Why do we value a 10 euro discount on an alarm clock that costs 45 euros more than on a television that costs 500 euros? Why are we incapable of making rational decisions about something without taking into account what we have invested in it? Who hasn’t stayed in a movie theater watching a movie they didn’t like just because they paid for a ticket?
Richard H. Thaler, 2017 Nobel Prize winner in Economics, states that the answers must be sought within the limits of rationality, “in taking into account a series of cognitive, emotional and social factors that deviate us from the standard model, making us more similar.” to Homer Simpson than to Mr. Spock. Thaler calls these behaviors “anomalies” and, while other economists have systematically ignored them in their research, he has been warning for years about the need for Economic Science to incorporate them to better explain our world and to help people and companies to Your decisions will benefit your well-being.
Together with Richard H. Thaler, Daniel Kahneman, Joseph LeDoux or Amos Tversky, among many other representatives of this current of behavioral economics, they affirm that the time has come to take into account and know how to manage the powerful alliance between our limbic brain. (which controls emotions) and our reptilian brain (responsible for 90% of decision making).
Human shortcuts
And that is where the so-called Behavioral Sciences come into play: «They are the human and social sciences applied to decision-making processes. Psychology would, therefore, be one of the most important behavioral sciences. –explains Gonzalo Camiña, CEO of BeWay, an innovative startup leader in applying behavioral sciences to the business field. Traditional economic theory adopts the neoclassical conception of homo economicus who tries to maximize the satisfaction of his preferences at all times and who thinks in an impeccably rational way. What behavioral sciences defend is that flesh-and-blood human beings are not homo economicus, but rather individuals with limited abilities who often take mental shortcuts (heuristic strategies) and make systematic errors (biases). By recognizing our true nature, behavioral sciences help people and companies make better decisions.”
And that is precisely what they do at BeWay: apply behavioral sciences to ensure that organizations achieve their objectives and have a positive impact on society as a whole. «Behavioral sciences help us achieve the business objectives of companies in a cost-efficient, ethical and rigorous way – explains Gonzalo Camiña. Business objectives are, fundamentally, behavioral objectives. Companies want their customers to carry out actions such as buying, going to a website, opening an email, filling out a form… Behavioral sciences tell us how to achieve the business objectives of companies while satisfying, at the same time, the authentic needs of the customers. people to whom they are addressed. For us, it is absolutely essential that the interventions we carry out using behavioral sciences have a positive impact for both companies and end customers. Only in this way can long-term relationships of trust be generated. If you try to deceive your audience, it is a matter of time before they end up distancing themselves from you, with all the right in the world.
BeWay has helped, for example, improve the savings of bank customers who had a negative balance. «This is beneficial for all parties. Firstly, for the clients, who, in this way, managed to improve their financial health. And, secondly, for the bank itself, because clients with better financial health can contract more products and services. We have also helped a bank improve its relationship of trust with customers. clients over 60 years old. We did this by focusing on improving customers’ financial health, not by insisting on selling them new products and services. However, our intervention contributed to older people taking out more savings and investment products and, in this way, protecting themselves from inflation,” explains Camiña.
After the 2008 financial crisis and the Great Recession, many people distrusted banks. Behavioral sciences have helped banks better understand their customers and offer them the products and services they really need, thus improving the relationship between the parties and increasing satisfaction. For this reason, BBVA Bank now has the largest behavioral sciences team in the world in the private sector. Other banks, such as Banco Santander, BanCoppel in Mexico or Bancolombia in Colombia, are following a similar path.
Incentives
As for the tools used by this discipline, these are mainly incentives (not necessarily monetary); personalized, clear and easy-to-understand communication of the service offering; definition of default options that maximize the benefits of end consumers without negatively impacting companies’ income; understanding of social norms and collective behaviors in societies and companies…. These tools are known worldwide as ‘nudges’ or small nudges that do not prohibit or force, but rather ‘help people help themselves’. For example, some energy companies include in the monthly bill a comparison of our energy consumption with that of our neighbors. If our energy consumption is higher than that of our neighbor, they put a sad emoticon; lower sies, one smiling. A simple change to the graphics and information displayed on the monthly bill – comparing users to their neighbors and adding an emoticon – has been shown to positively affect the amount of energy consumed.
The objective is to achieve business objectives while satisfying the real needs of the user.
This is an example of how subtle psychological nudges can make a big difference in the company. Another example is the option of selecting savings through payroll deduction, in which the aversion to losses that human beings suffer is not evident, because, in this case, it does not hurt not receiving money with which that didn’t count.
The Uber laboratory
The company Uber has an applied behavioral sciences laboratory through which they carry out quantitative and qualitative research, design and improve the range of services they provide. ExpressPool is a representative case of this work at Uber. This is a pick-up service between several people, on the same route, who usually wait a little longer, pay less and walk to a meeting point, a very different service from the traditional Uber (personalized, pick-up at an exact point). To ensure good acceptance, changes were introduced to the platform based on knowledge from behavioral sciences, such as: explaining each step and novelty while waiting for the service on the map as the route of the other passengers and their path to the point. of meeting (transparency in the operation), estimated waiting time and maximum arrival time (aversion to wasted time and gratification of reaching the goal of the service), by introducing these changes in the platform and testing them, the rate was reduced by 11% cancellation of service.
«Now, behavioral sciences are not only useful for carrying out isolated interventions. Their true potential appears when they are used to transform organizations by incorporating scientific culture and systematic experimentation – explains Gonzalo Camiña -.
At BeWay, we use behavioral science to transform companies into Behaviorally Driven Organizations or, in other words, in organizations that make their decisions based on scientific evidence and experimental results. We are doing it in Mexico with companies such as Banco BBVA or BanCoppel, among others. What our experience tells us is that applying behavioral sciences systematically in all teams, processes and projects has a very positive impact on the bank’s business objectives and the final customer satisfaction. In our case, we have managed to ensure that the companies we work for get an average of 10 euros for every 1 they invest in us.
Technological boost
New technologies open an even more attractive panorama for these disciplines. On the one hand, artificial intelligence allows us to deepen our knowledge of people, analyzing large volumes of data and identifying behavioral patterns and motivations. In this way, it will allow this discipline to anticipate people’s needs and provide them with products, services and experiences that adapt to them in a much more personalized way.
On the other hand, behavioral sciences are also going to be very beneficial for artificial intelligence. Artificial intelligence is trained with content that has been created by humans and, therefore, presents human biases and errors of judgment. Behavioral sciences will allow content to be refined so that artificial intelligences do not make the same mistakes as us and are, thus, much more useful and effective.
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