One of the key insights of behavioral economics is that people don't do what they know they should do;. That information by itself is just not enough to move the needle. But Kristen Berman is trying to change that, by doing what Greg calls “Pracademics” - putting academics into practice.
Kristen Berman is the co-founder of Irrational Labs with Dan Ariely, the co-founder of the Common Sense Labs for Financial Wellness at Duke University, and was also involved in founding Google's Behavioral Science Lab.
Today, she and Greg talk about whether the move to relying on data is a technological or cultural shift, the importance of mental models managing friction, and visible norm-setting.
Episode Quotes:
Information by itself is just not enough to move the needle / intention action gap:
So I tell you about compound interest, that does not mean you'll actually invest money. Now, this does not mean we're stupid. We can learn. So if I tell you about compound interest, you will learn about compound interest. The gap here is the doing, right? The gap here is not learning. And so that's really where behavioral science comes in. It says there's an intention action gap. We may know something about diet and exercise or investing money, but actually doing it is a problem.
Delayed reinforcement isn't effective:
The worst offenders of this are employee wellness plans. Employee wellness plans basically ask you to do something, and then at the end of the quarter, they may give you a $50 gift card to Starbucks. And lo and behold employee wellness plans have failed, with lots of money put towards them, to actually change any health outcomes. Some of that is self-selection where people who are already healthy are self-selecting into the employee wellness plan. And some of this is just bad design where I do something today, and in a year, in a quarter, my employer will tell me thank you.
Using social proof to change behaviors:
If I could do a crazy experiment, I would probably pay people to exercise outside in a community that has a higher likelihood of obesity. Visible norm setting is very important. If you're in a community that you don't see something happening, either because it's invisible like savings or because people just aren't doing it like working out, we really have an opportunity to figure out how we can get that social norm to be more visible. So paying people to run outside, you can imagine you see somebody running outside, you're like okay maybe I'll try it.
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