Doing demand management better, with behavioural insights

There may still be local authority chief execs and directors in local government who think they can steer a course through the financial challenges to come (the handy headline figure is a forecast £14.4bn shortfall in services by 2020) by reducing staff numbers and service levels, raising efficiency and changing eligibility criteria, but I don’t know them and I’m pretty sure they don’t exist. And, encouragingly, neither do the authors of Managing Demand: Building Future Public Services, Anna Randle and Henry Kippin. As they point out, these measures realise immediate savings but don’t shape services for the long-term.

This report is essential reading if you’re interested in the future of local public services. To me, it marks out the territory that should be occupied by anyone working on developing local public policy and practice. It should be, of necessity, the new black.

DMCover

Anna and Henry cover a lot of territory – perhaps too much. There are dozens of aspects worth writing about, but I’m focused here on the topic closest to my heart, as its my job: using behavioural insights.

Managing Demand and the emerging practice it reveals, is particularly interesting to me because of the coincidence of this stark challenge to public finances and the rapid growth of evidence from behavioural sciences. As I’ve explained to many people, I’d be promoting the use of behavioural insights to policy makers and practitioners right now, even if public finances were in rude health. The fact that they are not, though, provides even more of an opportunity for us to design services that reflect what people are really like: demand management done well means reframing public services and places – and we can knit into this redesign our rapidly improving understanding of just how context-dependent human behaviour is, and of how much less control we have over our actions than we like to think. If local government budgets were ticking along nicely, and the demographics were in our favour, the rationale for change simply wouldn’t exist.

If anything, Managing Demand understates the extent to which public services’ approaches are behaviourally naïve. Here are some examples I’ve come across recently:

  • Experienced Housing officers will often explain to cititzens likely to become homeless what the limitations are to what the Council can do for them, in effect anchoring the conversation at the level of service that used to be possible when supply and demand were less unevenly matched. When resources are scarce, we want them more, for good evolutionary reasons, so officers may be inadvertently encouraging demand that is costly to manage and damaging for residents’ wellbeing.
  • Waste and recycling communications are often framed around the needs of the service, describing the benefits in terms that give the citizen no emotional reward, and using terms (like ‘food waste’) that are at best ambiguous to most people.
  • Letters to a tenant in the process of reducing their arrears often don’t provide feedback in a way that acknowledges their success; they may receive an identically-worded letter to that sent to tenants with increasing arrears. So we miss the chance to embed the key behaviour: paying off the arrears.
  • Councils involved in projects to give away home efficiency measures often have limited success. One reason is endowment effect: our inclination to see something free as valueless. But it is also because they tend to introduce cognitive barriers into the conversation immediately, referring to ‘retrofitting’, not the emotional reward to the resident: a cosy, draught-free home.

There are plenty of demand management approaches to issues like these which don’t utilise the insights from behavioural economics and psychology that are needed to reframe what’s on offer in a way that works with the grain of human nature. So what are the emerging approaches that do explore these, and which look like becoming part of the toolkit of the behaviour-smart local authority?

One is behavioural auditing. This is a way of examining the way a service works to identify where demand is created, track this back to the need that the demand expresses, and use this as a starting point. For many services, apparently identical need will lead to differing levels of demand from different residents; analysing the behaviours of those who create little or no demand helps re-design in a behaviourally-smart way, as it give us insight into which behaviours to encourage.

Another important aspect (not new, of course) is ethnographic research and observation. When we focus in on the behaviours that create service demand, understanding what it is that people do and how they do it is much more important to re-design than the reasons people give to explain them – and the rationale that officers apply. There is plenty of evidence that we adjust our views to accord with what we do, much as we would like to believe the opposite to be true!

A third is co-production. Guided by a behavioural practitioner, officers, managers, service users, citizens, community representatives, etc (I’ve worked with teachers and nurses, for example) are able to understand and work with real insights from behavioural sciences and generate many of the approaches that they go on to put into practice.

A word of caution, though. We are realising how difficult a behaviourally-smart approach can be to put into practice – for good reason.

Why shouldn’t we be surprised at this? Individually and collectively, our default model for influencing people is to try to change their mind and persuade them. It’s based on the rational actor model. My experience on a wide range of demand management projects with local government and public health is that policy-makers and managers can accept the overwhelming evidence that behaviour is context-dependent and so target behaviours need to be made easier and appear more normal … but implementing this, when it challenges the mental models we have worked with since we were toddlers, is not straightforward.

