Human beings are inherently irrational, but predictably so. That’s the core principle behind the field of study known as behavioural economics (BE). In contrast to more traditional economic theories that are firmly rooted in rationality, BE accepts that human behaviour at times appears illogical and seeks to understand why that may be.
Governments around the world—including here in Canada—are turning to BE to help understand behaviour change to inform policymaking. For example, groups like the Behavioural Insights Unit within the Government of Ontario are using BE to “help government design and redesign public services that better reflect how people actually respond to, engage with and use these services”.
Hitting the right note
BE tends to focus on individual moments of decision-making and seeks to explain and understand the choices made in these moments. For example, in a well-known study on organ donation, researchers Johnson & Goldstein found that in countries where everyone was listed as an organ donor by default saw donation rates that were up to twice as high as other nations. In this context, people tend to pick the easiest option to avoid a complex decision—this is what behavioural economists call the “default bias”.
While BE can be useful for giving governments a general understanding of the reason for certain behaviours at a specific moment, it doesn’t provide a complete picture. By focusing so closely on a single moment in the experience, it’s easy to overlook the sequence of events and other factors that impact the outcome. To understand how individual moments of decision-making fit into a larger experience, it’s necessary to engage another mode of thinking—this is where service design comes into play.
Using service design helps the team understand the different decisions being made. Is the person likely to feel overwhelmed by the number of decisions? If they are overwhelmed, the user is more likely to just go with the default. Alternatively, if they are not overwhelmed, is it possible that they have been told a piece of information at the start that is influencing their decision. The anchoring effect occurs when people rely too heavily on the first piece of information given about a topic. We can investigate to learn if there is an anchoring effect that is impacting the outcome.
BE while useful on its own, becomes even more powerful when used in conjunction with a service design methodology. To use an analogy, BE is like the notes of a song and service design is like the rhythm. A great song needs to get both the notes and the rhythm right to get people moving. Similarly, by using BE and service design together, we can “get it right” and orchestrate service experiences that promote desired behaviour change. These two disciplines can work well together. So perhaps it’s time to think like a great composer and experiment with using behavioural economics in harmony with service design.Customer Experience Managementhuman centered designInnovationJourney Mappingprocess improvementservice designuser experience design