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Astrid Groenewegen

The Behavioural Design Blog - overview

The Behavioural Design Blog – overview

By All, Behavioural Science Insights

With this Behavioural Design Overview we want to help you to navigate through the Behavioural Design Blog. Our ambition with this blog is to explore how influence works by applying it to interesting real world problems. Most of these blogs appeared in  Behavioural Design Digest, our weekly newsletter. You can subscribe to the Behavioural Design Digest here.

Everything we write is in line with SUE’s mission: ‘To unlock the power of behavioural psychology to help people make better decisions in work, life, and play’. This is the guiding principle behind our Behavioural Design Method© we teach in our Behavioural Design Academy and that we apply in our Behavioural Design Sprints. Curious to find out more about us? Meet us at ‘We are SUE‘.

Happy exploring!

 

behavioural design - illustration birdeyes

Essential Reads and Videos

These are blog posts and videos that are essential to our thinking on how to influence minds and shape behaviour.

Behavioural Science Explained

There are concepts and principles in behavioural science that are the foundation of behavioural change. We explain them here.

Customer behaviour

Whether you have clients or customers. Whether you want to attract more clients or want them to buy, click, recommend or return. Behavioural science can help you get the most out of a customer.

Leadership & Team Behaviour

Organisations are collections of human behaviours. These blog posts and videos shed a light on how to leverage behavioural science to achieve operational excellence.

Citizen and Public behaviour

If you want the general public to adopt policies or design behaviours that will creat more welfare or better communities this is the section to keep your eye on.

Personal Behaviour

If you understand key concepts of behavioural science it can help you make better decisions that will improve your life, your work, your happiness and habits. Stay tuned here for self-improvement insights.

Methodology

Behavioural Design is applied behavioural science. It is active and results in tangible insights and interventions. This section will highlight the methodologic part of Behavioural Design.

Applied Behavioural Science

The true value of Behavioural Design is that it is applied behavioural science. In this section you’ll find blog posts on how to unlock the power of behavioural science in practice.

BONUS: free ebook 'How to Convince Someone who Believes the Exact Opposite?'

Especially for you we've created a free eBook 'How to Convince Someone who Believes the Exact Opposite?'. For you to keep at hand, so you can start using our insights whenever you want—it is a little gift from us to you.

Download ebook

Go ahead, it’s completely free of charge!

How do you do. Our name is SUE.

Do you want to learn more?

Suppose you want to learn more about how influence works. In that case, you might want to consider joining our Behavioural Design Academy, our officially accredited educational institution that already trained 2500+ people from 45+ countries in applied Behavioural Design. Or book an in-company training or one-day workshop for your team. In our top-notch training, we teach the Behavioural Design Method© and the Influence Framework©. Two powerful tools to make behavioural change happen in practice.

You can also hire SUE to help you to bring an innovative perspective on your product, service, policy or marketing. In a Behavioural Design Sprint, we help you shape choice and desired behaviours using a mix of behavioural psychology and creativity.

You can download the Behavioural Design Fundamentals Course brochure, contact us here or subscribe to our Behavioural Design Digest. This is our weekly newsletter in which we deconstruct how influence works in work, life and society.

Or maybe, you’re just curious about SUE | Behavioural Design. Here’s where you can read our backstory.

sue behavioural design

System 1 and 2 quick guide

By All, Behavioural Science Insights

In our post ‘Kahneman Fast and Slow thinking explained‘ we have elaborated in depth on system 1 and 2 thinking. And Daniel Kahneman’s work. Therefore, this post is meant for those who already grasp the groundbreaking concepts of Kahneman. The concept on human decision making as explained in his book ‘Thinking Fast and Slow‘. However, now and then we need a visual reminder of the differences between system 1 and 2. In short, that is why we have made an overview with the main characteristics of both the system 1 and system 2 operating systems in our brain. By highlighting the differences between the two.

Kahneman: Thinking fast and slow

Thinking Fast and Slow is all about how our brain uses short-cuts to base our decisions upon. For example, one of the short-cuts that have been tested in scientific research is the use of the picture of a brain. For instance, if you use a picture of a brain the system 1 of your listeners will think you are smart. You can use this by putting the visual above on your Keynote slides.

In other words, we thought it was a nice tip before we give you the overview or quick guide.  However, it is just one of the examples of how powerful the understanding of system 1 and 2 thinking can be. Therefore, if you start accepting that we are all irrational human beings. Driven by our subconscious. You start to understand how you can influence behaviour without changing minds.

System 1

These are the characteristics of your system 1.
  • Fast
  • Unconscious reasoning
  • Judgments based on intuition
  • Processes information quickly
  • Hypothetical reasoning
  • Large capacity
  • Prominent in humans and animals
  • Unrelated to working memory
  • Effortlessly and automatically
  • Unintentional thinking
  • Influenced by experiences, emotions and memories
  • Can be overridden by system 2
  • Prominent since human origins
  • Includes recognition, perception, orientation, etc.

System 2

These are the characteristics of your system 2.
  • Slow
  • Conscious reasoning
  • Judgments based on examination
  • Processes information slowly
  • Logical reasoning
  • Small capacity
  • Prominent only in humans
  • Related to working memory
  • With effort and control
  • Intentional thinking
  • Influenced by facts, logic and evidence
  • Used when system 1 fails to form a logical/acceptable conclusion
  • Developed over time
  • Includes rule following, comparisons, weighing of options, etc.

BONUS: free ebook 'How to Convince Someone who Believes the Exact Opposite?'

Especially for you we've created a free eBook 'How to Convince Someone who Believes the Exact Opposite?'. For you to keep at hand, so you can start using the insights from this blog post whenever you want—it is a little gift from us to you.

Download ebook

Go ahead, it’s completely free of charge!

How do you do. Our name is SUE.

Do you want to learn more?

Suppose you want to learn more about how influence works. In that case, you might want to consider joining our Behavioural Design Academy, our officially accredited educational institution that already trained 2500+ people from 45+ countries in applied Behavioural Design. Or book an in-company training or one-day workshop for your team. In our top-notch training, we teach the Behavioural Design Method© and the Influence Framework©. Two powerful tools to make behavioural change happen in practice.

You can also hire SUE to help you to bring an innovative perspective on your product, service, policy or marketing. In a Behavioural Design Sprint, we help you shape choice and desired behaviours using a mix of behavioural psychology and creativity.

You can download the Behavioural Design Fundamentals Course brochure, contact us here or subscribe to our Behavioural Design Digest. This is our weekly newsletter in which we deconstruct how influence works in work, life and society.

Or maybe, you’re just curious about SUE | Behavioural Design. Here’s where you can read our backstory.

sue behavioural design

Nudging explained

By Behavioural Science Insights

In this blog post, we will highlight the main concepts from the work of Nobel prize winner Richard Thaler as explained in his bestselling book ‘Nudge.’ We will explain what nudging is all about, how it related to behavioural economics and how you can use it to influence people and help them make better choices.

 

Nudging: what does it mean?

