behavioral science experts

behavioral science experts

The Impact of Behavioral Science: Insights and Applications

1. Introduction to Behavioral Science

Integrating behavioral science into public policy has the potential to help governments increase the effectiveness, efficiency, and equity of services. Behavioral insights (BI) use the insights from behavioral and social science research to improve decision-making and behaviors in the everyday lives of people and institutions. Integrating these insights into public policy can improve it, leading to programs that are more cost-effective and evidence-based. This can be achieved through the application of naturalistic experiments and interventions where choice architecture is considered. The use of behavioral science in policy also helps support policy development, identification of program impacts, and considering psychological needs and biases in program design.

Insights from behavioral science affect not just human behavior but the processes and institutions by which individuals make decisions in real life, breaking down hyper-rational views of behavior in classical economics and their impact on policy and making systems that underlie well-being. This allows for a more holistic approach to policy with a more accurate vision of real behavior. Given both potential and limits, economists and other policy analysts should use BI methods lightly and socratically, integrating them into ongoing iterative cycles of learning and improvement for the effectiveness of their intended policy goals. Overall, integrating BI into policymaking in the real world requires an ongoing commitment to developing the right culture alongside the right methodologies and capabilities.

2. Theoretical Foundations and Key Concepts

This report is an exploration of the recently noted convergence between “hard” and “soft” sciences, the stage of which is the growing use by economists of concepts developed primarily in the field of psychology. The central goal is to offer a simplified survey of some of the major applications to date: the canonical models and their behavioral hooks, the critiques and rationalizations, the new insights and their supporting experimental evidence. This survey is neither systematic nor rigorous, but it does explore a range of concepts and professional controversies that have been ignited in refereed journals, rather than just discussed informally by the water cooler. The primary aim is to offer the lay reader a concise, nontechnical framework for thinking about some of today’s most fascinating economic policy issues and puzzles.

Most of the policy applications will be transfer cases, where lessons from psychology might be imported into economics to make models more realistic or to deliver fresh insights about behavior in other settings. These will be supplemented by a small number of applications to consumer behavior and capital markets, areas where an economist would agree that psychology already reigns supreme. It is an outstanding question how many of the effects and findings in these key areas come from the framing of the experiments. Throughout, this report is complementary to the excellent surveys on the focus issues, on individual contributions and line of research, not only economics but also other disciplines, by numerous specialists. As such, it should not be seen as a substitute for that work, but rather as a supplement plus digest.

3. Applications in Various Fields

Consider a number of major fields other than economics in which behavioral science has had potentially important payoffs. (For reasons of space, my discussion, unfortunately, skips many interesting areas.)

Advertising: Many important recent advances in advertising and promotion implicitly utilize the concept of consumer attention.

Consumer demographics: Evaluations of progress in generating accurate demographic projections depend heavily on whether increasing household diversity is accompanied by increasing household similarity in response to consumer markets. The Census 2000 products famously confused researchers by counting African-Americans only once, given that many persons of mixed ethnicity are likely to fit the Census category and eligibility for related benefits depends on adherence to this scheme. This case is an encapsulation of a more general policy issue: If a society or market consists of people who are roughly 50% A and 50% B, how should markets allocate resources to cater to this demand?

Early childhood development: The importance of early years growth on long-range capability is a central insight that behavioral economics both anchors and has applied through field techniques.

Educational investment: The gap between normative and actual educational behavior undermines much of what we think we know about important factors relating to long-term educational success. Separately, the debate between those who argue that people need more quantitative education and those who say people should know more economic and financial theory is overblown and not very relevant.

Energy conservation: Behavioral economics has long had useful insights into energy pricing, which are well summarized in a prior volume of the Symposium.

Marketing research: Just as important as understanding customer purchasing patterns is recognizing that some aspects of specification, which come from surveying firms instead of households, are more substitute inputs and outputs than true products and services. Organizations that use this knowledge profit by aligning the culture they either build or rebuild to the production of truly desired goods and services.

4. Ethical Considerations and Future Directions

The insights of this report provide a foundation for analyzing the psychological dynamics of behavior, understanding the challenges related to designing choice architecture, and considering behavioral applications in the pursuit of national goals. Nudging, while consonant with economic theory within a more realistic model of human behavior and easier to implement than traditional economic tools, also has links to this broader happiness or flourishing goal. As our report illustrates, it often relies on private firms and organizations, rather than the government, to find out what people actually want and to provide products to meet these wants.

But many people have questioned the sufficiency of these existing ethical links. Is it enough for the state to remain neutral as to the question of which preferences it should support, or just any allegedly true preferences? Our report does not claim to have resolved these fundamental questions, but it certainly provides innumerable empirical insights and a good deal of associated practical wisdom that is relevant to these deeply important normative questions. These differences among citizens reflect their diverse values and preferences, and individuals’ evaluations of policies are also partly driven, as that report hints, by people’s judgments of generally important psychological factors that influence behavior.

We have shown, in this report, how even small differences in the choice architecture provided by policymakers can have a significant impact on behavior. And most studies of behavioral modifications aimed at increasing individual or social well-being applauded changes that could be thought of as respecting people’s autonomy, since improved transparency, simplicity, and relevant information for enabling people to make informed and autonomous decisions were among their corresponding key features. Advice on whether to adopt any change in the choice architecture that the research suggests, or indeed on what choice architecture is best, can be daunting to policymakers. The burgeoning literature on insights from psychology, behavioral economics, and fields such as cognitive and social psychology has both elevated the importance of these questions and deepened our understanding of possible answers.