Making Change Happen

There’s an interesting article by Michael Grunwald in Time Magazine about how Obama is using behavioral science to create the tremendous change he has promised and that America needs. Perhaps this approach can be useful to social entrepreneurs as well.

Grunwald illustrates that throughout the presidential campaign Obama used behavioral science to change voter and donor behaviors. Now, the administration is using it to take on healthcare reform, the economy and energy. During the campaign Obama relied on a advisory group of behavioral scientists which included authors Dan Ariely of MIT (Predictably Irrational), Richard Thaler and Cass Sunstein of the University of Chicago (Nudge), and Nobel laureate Daniel Kahneman of Princeton. These advisors provided his team research to back up their recommendations on everything from voter turnout, to rumor control, to fundraising. Behavioral science (among other things) got Obama elected and now its charge is to change the behavior of Americans who eat too much, use too much gas, don’t save money, run up their credit cards, etc:

The latest science suggests that yes, we can [change]. Studies of all kinds of human frailties are revealing how to help people change — not only through mandates or financial incentives but also via subtler nudges that preserve our freedom to make choices while encouraging us to make better ones, from automatic-enrollment 401(k) plans that require us to opt out if we don’t want to save for retirement to smart meters that warn us about how much energy we’re using. These nudges can trigger huge changes; in a 2001 study, only 36% of women joined a 401(k) plan when they had to sign up for it, but when they had to opt out, 86% participated.

What behavioral science offers, the Obama administration believes, is a way to capitalize on the inherent imperfections of the human race, which were formerly ignored or denied:

Neoclassical economics…has ruled our world for decades. It’s the doctrine that markets know best: when government keeps its hands off free enterprise, capital migrates to its most productive uses and society prospers. But its elegant models rely on a bold assumption: rational decisions by self-interested individuals create efficient markets. Behavioral economics challenged this assumption, and the financial meltdown has just about shattered it; even former Fed chairman Alan Greenspan confessed his Chicago School worldview has been shaken. Behavioral economics doesn’t ignore the market forces that were all-powerful in Econ 101, but it harnesses forces traditionally consigned to Psych 101. Behaviorists have always known we don’t really act like the superrational Homo economicus of the neoclassical-model world. Years of studies of patients who don’t take their meds, grownups who have unsafe sex, and other flawed decision makers have chronicled the irrationality of Homo sapiens.

In order to curb human being’s natural imperfections (their desire to pick the bad option) four aspects in the better option must be present:

1. Knowledge about what the better choices are, which is why the Obama administration is so interested in information transparency.
2. Affordability–Change can’t be expensive or it becomes unattainable.
3. Ease–Default options on healthcare and automatic retirement plans make it more difficult to not participate, making the better option the easier option.
4. Normalization–If people think that everyone else is doing it, they’ll be more likely to do it.

It occurs to me in reading this article that in essence Obama is the ultimate social entrepreneur.  As Grunwald points out:

Obama is no therapist changing individuals one at a time. He’s an organizer trying to build community and inspire collective action through house parties and Facebook as well as rhetoric about shared values. In other words, he’s trying to create social norms — behavioral change’s killer app.

He is trying to scale change throughout the country, perhaps throughout the world, in not just one area, but several.  So isn’t there something to be learned from his behavioral science approach to creating change that could be translated to the field of social innovation?

For social entrepreneurs whose challenge is to change crumbling systems and institutions, perhaps a behavioral approach can make scale achievable, more effectively and quickly.  For those looking to create a social capital market and bring “dinosaur” philanthropists and traditional investors toward new financial vehicles, perhaps behavioral incentives could help.  Whatever the area, whatever the need, the end goal is to change old ways of doing things.  Perhaps there is something to be learned from this new approach. Instead of denying or overriding human imperfection, we could actually harness that imperfection in order to create change on a large scale.  Perhaps the very problems we seek to solve require such an approach.

Tags: behavioral science, change, Obama, social capital market, social entrepreneurs