One day, when I was a kid, I had a philosophical argument with my brother. I had a math test coming up, and I was grumbling about studying for it – nothing too controversial there. His stance, however, was that not only would I study, go to school, and take the test as planned, but I would do so because in my heart of hearts that’s what I wanted to do. He outrageously extrapolated this to make a general prediction: everyone always did what they really wanted to do, even if the choices they made often seemed, frankly, fundamentally unpleasant.
In my mind, this was the height of stupidity. Obviously I didn’t really want to go to school for an exam more than I wanted to hang out with my friends, or stay at home and watch MTV (this was the 80s, after all). Surely my parents didn’t want to go to work more than they wanted a day off, either—and they were grown-ups, far more rational than I. Examples that refuted his point abounded.
Or did they?
When forced to follow my choices through to their logical conclusion, I was somewhat dismayed to admit that the consequences of not studying or taking the test would, in the long run, cause more trouble than they were worth. I was too rule-based even as a kid to consider skipping out altogether and getting a zero, so if I tried to postpone the inevitable I would have to come up with some credible story for my math teacher in order to schedule a make-up exam. On to option 2: if I didn’t study, but still showed up for the exam, the likely outcome of getting a low score would not only be a horrible blow to my ego – I was good at math! – but it would also bring my grade down significantly and could end up landing me in a different class than the one my friends were in: this was a social risk I was not willing to take. Speaking of friends… actually telling them that I had bailed while they had all stepped up to the plate was alone more than I wanted to face. And perhaps worst of all, informing my science-minded parents that I had decided not to avail myself of the joys of trigonometry was mortifying.
Clearly the deck was stacked: I would study, and I would go to school to take the exam, if for no other reason than that I either feared the consequences not doing so, or found the alternate to be such a hassle that it wasn’t worth it. As much as I was loathe to admit it, was there some truth to my brother’s theory?
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Economic theory has traditionally assumed that individuals make wholly rational financial decisions, using all the necessary information they had at their disposal to achieve ends in their own best interest. The field of behavioral economics recognized that this was not typically the case—and, in fact, rarely was— and grew out of a desire to provide additional cognitive and psychological insight into the process of decision-making to better understand both how people interpreted their options and how those perceptions affected the choices they made.
In recent years, behavioral economics has gained a fair amount of publicity and traction as a strategy for developing policy solutions in which the unpredictable nature of human behavior plays a significant role. When we begin to think of ‘economics’ as a more complex system of exchange that extends beyond finance, we can not only start to see how and why people make less rational—but perhaps more ‘human’—choices, but also why it may be valuable to apply theories derived from behavioral economics to design.
The concept of 'value’ itself casts a long shadow in economics history as a monetary measure, but in everyday use we realize that, in fact, it has much broader applications: consider the very real value of time, convenience, social currency, or experience. We pay people to clean our houses because we value tidy homes and clean laundry… but we value saving the time and effort it we would have spent to do it ourselves even more, and are willing to exchange money to avoid the chore and spend that time doing other things. Abstract ideas of 'gain', 'loss', ‘risk’, and 'investment' have similar wiggle room; while these terms make perfectly fine economic sense, they can also apply more broadly in more human, non-quantitative ways.
Consider my brother’s philosophical position, for example. Clearly there was little financial risk at stake in my decision to take the exam or face the consequences, but my perceptions of risk, loss aversion, and a weighing of current and future needs were embedded in nearly every aspect of my decision-making even if I didn’t realize it at the time. Fundamentally, the decisions we make are often inextricable from how we see ourselves; my hesitance to blow off that exam was tied as much to my perceived identity as someone who did well in school and strong kinship ties to my peer group than to any traditional financial benefit. This sense of identity is deeply tied to the things we value, both tangible and intangible.
Current applications of behavioral design way to exciting new strategies and tools that can help behavioral scientists and designers understand the choices users make and create better approaches to those challenges. Through a deeper understanding of the ways in which people problem-solve and make decisions, and focusing on key known tendencies—such as the fact that humans respond to vivid, anecdotal, and easily available information, have a difficult time balancing present-tense needs with future ones, and have deeply-seated needs to moderate their behavior based on their sense of relevant personal identities and peer influences—we can design solutions that leverage and/or counter common cognitive biases more effectively. We can start to incorporate behavioral economics into research, analysis, and ideation by considering factors such a:
Consider how concepts of gain, loss, risk, and uncertainty apply to decision-making
Recognize ways in which people exchange specific kinds of value, like time and money
Understand how emotional and social pressures can act as strong behavioral drivers
Provide feedback from the right source, at the right time and level, for maximum effect
Explore how self-control strategies work—or don't—in order to improve them
Decouple aspects of value, cost, and use to create new kinds of business models
But extending the design field by folding behavioral economics strategies into existing methodologies is just a start. Much in the same way that ethnographic research reached across domains to inform user-centered research, eventually becoming an integral component of the discipline, behavioral economics has the potential to radically shift how we think about and solve for humanity-based challenges. By incorporating generative, user-centered research into behavioral science we can contribute a critical lens of user context while retaining the sense of quantitative legitimacy that empirical studies excel at. Establishing leading and lagging metrics for measuring success can help design lead when behavioral solutions are too future-oriented or systems-driven to test with randomized control trials. And creating diagnostic and analytic behavioral-economics-informed tools for problem-solving can serve as the basis for more systematic and satisfying applications of design thinking to situations that are ambiguous or otherwise difficult to wrangle. Clearly, there is no shortage of directions to pursue; the problem is not in identifying how behavioral economics might inform strategic design thinking and vice versa, but figuring out which approaches to tackle first.