Behavioral Economics, Social Change, and O’Reilly Media’s “Designing for Behavior Change”, by Stephen Wendel


Change is hard – yet every entrepreneur, and especially every social entrepreneur, seeks to address global problems, and in doing so, transform the world. And yet even as people, markets, and populations are suffering in various ways, and available products, programs, and services are available to alleviate that suffering, the human inclination does not always act in its own best interest.

As a humanitarian organization committed to social change through leading various initiatives that foster scalable social entrepreneurship, like the launch of our NW Social Venture Fund, or the development of the Hacking Social Impact Unconference for geeks, social founders and impact investing professionals, we are always looking for best practices, research and to understand more about the economics and motivational principles of change.


For one, because the high performance social entrepreneurs we mentor must first master their own human propensity to avoid change and be distracted by their own human flaws, in favor of embracing a highly productive role as a high growth CEO, and secondarily because no matter how excellent their vision or product is, if the target market can’t or won’t access it, no change, and thus no relief of humanitarian suffering, is possible. Behavioral econonomics and psychological principles as discussed in OReilly Media’s new title, Designing for Behavior Change by Stephen Wendel, are key. When I heard about this book, I knew that it would merit a place in the toolset we use to help our community and portfolio understand how to apply simple tactics to the development of products at the early stage, to promote social impact.

Behavioral economics are interesting, especially in an empowerment context. In Plato’s Allegory of the Cave, the prophetic visionary sees a more clear reality and seeks to describe the light and potential to a chained up masses, to no avail. They cannot understand, and more importantly, they do not want to – exposure to the light is painful. In the case of facilitating behavior change, whether through traditional markets & products (think gym memberships for weight loss) or cutting edge social impact bonds for prison recidivism, like Goldman Sachs $9.6MM investment in a New York-based prevention program for formerly incarcerated individuals, it is essential to have a clear understanding of problem behaviors and why/how people choose, or fail to choose, ways that contribute to their well-being. Social entrepreneurs must understand human nature – that we will more often not take the easy path, than one that is difficult; that we have repetitive ingrained habits that operate separately from conscious decision-making, and that our will and best intentions are often overriden by convenience, comfort, and laziness.

Designing for Behavior Change reviews shortcuts to letting product features and program components act as an automator of decision-making and muscles that users and clients are otherwise too unstable or undisciplined to complete on a recurring basis. “Ideally, the company should find ways to shift the user’s burden onto the product, by identifying clever ways to make active participation by the user unnecessary beyond giving informed consent (Chapter 3, pgs 49-50).” One example given is the auto-enrollment for 401(k) savings plans; employees are defaulted into participating, but are allowed to decline if they prefer. The volume of participation was found to be twice as high with a default requirement, but Wendel also points out that there is a fine line “between voluntary behavior change and trickery (Chapter 3, pg 51)”, and the insinuation here is risky in certain cases – that people will adopt beneficial behaviors if there is no or limited effort (and further, that they should be rewarded for no or limited effort!), or that product developers and businesspeople can play God, in doing for a client what they cannot of their own human volition do themselves and otherwise would not. Behavioral economics inherently provides an advantage to understanding how oneself and others function on a core level, and consequently carries certain ethical parameters that cannot be overlooked. Yet, as the distribution and variety of technological support increases and becomes even more accessible, for example through 3D printing technologies, not to mention Google Glasses and other cyborg-anthropological uses of machinery, we all participate in extrahuman efforts that increase our personal capacity. As social entrepreneurs, where does one decide where the ethical line is, or more practically, where the decision-making line is for the client vs. product?

Designing for Behavior addresses this with the concept of consent – that the user must opt in, or at the very least, must be able to opt out of, interventive product features. Further, Wendel makes the point that some degree of automation on routine activities and habits, empowers the target client to make more advanced choices and behaviors possible – in the case of personal financial software, “tracking expenses can happen automatically… once the action is automated for the user, the product team is then free to focus on…. helping users stay within their budget. But that wouldn’t be feasible for most users if they are wasting their time tracking their spending first (Chapter 3, pg 54).” When social entrepreneurs think about developing solutions for complex humanitarian issues like alleviation of poverty, global health, environmental consciousness/climate change, isolating things that do not require personal effort and can be automated in order to extend the capacity of the target participant into more meaningful areas becomes a powerful resource for carrying the weight of the change process.

As to the downside of affecting change through the use of innovation and technology – Albert Einsten wrote a letter of endorsement to President Roosevelt in 1939, encouraging the advancement of the atomic bomb, then in retrospect, after the US bombings of Hiroshima and Nagasaki, he wrote, “I could burn my fingers, that I wrote that first letter to President Roosevelt.” Not all uses of technology further positive social change – and certainly the discipline of behavioral economics carries with it a shady side (Wendel calls this the Dark Arts), if interventive methods cause negative effects, or worse, are deliberately manipulated to cause harm to participants. Wendel writes that one area to be cautious about, is “helping people take an action they want to take, and pushing them to take the action they wouldn’t otherwise take… for example, an arm band that automatically tracks exercise” versus “an ankle bracelet that shocks you and reports you to the police whenever you leave the perimeter of your house (Chapter 15, pg 281).” So we see that empowerment is complicated, and having an expanded toolset to create and market empowering products, also requires checks and balances, particularly the measurement of impact as well as newly generated, and unintended effects, in comparison with the problem set one seeks to alleviate. For these purposes, impact metrics like GIIRS and other industry analytics, become an important platform for the social innovator to track what the outcomes are at all, and stay target to, and take ethical responsibility for, “the change you wish to see in the world (Ghandi)”.

This review was written by NWSVF’s Carolynn Duncan, on 13 Dec 2013. Thanks to Stephen Wendel for an excellent learning tool to help our social impact community think through behavioral economics for change, and to the OReilly Media team for providing copies of Designing for Behavior Change for review, and to Pam Abrahamsson of PRA Public Relations for reviewing drafts of this blog review.