I spoke to Maura Feddersen about behavioural economics. We discussed the field’s growing relevance and practical applications, behavioural economics frameworks, opportunities to use big data, the use of “nudging” and the broader ethical considerations, especially for policy interventions.
Maura is an economist at Swiss Re, focused on behavioural economics. She develops solutions that enhance prediction and improve the value that insurance offers consumers. Before joining Swiss Re, Maura was a behavioural economist at the UK's Financial Conduct Authority. Maura's background is in economic consulting. At PwC's Strategy& and KPMG's Financial Risk Management practice, Maura developed economic and behavioural science insights to help organisations position themselves strategically in view of continuous shifts in their environment
Defining behavioural economics: “An approach to economic analysis that incorporates psychological insights into individual behaviour to explain economic decisions. Behavioural economics is motivated by the observation of anomalies that cannot be explained by standard models of choice. It provides an explanation for the anomalies by introducing human and social cognitive and emotional biases into the decision-making process.” See Oxford Reference.
Navigating ethical considerations:
- Sunstein, C. (2016). The Ethics of Influence: Government in the Age of Behavioral Science. Cambridge University Press.
- Lades, L., & Delaney, L. (2020). Nudge FORGOOD. Behavioural Public Policy, 1-20.
- Jachimowicz, J., Matz, S. & Polonski, V. (2017). The Behavioral Scientist's Ethics Checklist. The Behavioural Scientist.
Frameworks & models:
- EAST framework by Behavioural Insights Team: This model for behaviour change suggests making actions Easy, Attractive, Social and Timely (EAST) through a 4-step process: 1. Define the outcome, 2. Understand the context, 3. Build your intervention, and 4. Test, learn, adapt. Also see MINDSPACE.
- Dual-system theory: “Dual-system models of the human mind contrast automatic, fast, and non-conscious (System 1) with controlled, slow, and conscious (System 2) thinking.”
- COM-B model: The COM-B model ('capability', 'opportunity', 'motivation' and 'behaviour') recognises that behaviour is part of an interacting system involving all these components. Interventions need to change one or more of them in such a way as to put the system into a new configuration and minimise the risk of it reverting.
- Tools and Ethics for Applied Behavioural Insights: The BASIC Toolkit by OECD.
Further reading:
- Classic behavioural economics books to get started:
- Kahneman, D. (2011). Thinking, fast and slow. Penguin.
- Thaler, R.H. & Sunstein, C.R. (2008). Nudge: Improving decisions about health, wealth, and happiness. Yale University Press.
- Ariely, D. (2008). Predictably irrational: the hidden forces that shape our decisions. HarperCollins.
- Great behavioural economics/behavioural science podcasts, for example:
More behavioural science and insurance insights:
More reading on some of the examples used in the podcast:
