Don't Listen To Your Customers - Do This Instead | Kristen Berman | TEDxBerlin

Summary

The speaker, a behavioral scientist, reveals that the difference in retirement savings among companies isn't due to education, income, or age, but rather the default settings in place. Using the example of automatic enrollment in retirement savings, she explains how 'opt-out' systems lead to higher savings rates compared to 'opt-in' ones. She advocates for behavioral design, a three-step process involving behavioral diagnosis, identifying psychological biases, and real-world experimentation, to create solutions that lead to positive behavior change. The talk emphasizes the importance of studying actions over words to build effective products that help people be healthier, wealthier, and happier.

Takeaways

• 📊 There's a significant disparity in retirement savings among employees, with some companies having nearly 90% of employees saving, while others struggle to reach 50%.
• 🌟 Companies with high savings rates automatically enroll employees in retirement plans, making it the default action, whereas others require employees to opt-in, leading to lower participation.
• 👩‍🔬 The speaker, a behavioral scientist, emphasizes that understanding and influencing behavior is crucial for designing effective products and solutions.
• 🗣️ Traditional market research methods like interviews and surveys often fail to predict actual behavior accurately because they rely on what people say rather than what they do.
• 🚫 People tend to underreport past behaviors that are socially undesirable or forgettable, making it unreliable to base solutions on self-reported past actions.
• 🔮 When asked about future actions, people often overestimate their future compliance, envisioning an ideal self that doesn't account for real-life complexities.
• 🍏 Environmental factors significantly impact behavior, as illustrated by a company's failed attempt to encourage healthy eating by providing apples, which were ignored in favor of fries.
• 🤔 The 'why' questions are often misleading because people attribute their actions to rational, thoughtful decisions rather than the default or easiest options.
• 🛠 Behavioral design involves a three-step process: behavioral diagnosis, identifying psychological biases, and real-world experimentation to understand and influence behavior effectively.
• 🎓 A case study on increasing financial aid applications demonstrated the power of behavioral design by simplifying the application process and integrating it into the enrollment procedure, leading to a significant increase in applications.

Q & A

What is the key difference between companies with high and low employee retirement savings rates?

The key difference is that companies with high savings rates automatically enroll employees into retirement savings plans, making it the default action, whereas companies with low rates require employees to opt-in themselves.

Why do some employees fail to save for retirement despite having the intention to do so?

Employees may fail to save for retirement because they are not automatically enrolled in a savings plan and face the inertia of having to take action themselves, which they might not do due to various psychological biases and the complexity of the decision-making environment.

What role does behavioral science play in designing products that change behavior?

Behavioral science plays a crucial role by providing insights into how people actually behave and the psychological biases that influence their decisions, allowing for the design of products that nudge users towards desired behaviors.

Why are traditional methods of understanding customer behavior, like interviews and surveys, often ineffective?

Traditional methods are often ineffective because they rely on what people say they will do, rather than what they actually do. People's self-reported behaviors and intentions can be influenced by social desirability bias, forgetfulness, and an inability to accurately predict future actions.

What is the three-step process of behavioral design as mentioned in the script?

The three-step process of behavioral design includes: 1) Conducting a behavioral diagnosis to map out all the steps and actions required for a desired outcome, 2) Identifying psychological biases that affect decision-making, and 3) Studying what people actually do through real-world experiments rather than relying on what they say.

How does the example of Carla illustrate the impact of default settings on retirement savings?

Carla, who earns under thirty thousand dollars a year, is saving for retirement because she was automatically enrolled in a savings plan when she was hired. This shows that defaults can significantly influence behavior, leading to positive outcomes like retirement savings.

What is the significance of the 'behavioral diagnosis' in the context of behavioral design?

Behavioral diagnosis is significant as it helps identify all the steps and actions required to achieve a desired outcome, allowing designers to understand and address the barriers and facilitators in the decision-making process.

Can you provide an example of how behavioral design was applied to solve a real-world problem mentioned in the script?

Behavioral design was applied to increase financial aid applications among eligible students. By diagnosing the application process, identifying cognitive overload as a bias, and running an experiment to simplify the decision, the likelihood of students applying for aid was significantly increased.

Why do people often underreport their past behaviors in surveys?

People often underreport their past behaviors in surveys due to social desirability bias, where they report what they think is socially acceptable or what they believe others will report, and because of forgetfulness, as they may not accurately remember their past actions.

How does the script challenge the common belief that people's future actions are determined by their rational decisions?

The script challenges this belief by demonstrating that people's future actions are often not accurately predicted by their stated intentions. Instead, environmental factors and psychological biases play a significant role in determining actual behavior.

What is the importance of studying actual behavior rather than relying on self-reported reasons for actions?

Studying actual behavior is important because it provides a more accurate understanding of how people truly act in various situations. Relying on self-reported reasons can be misleading due to biases and inaccuracies in how people perceive and report their motivations and actions.