My view? Let’s keep the focus on demand management; let’s make our approaches as behaviourally-smart as possible; and let’s build the capacity in local government and communities to use behavioural insights.

Why debating the ethics of applying behavioural science is a red herring

Why the debate on Nudge is a red herring (tapped out on my phone during the #LSEnudge debate):

1. We’ve previously designed services thinking everyone is an in-control homo economicus. There’s loads of recent evidence on what we’re like. Why not use it?

2. “They can’t solve everything” is not a reason to not use ‘nudges’. If policy-makers commission ‘nudges’ & don’t deal with the food industry, that’s a problem with policy making, not with decision science.

3. If you want a policy/political narrative for it, work up the idea that we can do politics better if we better understand what we’re like as a species.

4. Behaviour is context-dependent, whether you/others are trying to influence it of not. So it shouldn’t be controversial to try to influence it.

5. There are ethical issues. Why not codify them? For example, behavioural practitioners and their commissioners should only use social norm messages that are true (so you don’t say 95% pay their tax on time if it’s really 80%).

How not understanding our biases leads to unintended consequences

Here’s a neat reminder from Peter Ubel’s blog that not understanding our biases leads to unintended consequences. He’s quoting from Alex Stone’s book, Fooling Houdini

When law enforcement agencies began putting pictures of missing children on the backs of milk cartons, for instance, the perceived rate of childhood abductions, as measured by national surveys, shot up drastically.

My reaction? “Ah, of course – it would, wouldn’t it?”. That’s how availability bias would work, because those cartons would be making child abduction more imaginable. Which flags up how many cultural practices there must be that, due to our biases, have results never imagined – both good and bad. The researcher in me wants to know about control or comparative data: to what extent did abduction fear increase in nations not putting missing children on people’s breakfast tables (for example, I don’t think this happened to any great extent in the UK, though perceived stranger danger has increased)? Were there states in the USA where this didn’t happen and, if so, how does the data differ?

But let’s take this at face value. The result of heightened fear is children being driven everywhere, not being allowed to play outside – which, in turn, impacts on public health / obesity, social capital, the environment, etc. In the UK, we now have the extraordinary situation where, in the space of a few days, England’s Chief Medical Officer has recommended gifting children vitamin D tablets (yes, the same vitamin D you get from being outdoors in the sun) and a group of venerable NGOs has felt the need to campaign for children to spend half an hour daily outdoors.

Now, let’s put this in perspective: no doubt there were positive outcomes from putting missing kids on milk cartons: children found who wouldn’t have been otherwise. So when I read Peter’s blog, I wondered if the people responsible for the milk carton approach would, on balance, believe it had been worth it. They might argue that it’s a non-issue, as no amount of fear is disproportionate in this instance. Either way (and this is my main point), I’m pretty sure that they would have had no expectation initially of heightening parents’ fear.

I’ve argued before that decision-making, policy-making and even politics can be better if we understand our human biases better. And I think this might be another example.

Why behavioural practitioners should give a sh*t

A small, but growing number of people have studied decision science and/or use its insights to earn a living. I’m lucky to be one of them.

I’m delighted to see communities of practice developing, and I’ve noticed the (apparently) high proportion of jobs using behavioural insights that are in finance or pricing. It has made me think about what we want ‘our’ industry to be like. My view? In a nutshell, we need to give a shit. Right now, that means linking what you do to the impact of behavioural outcomes on lowering resource use and increasing human capital and social capital. For simplicity’s sake, I’m calling this sustainable behaviour.

Here are the three reasons you should be using your influence to make behaviour more sustainable, if you work with behavioural insights:

  • First of all, you should, for the same reason that everyone with any influence should: that the data compels us, if we care about our species’s future. For one thing, every year since the 1980s, we have used more natural resources (on which all our wealth is based) than our planet can replenish; this year (2013), Earth Overshoot Day was on 20 August. Vitally, the additional GDP that has driven the resource use does not make us any happier. Climate change is part of this story: the recent IPCC report confirms what we already knew: that we need to leave in the ground over half of our confirmed reserves of fossil fuels. Second, inequality has grown rapidly in much of the West, particularly the Anglo-Saxon world, in recent decades, exacerbating crime, poor health, mistrust, mental illness and a host of other social ills.
  • Second, it’s time. We’re starting to see ourselves (sort of, kind of) as a fledgling industry. So it’s time to decide – and state – what our values are as an industry. Do we want to uncritically use our insights into human nature to boost companies’ profits by helping them sell people more stuff (or to sell it more effectively), when we know the impacts this economic approach is having? Look to the Design industry as an example: for years, the trend in the industry has been for new, young designers to want to work on service design for social outcomes and, if working on product design, to want this to be sustainable in terms of material use and reuse. They see their industry’s impact on the world, and want to influence it. It’s not hard to find examples.
  • Third, because it should make even more sense to us than to most other professions. Using behavioural psychology or behavioural economics gives a special insight into human decision making. We know that the basis on which it has been assumed that people (you might call us ‘consumers’, but we’re people, you know) make decisions is very flawed. Classic Enlightenment thinking is wrong; homo economicus doesn’t exist. Well, that is the same Enlightenment thinking that drove us to create an economy in which the pursuit of individual wealth is paramount, which encourages unfettered short-term thinking and which does not price externalities (such as the impact of economic activity on natural resources through pollution and soil erosion) because, well, we can’t see them.

