What is Behavioral Insights?
Behavioral insights refer to the understanding and application of behavioral science principles to influence human actions. They encompass findings from various fields such as psychology, economics, and neuroscience, that reveal how humans actually behave, often in contrast to how they are traditionally assumed to behave. Behavioral insights acknowledge that human decision-making is often not rational and is affected by various cognitive biases, emotions, social factors, and environmental contexts. By applying these insights, policies, programs, and services can be designed to encourage, enable and support desired behaviors effectively.
Examples of Behavioral Insights
One of the most well-known applications of behavioral insights is the concept of ‘nudging’. This involves subtly guiding choices through the strategic design of decision-making contexts, without significantly changing economic incentives or limiting options. For example, placing healthier foods at eye-level in a grocery store to promote healthier eating habits is a type of nudge.
Another example of using behavioral insights is setting beneficial defaults. People often stick to default options due to inertia or the status quo bias. For instance, enrolling employees automatically in a pension plan, with the option to opt-out, can increase retirement savings.
Loss aversion, a key concept from behavioral economics, states that people are more likely to take action to avoid losses than to achieve gains. This insight can be used to motivate behavior. For example, a study showed that people are more likely to install energy-efficient equipment in their homes if they are told how much money they could lose from not installing the equipment (potential loss) as opposed to how much they could save (potential gain).