The term nudging seems to be popping up everywhere nowadays. People are being nudged, nudge units are set-up within governments, and nudging in marketing seems to pick up in popularity. But what is nudging all about? What does nudging mean? And from which underlying science does it derive? And especially how does it help people make better choices? Questions that will all be answered in this article. To make your reading life easier, we’ve divided the article into several subsections, which you can jump to easily:

Nudging Theory and Behavioural Economics
Making choices: Choice architecture
Making better and healthy choices
Recap

Nudging theory and behavioural economics

Nudging comes from the field of behavioural economics. Although behavioural economics is a science that is studied for almost forty years, it was the book ‘Nudge’ written by Richard H. Thaler and Cass R. Sunstein in 2008 that put nudging on the map. In Nudge, Thaler and Sunstein propose us a new take on decision making, one that takes our humanness and all the inconsistent decisions we make as a given.

nudging

Behavioural economists, as opposed to traditional economists, take human irrationality as a starting point. The basic assumptions of behavioural economics are that people are making choices with:

  • Limited rationality
  • Limited willpower
  • Bounded self-interest

Nudging: traditional economics vs. behavioural economics

Whereas traditional economics see people as rational beings, who make decisions and do cost/benefit analyses to make a choice that is always in their best interest not letting their emotions cloud their judgments, and always thinking about the future. Behavioural economists overthrow this, as it doesn’t fit the actual behaviour of people. You see people choose mortgages they shouldn’t be taking. You see people overspent on their credit cards. There are stock bubbles. Where’s the rationality in that? We are humans whose decisions are driven by cognitive bias and sub-conscious mental shortcuts, as we explain in this post on Daniel Kahneman whose research laid the foundation of all behavioural economics.

In the book ‘Nudge’ is also explained that being human, we all are susceptible to various biases that can lead us to blunder. Our mistakes make us poorer and less healthy; we often make bad decisions involving education, personal finance, health care, mortgages and credit cards, the family, and even the planet itself.

nudging

The main concept of the book is that if you know how people think, you can design choice environments that make it easier for people to choose what is best for themselves, their families, and their society. It’s all about choice architecture. An important concept that we’ll explain in the next paragraph.

But before we dive deeper into choice architecture, it’s good to know that there lies a very important concept underneath the nudging theory. A concept introduced in the book called Libertarian Paternalism.

  • Libertarian = An individual’s right to choose
  • Paternalism = Do what you can do to improve the welfare of people. Point people in the right direction.

The definition of a nudge

The idea is to apply the techniques of the psychology of decision making and behavioural economics to improve decisions without limited choices. Or easier put, help people make better choices for themselves without restricting their freedom of choice. But by nudging them. Which brings us to the definition of a nudge. As Thaler describes it himself:

A nudge is any small feature in the environment that attracts our attention and alters our behaviour.

You can nudge for good, or you can nudge for evil. Their book strongly focuses on the first, as the subtitle of their book states: improving decisions about health, wealth, and happiness. And we as a company take a positive take on behavioural psychology ourselves as we strongly live by our mission to unlock the power of behavioural psychology to nudge people into making positive choices in work, life, and play. But how do you achieve this goal? That’s what the next section is all about: how to help people make better and healthy choices.

Do you want to learn how to nudge behaviour?

Then the Fundamentals Course is perfect for you! You'll catch up on the latest behavioural science insights and will learn how to translate these into nudges that will trigger positive behaviours and help people make better decisions. We have created a brochure that explains all the ins and outs of the Fundamentals Course; feel free to download it here.

Download the brochure

Go ahead, there are no strings attached!

Nudging is choice architecture

If you want to help people making better decisions, you can achieve this with better choice architecture. But what is a choice architecture? Anyone who designs the environment in which people make choices is a choice architect. There’s choice architecture all around you. Think about menus, curriculums, or store layouts that decide how you walk inside a store (you probably all have been in an Ikea once, there it’s obvious how choice architects have designed the way you cruise the Scandinavian furniture epicenter).

A choice architect makes choices about how to present information or an environment for you. Although nudging is all about maintaining people’s freedom of choice, choice architecture isn’t neutral. You can compare it to regular architecture; it’s not possible to design regular neutral architecture. Think about the design of the building you’re probably in right now: it’s not possible to have designed that building completely neutral. It had to have doors, stairs, etc.

Choice architecture is not neutral.

The same goes for choice architecture, it affects how people make choices, and you have to make a choice yourself on how you present a choice. Richard Thaler often refers to the example of cafeteria meal planning. They found out that the way food was presented to kids in a school cafeteria effected what they would eat for lunch. The first choice presented to them was the prevalent choice. Someone responsible for the cafeteria then has several options:

  • Put the healthy options first, to promote more healthy eating behaviour
  • Start with the unhealthy options, to make kids more fat (could be he/she has a chubby kid and wants other kids to gain weight too, to stop the bullying)
  • Go for the most profitable as first option, to make the finance director happy
  • Present the food randomly, which is also a choice (confusing, but a choice)

The point is: you always have to make a choice. Choice architecture is not neutral. But some designs are better than others. Why not do it in a way that makes people feel better? That’s what nudging is all about, and which is the theme of the book ‘Nudge’ to help people towards making better choices.

Nudging: making better and healthy choices

In the book ‘Nudge’ they explain six principles of good choice architecture that will help people make better and healthy choices:

Incentives
People make better decisions if you provide the right people with the right incentives. This goes beyond monetary and material incentives, but also includes psychological benefits (eg peace of mind).

Understand mappings
A warm plea is made for more disclosure to help people make better decisions. In the book referred to as RECAP: Record, Evaluate, and Compare Alternative Prices. Make it easier for customers to compare what they are truly paying for, and ensure that all hidden fees are exposed.

Defaults
Defaults what happens if we do nothing. Think about your screensaver. Even if you do nothing it will activate. Defaults are sticky, as inertia rules in all humans. We tend to stick to the automatic choice that’s made for us. We for example hardly ever change factory settings on our phone. In Nudge an example is given about joining a retirement savings plan. If the default is to join, most people do join. If you have to actively choose to join only 30% does so.

Give feedback
A good way to help humans improve their decision making is to provide feedback. A good example is the Ambient Orb as developed by Clive Thompson that helped people save energy. Electricity isn’t visible, the ambient orb gives feedback on how well you’re doing by changing colour. Another example of giving feedback is paint that is pink when you apply it, but turns white within an hour. People often paint white ceilings white again, and it’s hard to see if you missed a spot. By making the paint pink, it gives you immediate feedback on what is left to paint.

ambient orb

nudging ambient orb

 

nudging paint

Magic white paint

 

Expect error
Expect people to make mistakes and design for it. A very good example of libertarian paternalism that actually saves lives are the ‘look right’ signs in London streets. You can still watch the wrong way, but you’re directed to look the right way.

look right London

nudging look right

Structure complex choices
When there’s an overload on choice, people tend to find ways to simplify them and break them down. Good choice architecture will find ways to make this more evident for people. An example cited was the choice of paint. Instead of using words like “Roasted Sesame Seed” or “Kansas Grain,” consider arranging similar colour themes next to each other. This could help people to choose the right shades and hues.

Recap

You could recap the Nudge theory like this:

  1. Humans are imperfect we can use all the help we can get
  2. It’s possible to improve choices without restricting options
  3. Don’t use bans and mandates, just nudge.

If you want to hear Richard Thaler explain the basic concept of nudging himself, take a look at this video. It’s 18 minutes.

 

BONUS: free ebook 'How to Convince Someone who Believes the Exact Opposite?'

Especially for you we've created a free eBook 'How to Convince Someone who Believes the Exact Opposite?'. For you to keep at hand, so you can start using the insights from this blog post whenever you want—it is a little gift from us to you.

Download ebook

Go ahead, it’s completely free of charge!

How do you do. Our name is SUE.

Do you want to learn more?

Suppose you want to learn more about how influence works. In that case, you might want to consider joining our Behavioural Design Academy, our officially accredited educational institution that already trained 2500+ people from 45+ countries in applied Behavioural Design. Or book an in-company training or one-day workshop for your team. In our top-notch training, we teach the Behavioural Design Method© and the Influence Framework©. Two powerful tools to make behavioural change happen in practice.