That’s it. I’m not launching a campaign. I don’t have a statement of ethics to sign up to. And I don’t have an ask. To start with, I’d just like to see if anyone else agrees.

Consumers are people, too

This blog isn’t about sustainability. It’s about decision-making – and especially framing. But I need to quickly explain something first. My background in sustainability makes me alert to issues around consumption. Why? Because the resource use required for the levels of consumption we have is literally unsustainable if humans are to carry on thriving. And also because increased consumption goes hand-in-hand with a host of problems including inequality, crime and mental illness, as our lives become ever more about the status that consumption signifies.

So it’s no surprise that I have a problem with the frequency with which people are described as ‘consumers’, rather than as residents, citizens or, erm, “people”. It happens a lot, and it annoys me, because there is so much more to us than what we buy and use.

I think we can now see a demonstrable problem with the way the word (and concept) frames debate and decision making. This might interest you even if you don’t give a monkeys about resource use or wellbeing. Its’ from the recent Government strategy on ultra low emission vehicles (which doesn’t include bicycles, I should point out). This screengrab on developing the market is telling, I think.

1.54 of ULEVS

Note how people are referred to as consumers; in the Strategy, this happens nearly as often as people referred to as ‘drivers’. Is it possible that this is affecting the way policy is framed? When we have a decision-making class that has unquestioningly pursued GDP growth for decades, this framing makes a positive outcome more likely. “Consumers” consume; and when you’re chasing growth, this is good.

The commitment made in this strategy is considerable: £500m six years infrastructural investment, from 2015-2020, and an office has been established at DfT dealing solely with low-emission vehicles. Cyclists (and potential cyclists, which is the vast majority of people), however, get a much poorer deal from decision-makers, who never refer to them, in the act of travelling, as consumers (the Government’s recent policy document on cycling doesn’t use the word once). So it’s no surprise that, even though this was seen by Government as something to trumpet, cycling is receiving a (imho) laughably small investment of £148m (some of which is local funding) – with no commitment beyond two years, despite the existing legacy of next to no investment.

This matters, because active travel (walking and cycling) offers an major benefit to the economy and to public health. It would address many of the UK’s deep-seated problems. But it remains marginalised in policy terms, blighted by poor design and assumptions about the primacy of motorised vehicles. The result is that cycling is not easy or normal; despite the hype, there is no cycling boom.

I don’t suppose we’d ever be able to run a real-world experiment where policy discussions are restricted to referring to individuals as ‘people’, extended to ‘people who … [cycle/drive/ buy things, etc]. If we could, the outcomes would be interesting. In the meantime, if you want to influence decision-makers, keep talking about consumers.

Doing it better

Below is a post I wrote for the Behavioural Design Lab a short time ago. The aspect that has attracted the most interest is the use of proposed use of defaults to move from a project management-centric view (where residents make a fresh decision at each stage of the process that has been mapped out) to a citizen-centric approach (where, once someone has chosen to have a warm home, the default is that they are taking part.

Two quick points, drawing on conversations that I’ve had with people since writing this.

First, this is a really good litmus test for whether we are comfortable using behavioural insights. Personally, my view is that our choices always have a context, and that framing the choice in this way makes it clear and easier to make a decision that is salient to the person making it. But I know that some people not used to working with behavioural insights are a little uncomfortable with it; because it seems a little, well, sneaky. In a world where there are numerous websites on which I can click a ‘buy now’ button, before verifying a host of details, I’m comfortable with it, and that’s why I see it as a litmus test: it only seems sneaky if you compare it with a context in which people have to repeatedly decide.

