For anyone interested in human behavior and decision making, Sept. 15 will likely be a day to remember. On that day, President Obama ordered government agencies to use behavioral science insights to “better serve the American people.”
In his executive order, Obama instructed federal agencies to identify policies and operations where applying findings from behavioral science could improve “public welfare, program outcomes and program cost effectiveness,” design strategies for using behavioral science insights, and recruit behavioral experts whenever considered necessary or helpful.
This order reflects the evidence that scholars across a variety of fields — from behavioral economics to psychology to behavioral decision research — have accumulated in recent years that people often fail to make rational choices. Across a wide range of contexts, we often make foolish decisions that go against our self-interest. We exercise too little and eat too much. We spend too much, don’t save enough and wind up heavily in debt.
Over the last decade or so, insights from behavioral science have been applied to public policy issues such as tax payments, medical decisions, consumer health and wellness and climate-change mitigation. Consider work conducted by the Behavioural Insights Team, an organization set up in the U.K. to apply “nudges” to improve government policy and services. (A nudge, a term introduced by Richard Thaler and Cass Sunstein in their 2008 book “Nudge: Improving Decisions About Health, Wealth and Happiness,” is any aspect of a process that changes how people behave in predictable ways “without forbidding any options or significantly changing their economic incentives.”)
For example, in one study, the BIT partnered with the U.K. Driver and Vehicle Licensing Agency to change the wording of the letter sent to people who were delinquent in paying their vehicle taxes. Departing from the complex legal language of the existing letter, the new letter in effect told people to “pay your tax or lose your car.” To make the demand more personal, some of the letters also included a photo of the car in question. The rewritten letter increased the number of people paying the tax; the rewrite with the photo changed behavior even more dramatically.
Nudges like these speak to the power of developing interventions and policies that consider people for what they are: creatures whose information-processing capacity and emotions limit them from being rational agents. Well-designed behavioral studies can offer policymakers useful insights into human behavior that can improve policies. Such studies are applicable to a wide range of policy areas, wherever human behavior plays a role.
Similarly, organizations can identify more effective management practices through a better understanding of human behavior. The implications could be wide ranging, from helping employees adopt healthier habits to increasing their happiness and productivity at work.
In its cafeterias, Google has experimented with this idea to encourage employees to adopt healthier eating habits. When “Googlers” reach for a plate, they encounter a sign informing them that people with bigger plates are inclined to eat more than those with smaller plates. Thanks to this simple change, the proportion of people using small plates has increased by 50%.
Behavioral science can help managers design new practices, suggest improvements to existing ones, or provide ex-post explanations of why people reacted in a particular way. In short, using insights from behavioral science can have profound benefits across government and business, and more are being implemented every day.
So, are you ready for a nudge?
(Francesca Gino is a professor at Harvard Business School and a faculty affiliate of the Behavioral Insights Group.)
© 2015 Harvard Business School Publishing Corp. Distributed by The New York Times Syndicate