You can also hire SUE to help you to bring an innovative perspective on your product, service, policy or marketing. In a Behavioural Design Sprint, we help you shape choice and desired behaviours using a mix of behavioural psychology and creativity.

You can download the Behavioural Design Fundamentals Course brochure, contact us here or subscribe to our Behavioural Design Digest. This is our weekly newsletter in which we deconstruct how influence works in work, life and society.

Or maybe, you’re just curious about SUE | Behavioural Design. Here’s where you can read our backstory.

sue behavioural design

Cialdini on persuasion

By All, Behavioural Science Insights

In this blog post, we will introduce you to the work of Dr. Robert Cialdini. Who is an expert on how to influence people. And in the psychology of persuasion. In his bestselling book, ‘Influence‘ Cialdini identifies six principles of persuasion. And explains the psychology of why people say “yes”.  And how to apply these understandings in real life.

 

6 Universal Principles of Influence

Robert Cialdini’s work can be considered as adding on to the work of Daniel Kahneman. Kahneman discovered what laid the foundation in all thinking about behavioural psychology and behavioural economics. We used to think that we are all rational thinking human-beings. Using information at hand to make a decision. But for the most part, we rely on emotional thinking. The majority of our choices are automatic and based on so-called shortcuts.

In his book Robert Cialdini uncovered six shortcuts that he calls ‘universals that guide human behaviour,’ they are:

  • Reciprocity
  • Scarcity
  • Authority
  • Consistency
  • Liking
  • Consensus or Social Proof

When using these shortcuts, Robert Cialdini states you can make people say ‘yes’ to about anything. Also called persuasion. The action or process of persuading someone or of being persuaded to do or believe something. That’s also the reason why he stresses to employ the persuasion principles an ethical manner.

Unlock the power of behavioural psychology for positive choices.

Which is something we can only stress once more. Behavioural science is a powerful tool. If you know how people think, and how they make decisions, you can influence their behaviour. Our company mission is to unlock the power of behavioural psychology to nudge people into making more positive choices in work, life, and play. We help people grow through change. And true change is all about behaviour. You have to stop doing the things that hold you back. And you have to start doing the things that will propel you forward.

Our company mission is to unlock the power of behavioural psychology to help people make better decisions in work, life, and play.

Why we love the work of Cialdini is that he brought the psychology of influence into practice. Like ethical sales, marketing, management, and business applications. He explains the psychology of why people say ‘yes’. And how to apply these understandings in daily life. Cialdini ‘s 6 Universal Principles of Influence were based on three “undercover” years. Applying for and training at used car dealerships, fund-raising organizations, and telemarketing firms to observe real-life situations of persuasion.

True change is all about behaviour. You have to stop doing the things that hold you back. And you have to start doing the things that will propel you forward.

Principle of Influence 1: Reciprocity

The reciprocation rule essentially states that if someone gives something to us, we feel obligated to repay that debt. Could be we give back to others in the form of behaviour, a gift, or service. Key to using the Principle of Reciprocity is to be the first to give. And to ensure that what you give is personalized and unexpected.

In his book, Cialdini illustrates this principle with an example you have probably have experienced yourself. The fact you get candy or peppermint with your restaurant bill. They have done a series of experiments in restaurants. To see if this phenomenon of giving a little gift together with the bill had any effect in influencing the amount of tip given. To trigger the obligation to do something back. This is what happened.

Key to using the principle of reciprocity is to be the first to give. And to ensure that what you give is personalized and unexpected.

The mint tipping example
When a single mint was given with the bill and the end of a meal, tipping amounts generally rose with 3%. Interestingly, if the gift is doubled and two mints are giving, tips didn’t double. They quadrupled to a 14% increase in tips. What turned out to be the most effective in influencing people using reciprocity? If the waiter gave just one mint, started to walk away from the table, but paused, and turned back. And said, “For you nice people, here’s an extra mint,”. Tips went through the roof. A 23% increase, influenced not by what was given, but how it was given. It feels personalized. And it’s unexpected.

You can imagine that using the principle of reciprocity can also improve sales effectiveness. Most of the times we’re not aware how the principles of influence work. But they drive how we make choices. And it once again shows the power of the subconscious mind Kahneman has illustrated so beautifully.

Robert Cialdini about Reciprocity:

Principle of Influence 2: Scarcity

People want more of those things they can have less of. That’s why for example you see so many websites using cues that stress the scarcity of a product or service. Deal times that are running out. The number of rooms left. Only two days to go, etc. Time pressure enhances the feeling of scarcity. And it even increases the perceived value of things.

People want more of those things they can have less of.

When it comes to effectively persuading others using the scarcity principle, it’s not enough to tell people about the benefits they’ll gain.  You’ll also need to be very clear about what is unique about your proposal. And what they stand to lose if they don’t buy your product or service.

Robert Cialdini about scarcity

 

Principle of Influence 3: Authority

This is the idea that people follow the lead of credible, knowledgeable experts. What Cialdini tells us is that it’s important to signal to others what makes you a credible, knowledgeable authority. You have to do this before you make your influence attempt. That can be done in different ways. Diplomas on your wall help. Wearing a uniform also does the trick. And being introduced to someone as an expert does work too.

It’s important to signal to others what makes you a credible, knowledgeable authority.

In his book, Cialdini discusses and example of authority on his website this that is very interesting (the example is directly taken from his website). A group of real estate agents was able to increase both the number of property appraisals and the number of contracts. By making sure the reception staff who answered customer phone calls to first mention their colleagues’ credentials and expertise.

So, people interested in letting a property were told “Lettings? Let me connect you with Sandra, who has over 15 years’ experience letting properties in this area.” Customers who wanted more information about selling properties were told “Speak to Peter, our head of sales. He has over 20 years’ experience selling properties. I’ll put you through now.” This is designing a customer experience that is actually behaviour driven design that can boost your sales.

Robert Cialdini about authority

 

Principle of Influence 4: Consistency

People like to be consistent with the things they have previously said or done. If you did A, you are inclined to do A (and not B). This has to do with the fact that our brain is always looking to reduce our mental stress. And it’s less stressful for our brain to be consistent. Daniel Kahneman has explained in-depth how this works in our brain if you want to know more about this check out this post.

People like to be consistent with the things they have previously said or done.

How can you use this in influence people?
Get someone to do, preferably a public or written, commitment to something. Your chances of influencing that person raise dramatically. Easier said if you can make someone say ‘yes’ to something it works wonders. An example. People who are conducting street interviews. If they would stop someone on the street, and first ask them ‘Do you consider yourself to be a helpful person?”. And if people said ‘yes,’  they would ask them, would you mind filling in this questionnaire for me? Compliance rates rose from 27% to 70%. People wanted to be consistent with their first answer. In other words, you can change attitudes towards something by using this principle of consistency.

If you can make someone say ‘yes’ to something it works wonders.

Cialdini gives another example of commitment in his book. In a study, they found out that the number of missed appointments at health centers was reduced by 18%. Simply by asking the patients themselves to write down appointment details on the appointment card. Instead of the doctor assistants who would normally do this.

Robert Cialdini about consistency

 

Principle of Influence 5: Liking

People are more inclined to say ‘yes’ to people they like. But how can you increase motivation for people like you? How can you influence people’s thoughts and behaviour towards yourself? The science of persuasion gives three very clear answers to this. People tend to like you more if:

  1. You are similar to them
  2. Pay people compliments
  3. If you cooperate with them towards a mutual goals

In short, you can behavioural design the perception of yourself by using the principle of liking.

Robert Cialdini about Liking:

 

Principle of Influence 6: Social Proof

Social proof is a psychological and social phenomenon where people assume the actions of others in an attempt to reflect correct behaviour in a given situation. Social proof is considered prominent in ambiguous social situations. Where people are unable to determine the appropriate mode of behaviour. And is driven by the assumption that the surrounding people possess more knowledge about the current situation (Wikipedia).

In other words, as Dr. Cialdini puts it:

Especially when people are uncertain, people will look to the actions and behaviours of others to determine their own.

Telling people the number of people that have already bought your product. Or the number of people that were happy with your service works. For example you can also design behaviour by referring to others who were in a similar situation as the person you are trying to influence. A well-known example is the research on towel re-usage in hotel rooms. By doing one small addition on the little information card that can be found in the hotel rooms. Stating that ‘75% of people staying in this room, reused their towels’ the towel re-usage rate increased with 33%.

Robert Cialdini about social proof:

 

BONUS: free cheat card 'Principles of Influence.'

Especially for you we've created a free cheat card 'Principles of Influence.' For you to keep at hand, so you can start using the insights from this blog post whenever you want—it is a little gift from us to you.

Download cheat card

Go ahead, it’s completely free of charge!

How do you do. Our name is SUE.

Do you want to learn more?

Suppose you want to learn more about how influence works. In that case, you might want to consider joining our Behavioural Design Academy, our officially accredited educational institution that already trained 2500+ people from 45+ countries in applied Behavioural Design. Or book an in-company training or one-day workshop for your team. In our top-notch training, we teach the Behavioural Design Method© and the Influence Framework©. Two powerful tools to make behavioural change happen in practice.

You can also hire SUE to help you to bring an innovative perspective on your product, service, policy or marketing. In a Behavioural Design Sprint, we help you shape choice and desired behaviours using a mix of behavioural psychology and creativity.

You can download the Behavioural Design Fundamentals Course brochure, contact us here or subscribe to our Behavioural Design Digest. This is our weekly newsletter in which we deconstruct how influence works in work, life and society.

Or maybe, you’re just curious about SUE | Behavioural Design. Here’s where you can read our backstory.

sue behavioural design

How to fight your mobile phone addiction

By All, Behavioural Science Insights

In this week’s video, Astrid Groenewegen gives you 2 practical tips from behavioral science to fight addiction to your phone. How often and how long you spend on your phone has everything to do with behaviour. Therefore, a behavioral intervention is exactly what you need to reduce this.

Beat your phone addiction

Do you sometimes have trouble focusing on your work? Your phone is one of the most disruptive signals that distracts your attention from a task at hand. It has even been investigated that the development of smartphones has gone so fast that we have not had time to adjust our behavior accordingly. So we literally do not know how to deal with all the distractions and information flows.

That is why you need a Behavioral Design intervention to change your behavior. I want to show you how to regain focus. The most important advice I have for you is to make the unwanted behavior as difficult as possible. For this I have two concrete tips that you can use right away.

1. Turn off all your app notifications: They are little dopamine shots you constantly get that you don’t need. You become addicted to constantly checking what is new on your screen.

2. Install a pomodoro app: This is a timer that prompts you to get to work. It helps you to work periods of 25 minutes. Your phone transforms into a countdown clock, without seeing all the other distracting apps and messages. It’s a nudge to stick to your pre-set time that you wanted to work.

So remember, the best way to stop certain behaviors is to make the unwanted behavior as difficult as possible to perform.

Good luck beating your mobile addiction. With the help of Behavioral Design you will be cured in no time.

Watch more on YouTube

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Three ways you are persuaded to buy a product

By All, Behavioural Science Insights, Customer Behaviour

In this weeks video, Astrid Groenewegen explains 3 ways you are being persuaded to buy a product or service. It is all about how you present the prices of your products. With the knowledge of these Behavioural Design tactics you can apply them in practice immediately to boost your own sales. 

Price estimation by anchors 

Do you want to convince someone to buy your products or services? Then knowledge of Behavioural Science is exactly what you need. The first step to get started with this is to look at your prices. No, not how much you products actually cost, but how you present them to your customers.

Did you know that we as humans are quite price clueless. We often have no idea what something should cost or what something is worth. The way our brain forms an opinion about pricing is taking cues from the environment in which the product or service is presented. A signal that gives you a reference point to base your estimation of the price of the product on is called an anchor.

“A reference point that we use to base our opinion on to buy something”

On a daily basis you are being influenced by anchors. This occurs unconsciously, so you don’t even notice it is happening to you to! This is why it is such a great tactic to use when we want to influence customers behaviour to buy our product.

Three ways you are persuaded to buy a product. 

I want to show you three ways you are being influenced by an anchor that makes you buy something.

1. The decoy effect: When there are two items for sale, the decoy item is priced in a way to make the other item (the one the manufacturer really wants to sell) seem more attractive.

Let’s say you are shopping for a coffee machine. If you are presented with two options, of which one is significantly more expensive then the other, you are probably dealing with a decoy. This tactic makes it more easy for you to choose because you probably want to cheaper version (if the quality is the same). You can use this principle to make your products more attractive. Just add another product for a much higher price to your shop so people are more attracted to your original, and now cheaper, product.

2. Presented with 3 options: People tend to choose the option in the middle.

What you need to know is that when people are presented with more than two options another phenomenon occurs. The center-stage effect: when we make decisions we tend to gravitate to the middle. You often see this in pricing plans. You are offered three options: small – medium – large. A small package might seem too little but a large package might seem too much. So our unconscious decision making brain will pick the middle option. It is important to know that you might have made a different assessment of the packages when there were only two options. You can use this to by presenting your products or services in three options. Make sure you present the most desired option for you as the middle option.

3. Shown the old price: The original high price is crossed out and replaced with the lower new price.

This final tactic you see a lot. Our unconscious brain uses the original price as an anchor. The new price will be compared to this anchor and will be perceived as a bargain. This happens automatically. We don’t stop and wonder if the new price actually is a bargain for that specific product.

So here is a tip: when you buy a product of service, be aware of anchors that increase the attractiveness of a product or service.

Watch more on YouTube

Check out the whole series on YouTube. If you like the videos, it would mean a great deal to me if you could give them a thumbs up or subscribe to my channel.

Or check out the most popular videos here

Or book a training

Learn how to influence minds and shape behaviour.

Join our most popular training the Behavioural Design Fundamentals Course. You will learn the latest insights from behavioural science and you'll master an easy-to-use method to help apply behavioural science in practice right away!

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Behavioural Science for Daily Life

By All, Behavioural Science Insights

Our mission is to help as many people as possible to leverage the power of behavioural science to make better decisions that will help them improve their work, private life and living environment. This is why Astrid Groenewegen, co-founder of SUE | Behavioural Design, has created a video series called ‘Behavioural Science for Daily Life’, showing you how you can make the breakthrough and unmissable insights from behavioural psychology work for you in practice.

Behavioural Science for Daily Life: introduction

Hi, my name is Astrid Groenewegen. This video series will help you unlock the power of behavioural science to help you make better decisions in work, life, and play. Why do people do things? Or don’t they? Why do so many of our good intentions of changing our behaviour fail? How can we shape positive behaviours or help people make better decisions for themselves or the planet we live on? I will debunk the myths about motivation, shed light on the hidden psychology of human decision-making, and foremost, show you how to apply the groundbreaking insights from behavioural science to shape desired behaviours yourself. My goal is to make science practical and show you that some basic understanding of human psychology will give you far more control over successful outcomes than you might have ever thought. So, join me on a journey to learn what most of us didn’t get taught in school. Welcome to Behavioural Science for Daily Life!

Watch more on YouTube

Check out the whole series on YouTube. If you like the videos, it would mean a great deal to me if you could give them a thumbs up or subscribe to my channel.

Or check out the most popular videos here

Or book a training

Learn how to influence minds and shape behaviour.

Join our most popular training the Behavioural Design Fundamentals Course. You will learn the latest insights from behavioural science and you'll master an easy-to-use method to help apply behavioural science in practice right away!

Download the brochure

Go ahead, it’s completely free of charge!

What Is Behavioural Design

What is Behavioural Design

By All, Behavioural Science Insights, Citizen Behaviour, Customer Behaviour, Employee behaviour, Personal Behaviour

This blog post is an extended introduction to Behavioural Design. You will get a clear idea about what it is, how you can use it in your professional and personal life to influence minds and shape behaviour, and what you could do to learn more about it. Moreover, this blog post is the perfect entry to most other blogposts we published on the SUE Behavioural Design website.

 

1. Behavioural Design is about influence

How do you influence minds and shape behaviours? How do you change other people’s, as well as your behaviours? How do you help people to make better decisions? Isn’t it strange that the majority of all of our behaviours and communication aims at influencing other people? Yet, at the same time, we have no clue about the principles and laws that govern influence?

 

Behavioural Design is a systematic understanding of how people think and how they make decisions. This understanding forms the basis of thinking about interventions that lead to behavioural change. Maybe you want to influence the behaviour of your partner or children. You might want to influence your colleagues or managers. Some people like to develop a healthy habit for themselves or want to live a more sustainable life. Maybe you want to influence customer behaviour or win elections. No matter what the subject is, you can all think of them as a behavioural design challenge.

 

So what is Behavioural Design? The most pragmatic definition of Behavioural Design we came up with so far is the following:

 

Behavioural Designers combine Psychology, Design, Technology, and Creative Methods to find out why people do the things they do and to figure out through experimentation how to activate them to change their behaviour.

 

2. Behavioural Design is a method

The best way to think about Behavioural Design is to think of it as the combination of Design Thinking with the Science of Influence. Design Thinking is the method through which designers solve problems. Designers start with empathy. Through interviews and observations, they try to “fall in love with the problem”: Why do people do what they do and where could we spot opportunities for improvement? This insight phase forms the groundwork for creativity. First, designers develop as many ideas as possible, and then they prototype the most promising ones. They take the prototypes back to the real world and test them with real people to learn and observe how the prototype influences the targeted behaviour. Design Consultancy Ideo, the godfathers of Design Thinking, explain the process like this:

When you combine the method of design thinking with behavioural science, you will get design thinking on steroids or Behavioural Design Thinking. Because a better understanding of human psychology you will get:

1) Better insights into why people do what they do;
2) Better ideas on where to look for solutions;
3) Better prototypes, because you will have a much sharper understanding of what specific behavioural outcome you’re designing for.

At SUE the essence of what we do is to train the Behavioural Design Method© at our Behavioural Design Academy and at in-company training and we run the Behavioural Design Method© in Behavioural Design Sprints together with our clients.

More about Behavioural Design as method:

Would you like to power up your team or project with behavioural intelligence?

Feel free to contact us. We are happy to tell you more about our consultancy or academy. Helping you innovate, transform or grow levering insights from behavioural science in practice.

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3. The ethics of Behavioural Design

Behavioural Design is dark wisdom. The difference between positive influence and manipulation is a very fragile line. In the end, we have to be aware that Behavioural Design is about using deliberate action and techniques to influence the behaviour of the other in the direction you want.

The problem is that those who want to design for good quite often feel bad about using dark forces. Whereas those who use this dark wisdom to manipulate and mislead are usually much more motivated, advanced, and have fewer scruples about its application. Think about how extreme-right populists exploit fear and uncertainty, or think about how technology companies use our vanities and our desire for social recognition and belonging to the extent that it leads to (social media) addiction.

The world of interaction design is full of “dark patterns“, which are manipulative ways to present choices to us in such a way that they manipulate us into making a specific decision, whether we want it or not.

 

Doctor Evil

At SUE, we are very sensitive to this ethical component. We even encoded it in our mission. The SUE mission is “to unlock the power of behavioural psychology to help people make better decisions in work, life and play”. Our point of departure for designing interventions for behavioural change always starts with the question, “How might we help people to make better choices? Moreover, how could we create products, services, and experiences to contribute to helping people achieve their goals or dreams? Our commitment to this mission is sacred, even to the point that we refuse to accept work that doesn’t match this mission. You can find more about this way of thinking below at “5. Outside-in Thinking“.

More on the ethical side of Behavioural Design:

4. Behavioural Design is about designing choices

Multiple levels of influence
In a certain sense, the term ‘Behavioural Design’ is a little bit misleading. Behavioural change is the outcome we aim for when we design an intervention. When we want to achieve this outcome, we need to create interventions on multiple levels at the same time:

  1. Design attention: How do you make sure something catches people’s attention?
  2. Trigger curiosity: How do you get people to invest time and mental energy to learn more about what you want from them?
  3. Change the perception: how do you get something to stand out as the attractive option between other choices? How do you design the desired perception?
  4. Design the experience: How do you get someone to have a positive feeling? How can you reduce stress or uncertainty?
  5. Trigger the behaviour: How do you trigger the desired behaviour? How can you increase the chance of success that people act upon your trigger?
  6. Change habits: How can you get people to sustain the behaviour? Most behaviours require much more than a one-time action. Think about saving, living healthy, exercising, recycling, collaborating, etc.

Thinking fast and slow

This simple list of influence levels teaches us that:

Behavioural Design is all about how we design choices and how we present those choices.

Behavioural Design has everything to do with human decision-making and how the brain works. The cornerstone of human decision-making is the masterpiece “Thinking Fast and Slow” by Kahneman and Tversky. This book – awarded with the Noble Memorial Prize in Economic Sciences in 2002 – is the fascinating journey of the collaboration between two Israeli psychologists and their discoveries of how the mind works. This book is the ultimate work on thinking about thinking.

Kahneman and Tversky discovered that about 96% of our thinking is automatic and unconscious. Our brain is making most of the decisions for us by taking shortcuts – which they call heuristics -, with the goal of not having to invoke the 4% bandwidth of our slow, rational brain. In a way:

Influencing behaviour comes down to helping people to decide without having to think. Because the more we need to think about something, the more stress we get, the less we end up making choices.

Since 2018, we now have a second psychologist in the ranks of noble prize winners. Richard Thaler built upon the work of Kahneman and Tversky and zoomed in on how to make use of System 1-System2 thinking to nudge people into better decision-making in wealth, health, and happiness.

 

Our hard-wired tendency to persuade

When it comes to our attempts to influence minds and shape behaviours, our biggest fallacy is that we always tend to persuade the other with rational arguments. The problem with persuasion is two-fold:

  1. Persuasion evokes system 2-thinking, and we don’t like that. When you try to persuade someone, you want them to think about your argument. Thinking complicates things.
  2. System 2 is the little slave of system 1: we only accept rational arguments or facts when they align with how we already think about matters. You can only persuade someone who’s already convinced.

The real challenge is to make a decision making extremely easy. More about designing choices:

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5. Behavioural Designers think ‘outside-in’

When we try to influence minds and shape behaviour, the most common mistake we make is to think inside-out. We take the benefits of our product or service as our point of departure, and we try to figure out how we could pitch those benefits so that people would realize the value of what we have to offer. Behavioural Designers work the other way around.

We take the human behind the customer as our focal point, and we try to figure out what this human needs to be successful.

Which anxieties, doubts, prejudices or bad habits he holds stand in the way of embracing the desired behaviour or which pains or frustrations we could solve for him.

The SUE | Influence Framework©

We developed the SUE | Influence Framework© as a tool to do outside-in thinking systematically,. This model brings all the forces to the surface that influence the behaviour of the people for whom we need to design interventions. The Influence Framework© consists of five questions we need to answer to understand why people do what they do and how to get them to act:

  1. Job-To-Be-Done: What is the underlying goal for which people would have to embrace the new behaviour? How might we align the desired behaviour with goals that matter to them?
  2. Pains: What are possible frustrations and pains in their current behaviour, for which we need to come up with a solution?
  3. Gains: What are the benefits we have, compared with their current solutions?
  4. Anxieties: What are anxieties, doubts, prejudices or other barriers that prevent someone from embracing the new behaviour?
  5. Habits: Which habits keep them locked in their current behaviour?

Finding the answers to these questions will provide you with a blueprint of where to spot opportunities for behavioural change. In this video, you can find a brief explainer of the SUE | Influence Framework©.

 

More about outside-in thinking:

6. Behavioural Designers work with principles from the science of influence

The next step in the Behavioural Design Method© is about turning a deep understanding of the forces that explain people’s behaviours, into ideas for behavioural change.  These are two different games. Whereas the SUE | Influence Framework© uncovers the unconsciousness of people, is this part about applying principles from the science of influence to come up with solutions on how to change behaviour. We have developed a helpful tool for this: the SUE | SWAC Tool©:

It is foremost a very easy-to-use tool. It explains which four pieces of the puzzle you need to solve to create a context that will persuade someone into doing something and to have them keep doing it. What makes the tool so easy to use in practice, is that anytime you want to design for behavioural change, all you have to do is ask yourself four simple questions:

  1. How can we make sure someone WANTS to perform the new behaviour?
  2. How can we make sure someone CAN perform the new behaviour?
  3. How can we SPARK new behaviour at the moments that matter?
  4. How can we activate this new behaviour AGAIN and again?

 

When the new behaviour does not happen, at least one of those four elements is missing. The most important implication of this is that by using the SUE | SWAC Tool© as a guide you can quickly identify what stops people from performing the behaviours that you seek.

If a sufficient degree of capability (CAN) to perform a behaviour is matched with the willingness (WANT) to engage in that behaviour, all that is then needed for the behaviour to occur is to set someone into action (SPARK) at the Moments that Matter.

Maybe you notice that in the tool it says moments that matter. Not one moment, but moments. As we learned, behavioural change doesn’t happen overnight. Most of the times someone needs to be reminded of the desired behaviour more than once for it to happen in the first place. Furthermore, behaviour becomes easier when repeated. Therefore, we have to make sure we SPARK someone AGAIN and again to activate the desired behaviour. So, you need to design several interventions at multiple moments that matter. In practice your intervention strategy will look something like this:

The objective of most intervention strategies is to not only to change behaviour, but to change this new behaviour into a routine behaviour (a habit), so the new behaviour will stick.

Often your desired behaviour is new behaviour for people and that’s why it is important to spark behaviour AGAIN and again. Only then the behaviour will take place, as illustrated above as the BEHAVIOURAL CHANGE THRESHOLD. When your objective is to design repeat behaviour, it almost goes without saying that you have to make sure the desired behaviour is performed repeatedly. If you can make someone perform new behaviour over and over AGAIN, it can become automatic.

7. Behavioural Designers research, prototype, test

The more familiar you get with how the brain works and how influence works, the more you become aware that human behaviour obeys a different kind of logic than formal logic. Rory Sutherland calls this “psycho-logic” in his brilliant book Alchemy.

The way people make decisions is highly context-sensitive. These decisions are full of stories they tell themselves and full of irrational beliefs they hold. Furthermore, even the slightest difference in how something is framed can dramatically affect how people perceive the meaning. When an English native speaker says they think something is “interesting”, it usually means precisely the opposite. Whereas a non-native Dutch audience would think “interesting” means what they think it means.

The importance of doing the research yourself

That’s why research and prototyping are so important. Before you come up with an idea for behavioural change, you first need to fall in love with the problem. You observe or interview humans and try to put yourself in their shoes. You’ll be surprised about how many thoughts and beliefs you hold are projections of your limited worldview onto the world of the target audience you want to influence.

Prototyping and testing are all about finding out which variation of your intervention has the highest potential to design perception, attention, curiosity, experience, behaviour or habit. Even with the clearest of insights, you can still develop an intervention that ultimately misses its desired effect. What you thought your intervention was supposed to trigger sometimes triggers the exact opposite.

More about prototyping and testing:

Want to shape behaviour and decisions?

Then our two-day Fundamentals Course is the perfect training for you. You will learn the latest insights from behavioural science and get easy-to-use tools and templates to apply these in practice right away!

Download the brochure

Go ahead, it’s completely free of charge!

8. Domains of Behavioural Design

The number of applications for Behavioural Design is endless. Because in the end, most of the things we do as humans aim at influencing the behaviour of others. You can apply it from managing teams to the design of products. Or from getting people to buy products to changing the way they perceive a service or experience. And from the creation of financial habits, personal habits and healthy habits till the raising of children. At SUE, we’re particularly fascinated by six specific domains for behavioural change:

  • customer behaviour (product, marketing, sales)
  • citizen behaviour (government/society)
  • financial behaviour (financial independence)
  • voter behaviour (politics and government)
  • self-improvement (personal development)
  • team-behaviour (organisational design)

Most of our blogs and our weekly newsletter “Behavioural Design Digest” is about one of these topics.

 

9. Start to learn more about Behavioural Design

Now you have a deeper understanding about what Behavioural Design and how you can apply the Behavioural Design Method to influence minds and shape behaviour, there’s a couple of next steps you can take to learn more about the method:

  1. Subscribe to our weekly newsletter Behavioural Design Digest, in which we take a closer look at how influence works in daily life.
  2. Subscribe to one of the upcoming editions of our Behavioural Design Academy courses and master the SUE | Behavioural Design Method© to create next-generation, people-centred products, services, campaigns or policies.
  3. Book in-company training for your team and learn the method while applying it to a critical business challenge for your organisation.
  4. Hire SUE to run a Behavioural Design Sprint to fast-track your innovation, transformation or growth by leveraging behavioural science to develop people-centred products, services, campaign or policies with an evidence-based approach.
  5. Book SUE for a keynote or workshop (contact us).
  6. Check or frequently asked questions and discover answers to questions you didn’t even know you had.

How do you do. Our name is SUE.

Do you want to learn more?

Suppose you want to learn more about how influence works. In that case, you might want to consider joining our Behavioural Design Academy, our officially accredited educational institution that already trained 2500+ people from 45+ countries in applied Behavioural Design. Or book an in-company training or one-day workshop for your team. In our top-notch training, we teach the Behavioural Design Method© and the Influence Framework©. Two powerful tools to make behavioural change happen in practice.

You can also hire SUE to help you to bring an innovative perspective on your product, service, policy or marketing. In a Behavioural Design Sprint, we help you shape choice and desired behaviours using a mix of behavioural psychology and creativity.

You can download the Behavioural Design Fundamentals Course brochure, contact us here or subscribe to our Behavioural Design Digest. This is our weekly newsletter in which we deconstruct how influence works in work, life and society.

Or maybe, you’re just curious about SUE | Behavioural Design. Here’s where you can read our backstory.

sue behavioural design
Behavioural Economics 101: We’re Only Human.

