The behaviours and decisions made by consumers, businesses, regulators and policy makers are at the heart of the way society operates. It goes without saying that an understanding of human behaviour is a prerequisite for addressing complex public policy and business problems.
Economists have conventionally viewed people as making ‘rational’ decisions that follow a predictive model of maximising individual interests and wellbeing. But this conventional model does not always hold, and is often complicated by other factors that influence behaviours such as social norms, cultural expectations, emotions, and the context in which choices are presented. When faced with difficult decisions, and a lack of full information about the implications of different choices, people often act on the basis of ‘gut feel’ or intuition, rather than making a deliberative and planned choice.
Behavioural economics is the study of how people make decisions in the ‘real world’. This is of critical importance when designing cost-effective policies or regulatory frameworks that aim to influence behaviours – for example customer demand for water or energy, industry compliance with regulation, or motivating people to make better environmental or health decisions. Once the factors that drive behaviours are understood, it is possible to craft incentives that ‘nudge’ people toward making desired changes.
Our team at Synergies use a combination of qualitative and quantitative techniques to identify the factors that are influencing behaviours. We apply customer journey maps, focus groups, choice modelling, and analyses of historical behavioural data to assess variables that are responsible for decisions. We use the outputs from these analyses to shape recommended policy interventions.
