jon williams
TRANSCRIPT
Behavioural Insights
Moving from party tricks, to business results
PwC 2011
“The world doesn’t need a thousand different theories to explain a thousand different facts. At some point there needs to be a discipline of trying to explain many facts with one theory”
Levine, 2012
EXISTING INTENTION
NO EXISTING INTENTION
AC
TIV
E
INA
CT
IVE
n/a
Unused gym memberships
Failed to send in cashback offer
Intend to leave bank. Don’t.
Standard economics:
• People know what is in their best interest.
• They are able to act on that knowledge.
• What we see is what they prefer.
ad·ver·tis·ing [ad-ver-tahy-zing]
• from ‘ad·vertere’ …."to turn toward”
• the act or practice of calling public attention to one's product, service, need, etc
A previously misunderstood population
Why intending but not active?
Gross, Souleles 2002 Do liquidity constraints and interest rates matter?
“Dollar bills on the sidewalk”
Mistakes with patterns & transferrable lessons Knowing more than Grandma
Why do so many end up
here specifically?
&
“our understanding of human behaviour can be improved by appreciating how people systematically go wrong.”
Thaler & Sunstein, 2009
PwC
In a lake, there is a patch of lily pads.
Every day the patch doubles in size.
If it takes 48 days for the patch to cover the entire lake, how long would it take for the patch to cover half the lake?
PwC
In a lake, there is a patch of lily pads.
Every day the patch doubles in size.
If it takes 48 days for the patch to cover the entire lake, how long would it take for the patch to cover half the lake?
And now ... ?
? Less focus here
Less focus here
More focus here
But not just party tricks! | Tracing back to "the psychological roots”
What kind of orange car?
What are the features of the terrain?
Timing Frames
Social Shortcuts
Seduced by short term wins Put off by small barriers
Purchase ‘cheap’ white-goods
5% fat or 95% fat free?
Superficial changes in
language
Intentions & outcomes of others matter
Not happy if price of umbrellas increased on a rainy day
Don’t eat at empty restaurant
Information is used selectively
HOW THE DRIVER SEES THE RACE
PWC APPROACH
Observe & Analytics Field Trials
Choice Architecture
Timing Easier to do in future. Help to lock in a time. Small inconveniences prevent important steps.
Frames Frame the costs of not acting.
Shortcuts Information will be used selectively. Is it clear enough what is at stake? What to do?
Social Have employer’s intentions been communicated? What about what others have done?
“Dollar bills on the sidewalk”
PwC
DATA & DESIGN THINKING
Do you need behavioural economists in your analytics team?
• Flood insurance purchases spike in the weeks following a flood then settles back
• Houses with pools sell for more on hot days
• Child care late fines increase late arrivals
• Lipstick sales increase during recession
• Frequent flyers don’t take up ‘free’ points
Orange cars difficult to spot in environments we are used to…
What kinds of orange cars? | Targeted nudge
• Average outstanding amount per person plotted against household income for that postcode
• Size of circle represents postcodes with higher overall outstanding amounts
Debt collection: Wealthy households with high outstanding debts?
Persona Headline description Symbol
Comfort seeker
Unsure and confused by technology. Needs kindness and patience
Racer Very busy and will generally come to interaction well prepared, Needs to have time respected
Fact finder Needs information to be accurate and easy to access and likes to be respected for what they know
Technology adventurer
First to have every new gadget, frustrated by dealing with people who don’t know as much as them
The Outsourcer
Just wants it done. My problem needs to become your problem quickly and reliably.
What kinds of orange cars? | Evidence from the wild
22
Modelling and measuring different driver / terrain scenarios
23
Modelling and measuring different driver / terrain scenarios
PwC
CAUTIONS & CONTROLS
“If you are like most people you have an opinion about the reasons… but do you really know why? ...Anecdotes? Gut feelings? Introspection?”
Gneezy & List, 2013
Not in a school =
Less likely! - Do you support
increased funding for schools? In a school =
More likely!
Don’t Just Ask | Observe and Analyse
Controlled Trials| Not just story telling
Controlled Trials| Not just story telling
The world is full of orange car challenges
It is about the terrain (easy to overlook) as well as the car/driver
Data will inform the discussion in important ways
Testing for real causes - not creative story telling
Creative – but from a new common platform / language
From party tricks, to business results!
Behavioural Insights
William Mailer BI Australia Lead +61 (2) 8266 1026 [email protected]
Jason Collins BI SME +61 (2) 8266 2662 [email protected]
Jon Williams Lead Partner – People +61 (2) 8266 2402 [email protected]