Behavioural economics 101: We’re only human.

By All, Behavioural Science Insights

Behavioural economics, maybe you have asked yourself once or twice, what’s all the fuss about? Why is everybody talking about us not being rational and capable of making good decisions all of a sudden? Is Behavioural Design something you should add to your competence gamma, and if yes, why so? This is a short introduction to behavioural economics. Meant to bring you up-to-speed with what everybody seems to be talking about right now in a simple way. In fact, I could summarise what’s in it for you in one sentence: 

If you want more control over successful outcomes, you have to understand you are dealing with humans, not econs. 

 

behavioural Design

The difference between economics and behavioural economics

Okay, I admit this sounds vague without any background. Basically, it comes down to a difference in paradigm on decision-making between economists and psychologists that gave birth to a beautiful cross-over between the two: behavioural economics (also known as behavioural psychology). What is it all about?

Let’s start with a problem we have probably all faced. Many new products, ventures, policies or innovations of any kind fail because they don’t take a deep understanding of human decision-making into account. They are inside-out, not inside-in driven. Therefore, innovations are often technological high-end, make things more cost-effective or offer different unique selling points, but they don’t start at the end. How do people choose for your offering? What psychological effects does pricing have? What’s, is the impact of social influence? Does the way we display products or frame policies affect decision-making? Which unconscious psychological forces influence our decision-making? Do those forces make objective sense?

According to an economist, the answer is:

  • Decision-making is rational.
  • People make a cost-benefit analysis.
  • The utility is a critical driver of any choice we make.

However, if you have ever had any regret after purchase or not making a purchase, you know that economist rule out one crucial factor: emotion. Emotions from within and emotions attached to what we think others think or expect from us. We are not 100% rational (or econs); we are filled with emotions and sometimes make decisions that are a far cry from most optimal for ourselves or our future.

Behavioural economics put emotions into the economic equation.

Bounded rationality: critical concept of behavioural economics

Furthermore, economists propose people always have all information at hand to make informed decisions. But is that true? First of all, we are bombarded with information all day long via multiple channels and media. No sane person can process all this rationally. Secondly, do we truly have all information to make informed decisions, for example, about our future? This is where we really have to make crucial decisions, after all. Buying an ice cream is not so hard but deciding upon your mortgage or pension plan is a whole different ballgame. Do you have all the information at hand to make a 100% rational decision here?

For example, do you know exactly your income level in 5, 10 or 15 years? Do you know what the inflation ratio will be in the same periods? Do you know what your health level will be like? Will you be able to work full-time, part-time or be out of work?

Rationality requires completeness of information, computational abilities, consistency in decision-making and cognitive skills (ability to think through a problem unemotionally). No human scores 100% on all these factors. So, what do we do when faced with a decision? We rely on short-cuts and social cues in our context and past experiences. We are only human, after all.

Taking the human, so-called bounded-rational part of us into the decision equation is what behavioural economics is all about.

Behavioural economists have researched and unlocked these human tendencies for years. Behavioural Designers take this behavioural science to design environments that help shape positive behaviours and choices of people. In fact, by using the exact science and combining it with design and creativity, we can create tangible products, services, policies, or organisations that help people make better decisions for their health, wealth and happiness.

Behavioral Design is applied behavioural economics.

Want to shape behaviour and decisions?

Then our two-day Fundamentals Course is the perfect training for you. You will learn the latest insights from behavioural science and get easy-to-use tools and templates to apply these in practice right away!

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Go ahead, it’s completely free of charge!

Behavioural economics: a game of choice architecture

One final note: How can we design environments that shape positive behaviours and better choices? Often, we think we need disclosure. Make sure you provide people with all the required information to help them make their informed decision. Unfortunately, that again is an econ approach to matters. Even if you help people with the information they need for a particular decision, we as humans often don’t use it. Most of the times, we know what is good for us but don’t act upon it.

For example, we all know exercising is good for us, and I guess we have all made a plan to do some form of exercise one day or the other, but most of us either started and stopped or are still procrastinating. This is known as the planning-action gap or intention-action gap. This is not new, of course, as we see in general three tools being applied to get humans into action:

  1. Restrictions (you cannot buy alcohol under the age of 18)
  2. Incentives (if your child attends school five days a week, you will get more child support)
  3. Selling (convincing people by telling them about benefits or USPs)

Behavioural Designers use another tool: choice architecture. We take humans and a deep understanding of their decision-making processes as a starting point to design a context that triggers better choices and behaviours. We do it using our SUE | Behavioural Design Method©, a highly structured, practical approach to turn human insights into strategies and ideas that influence better choices and shape positive behaviours. Basically, turning the breakthrough science of human behaviour into practical applications. What this results in, you can check out on our success stories page.

Summary: What’s behavioural economics all about

For now, I just want to wrap it up with the three things to remember when designing better choices and behaviours:

  1. You are dealing with humans, not econs
  2. Humans use cues in their context to make decisions
  3. You need to be aware of the intention-action gap

Taking these three principles as starting point already jumpstarts you in thinking as a behavioural designer. And understanding what all the fuss about behavioural economics is about (and how important it is to get a grip on success).

 

Astrid Groenewegen

 

Cover visual by Red with the Red Hat on Unsplash.

BONUS: free ebook 'Behavioural Economics: the Basics'

Especially for you we've created a free eBook 'Behavioural Economics: the basics'. For you to keep at hand, so you can start using the insights from this blog post whenever you want—it is a little gift from us to you.

Download ebook

Go ahead, it’s completely free of charge!

How do you do. Our name is SUE.

Do you want to learn more?

Suppose you want to learn more about how influence works. In that case, you might want to consider joining our Behavioural Design Academy, our officially accredited educational institution that already trained 2500+ people from 45+ countries in applied Behavioural Design. Or book an in-company training or one-day workshop for your team. In our top-notch training, we teach the Behavioural Design Method© and the Influence Framework©. Two powerful tools to make behavioural change happen in practice.

You can also hire SUE to help you to bring an innovative perspective on your product, service, policy or marketing. In a Behavioural Design Sprint, we help you shape choice and desired behaviours using a mix of behavioural psychology and creativity.

You can download the Behavioural Design Fundamentals Course brochure, contact us here or subscribe to our Behavioural Design Digest. This is our weekly newsletter in which we deconstruct how influence works in work, life and society.

Or maybe, you’re just curious about SUE | Behavioural Design. Here’s where you can read our backstory.

sue behavioural design

How to make better financial decisions: mental accounting

By All, Behavioural Science Insights

Did you know we treat money differently depending on where it comes from, where it is kept, or how we label it? In this blog post, I want to introduce you to the concept of mental accounting. A fascinating psychological phenomenon affecting many of our financial behaviours, such as the way we spent and save money or value things for which we’ve paid money. Understanding more about mental accounting could help us design better financial decisions and behaviours. And understand why some people seem to make financial decisions that don’t always seem to make sense or be in their best interest.

Mental accounting: How humans violate the economic theory

Why mental accounting is so fascinating is that it simply explains why 1 euro isn’t always 1 euro. From an economic theory perspective, this might sound foolish. The value of 1 euro and another euro on the same day is equal. We have a whole international money rate system in place that can tell you the exact worth of your euro at any precise point in time. In four digits. Also, economists believe that it shouldn’t matter if you have a 100-euro banknote or five 20-euro banknotes. It is the same amount of money, and you will spend it the same way; after all, they are exchangeable. However, psychological research has shown that humans often violate this rational approach to money. 

