Behavioral Economics, Social Change, and O’Reilly Media’s “Designing for Behavior Change”, by Stephen Wendel


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O’Reilly Media’s “Designing for Behavior Change”, by Stephen Wendel

Change is hard.  Many entrepreneurs, especially those seeking to create social good, want to address and solve problems, and help transform the world. Yet, even as people, markets, and populations suffer in various ways, human nature does not always act in its own best interest to use the solutions at hand to alleviate this suffering. Social entrepreneurs must understand human nature – that we will more often not take the easy path, than one that is difficult; that we have repetitive ingrained habits that operate separately from conscious decision-making, and that our will and best intentions are often overriden by convenience, comfort, and laziness.

This is why O’Reilly Media’s new title, “Designing for Behavior Change” by Stephen Wendel, is a timely and well-developed answer to this age-old problem. The book outlines the idea that behavior is in essence a muscle, and one which users and clients need to have reinforced through product functionality and features, in order to increase effective decision-making, and create positive outcomes. The premise of reviewing behavioral economics and psychological “shortcuts”, then lets product features and program components act as an automator of decision-making and muscles that users and clients are otherwise too unstable or undisciplined to complete on a recurring basis. “Ideally, the company should find ways to shift the user’s burden onto the product, by identifying clever ways to make active participation by the user unnecessary beyond giving informed consent (Chapter 3, pgs 49-50).” One example given is the auto-enrollment for 401(k) savings plans; employees are defaulted into participating, but are allowed to decline if they prefer. The volume of participation was found to be twice as high with a default requirement, but Wendel also points out that there is a fine line “between voluntary behavior change and trickery (Chapter 3, pg 51).

In my work as the founding partner of the NW Social Venture Fund, a humanitarian organization committed to social change through leading various initiatives that foster scalable social entrepreneurship, including the development of the Hacking Social Impact Unconference for geeks, social founders and impact professionals, my team and I are always looking for best practices, research and to understand more about the economics and motivational principles of change. Firstly because the high performance social entrepreneurs we mentor must first master their own human propensity to avoid change and be distracted by their own human flaws, in favor of embracing a highly productive role as a high growth CEO.  Secondarily, because no matter how excellent their vision or product is, if the target market can’t or won’t access it, no change, and thus no relief of humanitarian suffering, is possible.

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Founders at the Hacking Social Impact Unconference, in Portland, OR

Behavioral econonomics and psychological principles as discussed in Designing for Behavior Change, are key to understanding and successfully implementing our vision for scalable, entrepreneurial change. Upon reading this book, I knew it merited a place in the toolset we use to help our community and portfolio understand how to apply simple tactics to the development of products at the early stage, to promote social impact.

Especially in an empowerment context, behavioral economics are interesting. In Plato’s Allegory of the Cave, the prophetic visionary sees a more clear reality and seeks to describe the light and potential to a chained up masses, to no avail. They cannot understand, and more importantly, they do not want to – exposure to the light is painful. In the case of facilitating behavior change, whether through traditional markets & products (think gym memberships for weight loss) or cutting edge social impact bonds for prison recidivism, like Goldman Sachs $9.6MM investment in a New York-based prevention program for formerly incarcerated individuals, it is essential to have a clear understanding of problem behaviors and why/how people choose, or fail to choose, ways that contribute to their well-being.

One insinuation here is risky in certain cases – that people will adopt beneficial behaviors only if there is no or limited effort (and further, that they should be rewarded for no or limited effort!), or that product developers and businesspeople can play God, in doing for a client what they cannot of their own human volition do themselves and otherwise would not. Behavioral economics inherently provides an advantage to understanding how oneself and others function on a core level, and consequently carries certain ethical parameters that cannot be overlooked. Yet, as the distribution and variety of technological support increases and becomes even more accessible, for example through 3D printing technologies, not to mention Google Glasses and other cyborg-anthropological uses of machinery, we all participate in extrahuman efforts that increase our personal capacity. As social entrepreneurs, where does one decide where the ethical line is, or more practically, where the decision-making line is for the client vs. product?

Designing for Behavior addresses this with the concept of consent – that the user must opt in, or at the very least, must be able to opt out of, interventive product features. Further, Wendel makes the point that some degree of automation on routine activities and habits, empowers the target client to make more advanced choices and behaviors possible – in the case of personal financial software, “tracking expenses can happen automatically… once the action is automated for the user, the product team is then free to focus on…. helping users stay within their budget. But that wouldn’t be feasible for most users if they are wasting their time tracking their spending first (Chapter 3, pg 54).” When social entrepreneurs think about developing solutions for complex humanitarian issues like alleviation of poverty, global health, environmental consciousness/climate change, isolating things that do not require personal effort and can be automated in order to extend the capacity of the target participant into more meaningful areas becomes a powerful resource for carrying the weight of the change process.

As to the downside of affecting change through the use of innovation and technology – Albert Einsten wrote a letter of endorsement to President Roosevelt in 1939, encouraging the advancement of the atomic bomb, then in retrospect, after the US bombings of Hiroshima and Nagasaki, he wrote, “I could burn my fingers, that I wrote that first letter to President Roosevelt.” Not all uses of technology further positive social change – and certainly the discipline of behavioral economics carries with it a shady side (Wendel calls this the Dark Arts), if interventive methods cause negative effects, or worse, are deliberately manipulated to cause harm to participants. Wendel writes that one area to be cautious about, is “helping people take an action they want to take, and pushing them to take the action they wouldn’t otherwise take… for example, an arm band that automatically tracks exercise” versus “an ankle bracelet that shocks you and reports you to the police whenever you leave the perimeter of your house (Chapter 15, pg 281).”

So we see that empowerment is complicated, and having an expanded toolset to create and market empowering products, also requires checks and balances, particularly the measurement of impact as well as newly generated, and unintended effects, in comparison with the problem set one seeks to alleviate. For these purposes, learning tools like Designing for Behavior Change, as well as impact metrics like GIIRS and other industry analytics, become an important platform for the social innovator to track what the outcomes are at all, and stay on target with, and take ethical responsibility for, “the change you wish to see in the world (Ghandi)”.

Thanks to Stephen Wendel for an excellent learning tool to help our social impact community think through behavioral economics for change, to the O’Reilly Media team for providing copies of Designing for Behavior Change for review, and to Pam Abrahamsson for revising drafts of this article.

Carolynn Duncan
Social Venture Society
NW Social Venture Fund