Second, reflecting that most of the feedback I’ve had has been of the “what a great idea!” variety, there is so much that we can do better in public services, and it is within our grasp. I hope that this helps demonstrate the value of what I’ve been trying to do with With The Grain over the past couple of years. There are so many behavioural effects that we know can affect our decisions; and there is an ever-growing body of evidence of how and when they work. So let’s generate new approaches drawing on this knowledge. This idea was generated in a workshop of stakeholders brainstorming ideas based on different effects, of which defaults was one. Most of them hadn’t been exposed to much behavioural science before; if they can do it, so can you. This is one of our best chances of meeting the demand management challenge.

“Did I just use behavioural science? But I’m not a designer!”

So said a dozen or so stakeholders of a project aimed at retrofitting 160 draughty homes in Crawley, West Sussex. With good reason. They had co-produced a wide-ranging set of design and communication ideas for the project.

The project offers work such as external wall cladding, funded by the Energy Companies Obligation, through which the Government is obliging utilities to fund energy efficiency work on Britain’s coldest, draughtiest and most energy inefficient homes. The problem many have found is that, in the absence of existing demand (that is, people who are aware that they want their home retrofitted but haven’t been able to do it yet), building demand for something free is tricky. Price perception tells us that if something is free, it doesn’t have value. Homo economimus might see free cladding as a no-brainer; real people don’t.

So, when introducing the opportunity to people, we decided to frame the choice as being between a cold home and a warm home – not as the chance to choose a named process or product. And we avoided terms (such as ‘retrofitting’), known by professionals but which may provide a barrier if not familiar to residents. Crawley-ECO-leaflet-section

Adding the use of behavioural insights to the team’s existing expertise in community engagement had a major impact immediately, speeding up recruitment 4-fold, compared with similar projects being undertaken elsewhere in the South East.

Another innovation is that, when people say ‘yes’ to a warmer home, this becomes the default setting. So, instead of initially agreeing to an “assessment” which leads to another choice once the surveyor has visited, householders make a single choice: the surveyor will make a recommendation of the measures to adopt “ … unless you drop out”. From a project management viewpoint, we’re moving from a process whose success depends on people saying ‘yes’ at several different stages to a process designed to support and prove people’s positive choice to have a warmer home.

There are a dozen other ways in which we are using – or plan to use – behavioural insights. Rob Bennett, who leads the community engagement team, says, “It is really important that we find ways to encourage communities as a whole to get behind these initiatives, So whether it’s the initial decision to participate in a scheme, or ensuring that residents communicate what works best by sharing good practice and experiences – we expect behavioural evidence to play a critical part in successful ”delivery”.

We think we’ve learned what the With The Grain tool has also demonstrated in other settings: that behavioural insights are accessible and usable; that these insights help make approaches more people-centric and therefore more efficient; and that it’s possible to get away from the default setting of trying to persuade people.

So we now have a platform for using behavioural insights in the future. And we have a group of stakeholders who are comfortable with knowingly using behavioural insights to affect the context within which people make decisions.

In the future, this won’t be unusual. Right now, it feels revolutionary.

I Have a Dream: an update?

A quick thought, prompted by the coverage last week of the 50th anniversary of Martin Luther King’s celebrated ‘I have a dream’ speech. The most quoted sentence is:

I have a dream that my four little children will one day live in a nation where they will not be judged by the colour of their skin but by the content of their character.

It’s so obviously right, that you can’t really imagine someone calling it into question. And yet … what is ‘the content of [someone’s] character’? We now know (and largely didn’t in MLK’s day) that we humans fall prey to, for example, fundamental attribution error very easily. It shapes how we feel about people and is so well understood you can even buy the t-shirt. In brief: because we don’t recognise the extent to which our own – and others’ – behaviour is context dependent, we tend to over-attribute personality traits to others based on what we notice them doing.

So my suggestion is that we want to be judged by what we do rather than by the ‘content of [our] character’ since, though our perception of events is biased, surely we can get a better handle on the former than the latter.

To illustrate what I mean – what’s more important: that someone identifies discrimination and acts to prevent it (which are behaviours), or that (as a character trait) they are opposed to discrimination? The first, surely.

Further ahead, what I hope will happen is that public understanding of our behavioural and perceptual biases, and of context dependency, increases to the extent that we can all be better at interpreting people. We’d have better relationships. And we’d do politics better.

I’m not going to rewrite King’s speech. It’s beautiful. But I do wonder if, given what we now know, we can have a dream about mass understanding of behavioural insights.