This works may be easiest explained by an example described in the landmark paper of Richard Thaler (1), the author of the influential book ‘Nudge‘ and a Nobel prize laureate. Let’s say you have bought a ticket to a concert and it cost you 50 euros. You made your way to the concert venue, you have dressed up nicely, you have arranged a babysitter, and if you say so yourself: you look good. You are more than ready for the evening out that you have anticipated for weeks. You get to the entrance, reach into your pocket to find out that you have seemed to have lost your ticket. After going through all the stages of grief: denial, pain, anger, depression, acceptance, finally, hope kicks in as you see the ticket booth is still open. You quickly head over to the ticket booth to find out you don’t get your ticket reimbursed but have to pay another 50-euro for a new ticket, which is luckily still available.

Okay, same scenario, but just a bit different. You want to see that same concert, again you dress up nicely, sprayed on a bit of cologne because it is a special night out, after all, the same babysitter is there to attend to your kids, and you head over to the concert venue. When you go over to the ticket booth to buy yourself a ticket, you realise the 50-euro banknote you had put in your pocket to pay for the ticket fell out. After almost panicky going through all your pockets, reality sinks in. The 50 euros are gone. Luckily, the time tickets are still available; you have to get out another 50 euros to buy the ticket. 

The interesting question is would you do so in both situations? From an economist perspective, the exact same situation: You have lost 50 euros, and you have to pay another 50 euros to attend the concert. So, there shouldn’t be a difference in the decision you make. However, Thaler’s research found that people in the first scenario are far more likely not to buy a second ticket, whereas people in the second scenario do. 

If you lose cash, it turns out you’re willing to buy a ticket. If you lose a ticket, you do not want to buy a second ticket.

Would you like to know more?

We have created a brochure telling you all about the details of the Behavioural Design Sprint. Such as the set-up, the investment, the time commitment, and more. Please, feel free to contact us any time should you have any further questions. We are happy to help!

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Mental accounting: What is it, and how do people do it?

Mental accounting explains this story. What is mental accounting? It is the idea that people tend to label money. And the moment you label money differently, it gets spent differently. 

People tend to label money. And the moment you label money differently, it gets spent differently.

 So, how do people mentally account? Well, there are several different ways in which people put money into different psychological categories: 

  1. You could mentally account by purpose. You can allocate money to a specific product or service, or objective. This is what happened with the concert ticket. It was assigned to the concert, losing the ticket felt we had lost out on the concert in our mental account. You think you are already in the ‘red’. You are not going to make it worse by spending even more money on the same product. But allocating money to savings is another way to mentally account by purpose.
  2. You could mentally account by time. You could say I will spend X amount per week or budget that many euros each month.
  3. You could mentally account as a function of how you have earned money. If you have put in many hours of hard work to make your money, you will spend it differently if you have earned it by winning a lottery. 

Mental accounting: The sunk cost effect

Let’s take a look at another way mental accounting influences our behaviour. Let’s get back to the concert. Let’s say you have the ticket, only this time there is a difference in how you acquired that ticket. In the first scenario, you have prepaid for it; in the second scenario, the ticket was a gift. Imagine this situation, on the evening of the concert, there is this raging blizzard storm, and the concert is a two-hour drive away from your home. Would you go to the concert in both scenarios? If you would rationally think about it, you wouldn’t go in both situations. It is much safer to snuggle up comfortably on your couch. However, most people who have prepaid the ticket will make an effort to drive a few hours through a blizzard storm to attend a concert that they (only) paid $20 for. This is caused by a phenomenon known as sunk cost fallacy

If people have spent effort, time or money on something, they will commit to the behaviour related to it; otherwise, they feel they lose out.

The moment you spend money to consume something in the future, our sunk cost effect of mental accounting kicks in. The moment you prepay, you have a deficit in your account. If you cannot consume, then you have to close your account in red. It’s like making a loss. People don’t like making losses, so they rather get what they paid for than perhaps make a better decision not to consume something. For example, if people spent 60 euros on a four-course dinner, but they are already full at the third course, most of them will eat dessert anyway. I paid for it! It feels like a loss not to go or not finish all your plates.

Another example made famous by Richard Thaler is about a man who joined a tennis club and paid a $300 membership fee for the year. After just two weeks of playing, he develops a case of tennis elbow. Despite being in pain, the man continues to play, saying: ‘I don’t want to waste the $300.’ (2)

The sunk cost effect becomes a huge motivator of consumer behaviour.

However, the intensity of the sunk cost effect isn’t always the same; it depends on how closely the cost and benefit are connected. Let me give you an example of how this works. Let’s say you love skiing and you have booked yourself a trip to the French Alps. You got yourself a four-day ski pass giving you access to all the ski lifts for the four days at the costs of € 160. You enjoyed the first three days, and then all of a sudden, the weather conditions change dramatically: Big snows, fog, heavy winds. No skiing conditions that will bring joy. The same scenario, but now you have bought four separate tickets of € 40 with which you can hit the slopes for four days. In which situation would you go out skiing on the fourth day?

This was researched (3), and it showed that people who bought the one ticket would be more prone to stay in. However, the people who had four separate tickets were far more inclined to go out and ski anyway. They felt the €40 burn in their pocket (cost) and want to experience the benefit (skiing). The all-inclusive ticket is, in fact, a form of price bundling. This leads to a ‘decoupling’ of costs and benefits. The effect being it reduces someone’s attention to sunk costs and decreasing a consumer’s likelihood of consuming a paid-for service. In other words,

Price bundling affects the decision to consume.

Now, it becomes interesting how we can use these insights to design for better choice and positive behaviour.

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Mental accounting: Using it for better decision-making

Being aware of the human tendency to engage in mental accounting and being affected by the related sunk costs effect can help us develop behavioural interventions that can help people make better decisions. I want to end this blog post with an example of how this might work. 

A lot of people find it challenging to spend less money than intended. You can make this easier for them by partitioning. How does it work? Let me illustrate this with a real-life example that took place in India. In India, there are quite some low-income households with very little spare cash. Salaries are often paid in cash, making it very easy for family providers to spend it, for instance, in the bar, after a hard days’ work. Still, people also needed money for the children’s upbringing, for example. 

Those households typically earned 670 rupees per week (£6,60 or $11,20), and most families only managed to put aside 5 rupees per week (0,75%) (4). The intervention they did is divide the money into envelopes before handing it over to the beneficiary and partitioning it beforehand. It increased the savings rates to 4% (27 rupees per week)(5). What made it even more successful is putting a visual reminder on the envelopes. So, for example, a picture of their children on the envelope contained money for their upbringing.

You could also use this for yourself. We are also more reluctant to spend money we have already mentally allocated for savings. You can distribute very physically, like the envelopes, but think about labelled jars in which you divide your household money. Viviana Zelizer, a sociologist at Princeton, calls this ‘Tin Can Accounting’ (6). The more digitally savvy translation of this is the digital saving buckets many banks offer nowadays, in which you can allocate your savings to specific goals. It will be harder to withdraw money from an ‘ultimate wedding dress’ or ‘summer family holiday’ bucket than from a general savings account.

Summary

We, as humans, often make very emotional decisions when it comes to money. It largely depends on how we have earned, labelled or how our money is kept, how we will treat money and how we value what we bought with the money. This largely influences our behaviour. A euro isn’t always a euro, and a dollar not always a dollar. It may sound illogical, but it will make perfect sense once you understand the concepts of mental accounting and the sunk cost effect. We need to take these psychological phenomena into account if we want to help people make better decisions.

Astrid Groenewegen

 

Cover visual by Kelly Sikkema on Unsplash.

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