that lurk below our decision making, we had to make quick judgements with life-or-death consequences for the patient. Responses were collected (thankfully, anonymously) and aggregated, using electronic keypads. It’s a fair bet that pulse rates, anxiety and blood pressure levels in the conference room were a lot higher by the end of the workshop. Spoiler alert: we killed the patient. Cognitive biases can kill!

The Corridors of Power

BIT CEO David Halpern noted that behavioural economics and the impact of the Behavioural Insight Team had gone “from the seminar table to the Cabinet table.” This was attested by the presence of the head of the UK Civil Service, Cabinet Secretary Sir Jeremy Heywood, and Matthew Hancock MP, Cabinet Office Minister, Paymaster General (and co-author with Nadhim Zahwai MP of a book on the economic crash, ‘Masters of Nothing,’ which looks at the human behaviour that caused the crash).

Lost In Translation: There Is No French word for Nudge

Look up Nudge in the Collins online dictionary, and here’s what you get: 1. donner un (petit) coup de coude à - to nudge each other se donner des coups de coude. Noun : 1 (= push) coup m de coude - to give sb a nudge donner un (petit) coup de coude à qn. 2 (= gentle persuasion) coup m de pouce - to give sb a nudge in the right direction pousser doucement qn dans la bonne direction.  Or when, I asked a French delegate, I learned that the nearest is apparently “incitation.” Despite this, the French government does have a nudge unit. Only it's known as the Mission pour “Methodes d’ecoute et d’innovation.” No doubt that helps to keep the Academie Francaise on side.

My, How You’ve Grown

There were 800-900 of us in the Westminster Plaza for the Behavioural Exchange 2015, from around 20 countries. According to BIT CEO David Halpern, this is more than double the number of attendees at last year’s gathering in Sydney. It would have been hard to imagine this even five years ago, when mention of the words “behavioural economics” would normally generate a blank look.

Most Brilliant Conference Organisation

The BBC’s Home Editor, Mark Easton, who hosted Day 2, commented that it had been the best-organised conference he had ever attended. From a delegate’s perspective, that was also true.

Penultimate Nudge  

From the gent’s toilets at the event. (Now there’s a tricky photo assignment).

Find Out More

Everything will be posted online next week on storify    

And Finally, A Behaviour Workshops Nudge                   

To find out more about our workshops, based on behavioural economics, behavioural science, behavioural insight, applied social psychology and/or social marketing, please drop us an email: behaviourworkshops@gmail.com. We offer workshops that can be tailored to meet the needs of most organisations. Follow us on Twitter @BehaviourW 

World Bank issues major report on behavioural factors and development

Last month the World Bank issued its World Development Report 2015: Mind, Society, and Behavior (their [US] spelling!). Interestingly, for an organisation which has often been associated with the standard economic orthodoxy, this report recognises that people do not always make deliberative, independent decisions based on careful self-interested calculations.

Instead, taking its cue from the behavioural sciences/behavioural economics the report notes that people often think quickly, use mental shortcuts and rely on shared mindsets. As the report states, by factoring this in, governments and other actors can design (development) programs that make it easier for individuals to cooperate in the pursuit of shared goals.

The report relates to areas such as early childhood development, productivity, household finance, health and health care and climate change, and includes case studies where development work has incorporated findings from behavioural science, using techniques such as framing, default setting, the importance of social norms, the use of commitment devices and recognising that timing matters, due to cognitive and mental depletion in decision making.

The report outlines three principles of human decision making: thinking automatically, thinking socially, and thinking with mental models. The consequences are that: much of human thinking is automatic and depends on whatever comes to mind most effortlessly; people are deeply social and will tend to cooperate as long as others do too, and we are highly influenced by social networks and norms; and most people do not invent new concepts, rather they use mental models drawn from their societies and shared histories to interpret their experiences.

As the report notes, focusing more closely on correctly defining and diagnosing problems can lead to better designed interventions. The report cautions that even experts’ initial assumptions about the causes of behaviour can be wrong, which means that it’s important to run pilots and trials to test a range of interventions. An important finding for politicians, policy makers and behaviour change specialists – and not just those involved in development work. Full report here. 

At Behaviour Workshops we run training workshops which draw on many of the tools and techniques featured in the World Bank report – providing insights and applications from behavioural economics and social marketing which can help organisations meet their objectives in a more cost-effective way. More information on a typical workshop here. There is an independent review of one of our workshops here on the Comms2pointO website by Carolyne Mitchell of South Lanarkshire Council, who commissioned it. 

You can contact us at behaviourworkshops@gmail.com or by calling 0845 094 5581.