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 william.mailer@au.pwc.com

Jason Collins BI SME +61 (2) 8266 2662 jason.collins@au.pwc.com

Jon Williams Lead Partner – People +61 (2) 8266 2402 jon.williams@au.pwc.com