Science has proven that the vast majority of decisions we make on a daily basis are automatic: we don't stop to think. It is estimated that in 90% of our decisions we use heuristics (mental shortcuts, rules of thumb) developed throughout life that generate bias and often lead us to predictable decisions and behaviours. These heuristics are often shared between people of the same cultural and geographic strata. This is because, in most situations, we do not have all the information and/or the time and/or the cognitive ability to process it. In addition, we are often unable to prevent emotions from influencing our habits and behaviours.

 

Behavioural Economics studies the effects of psychological, cognitive, emotional, cultural and social factors on the economic decisions of individuals and institutions and how these decisions differ from those based on classical theory. Behavioural Science encompasses Behavioural Economics adding non-economic decisions and other factors such as neuroscience and anthropology.

Behavioural Economics / Behavioural Insights / Applied Behavioural Science / Nudging 

 

Different groups have been developing various approaches to encourage individuals to make decisions, often unconscious, that benefit themselves and society as a whole. These approaches are designed to incorporate the latest discoveries about how individuals typically react to different subtle stimuli, based on heuristics, biases.

 

To identify the most effective approaches, these groups have used Randomized Controlled Trials (RCT) - the gold standard. Once identified empirically, these more effective approaches guide large-scale behaviour change initiatives.

 

The design and use of these approaches has become a worldwide movement. A major boost came in 2002 with the Nobel Prize won by psychologist Daniel Kahneman for his work in Behavioural Economics. Since then, it has been used more and more around the world in several areas, especially in finance, education, health, civility, etc. One of its main applications was named Nudging, due to the book “Nudge: Improving Decisions About Health, Wealth, and Happiness ”, whose author, Richard Thaler, also received the Nobel Prize in October 2017.

 

  • Nudge is a “little push” that leads people to change, predictably, their habits or behaviours benefiting themselves and society as a whole;

  • Using mental shortcuts, contexts are designed to motivate changes in habits or behaviours:

    • Without restricting any of the options or significantly changing economic incentives;

  • In the dedications of his books, Richard Thaler likes to end with the request: "Nudge for Good".

 

The various professionals and experts have used different names for this approach: Behavioural Economics, Behavioural Insights, Applied Behavioural Science, Nudging etc.