Leveraging Behavioral Economics for Better Startup Solutions

This is the fifth and final installment in a five-part series on the CAH’s Startup Lab, our academic incubator program for health and finance tech startups.

Don’t miss your chance! Startup Lab applications are only open until June 30th at 5pm EST.

Apply here.

Startups + Behavioral Economics

Since its inception as a primarily theoretical field of study that reunified psychology and economics[1], behavioral economics has been increasingly utilized to inform solutions, alter environments, and design technologies. By applying what we know from the field about how humans behave in reality (rather than the traditional economic view of humans as rational actors that always make decisions in their best interests), more effective solutions have emerged that are more in line with natural human behavior. But there is far more work to be done!

The Center for Advanced Hindsight believes that the findings of behavioral economics should be used to serve society. For better or for worse, designers influence human behavior. In the interest of using behavioral economics for good, we seek and support the solutions that enhance people’s lives.

Solutions that Enhance People’s Lives

In 2015, the United Nations laid out 17 Sustainable Development Goals (SDGs) as a “universal call to action”[2]. These are a prime example of the kinds of goals we care to collectively pursue with our entrepreneurial partners at the CAH. Startups building solutions that contribute to SDG 1, ending poverty, or SDG 3, promoting good health and wellbeing (see The World Health Organization’s graphic[3] below highlighting health) are those that we want to support in integrating behavioral concepts to increase their effectiveness.


Leveraging Behavioral Economics


The Startup Lab puts BE into the hands of those designing the next solution for the good of others. Entrepreneurs are influencers of the future, and the CAH helps them design a future that improves human decision-making to make people happier, healthier, and wealthier.

The CAH provides an environment where behavioral economics research is accessible and applicable. We provide actionable teaching, create collision between startups and researchers, and enable access to brilliant academic minds (like Dan Ariely).

 Targeting Behaviorally-Based Problems

Not all problems in health and finance are behaviorally based—some illnesses are genetic rather than preventable by behavior change, for instance, and such a goal as ending poverty requires more than behavioral interventions alone, but also changes to policies and systems. But behavior is the underlying cause of many problems in health and finance—and behavior is what humans can control. Even the bulk of premature deaths (from preventable health issues) can be attributed to our poor decision-making, and thus could be avoided if “readily available alternative choices were made”[4].

Startup tech solutions that enhance people’s lives are those that work in conjunction with the user’s natural operation and daily environment, and enable them to make decisions that are in their best interests. In the health domain, for example, we know that ineffective (or lack of) hand washing by doctors is a widespread problem in hospitals[5] that leads to the spread of bacteria. A solution to this behaviorally based problem would need to integrate with a doctor’s daily routine and nudge them at the right time and place to complete the key behavior of washing their hands. In finance, increasing savings for low-income populations is an important mission. One such solution that further this goal might target people at the point that they bring a check into the bank, and encourage them to allocate some of it towards savings rather than defaulting to cashing the entire check.

We can use behavioral economics to make alternative choices readily available and make it easier for people to choose the better option. Helping people behave in ways that make them healthier (like adhering to their prescribed medication), or make decisions that increase their financial well-being (like allocating discretionary funds to pay down debt instead of making unnecessary purchases) are the kinds of solutions that we’re invested in bringing to fruition.

The kinds of startups that the Startup Lab seeks to invest in and collaborate with are those that are working to solve behaviorally based, high-impact problems in health and finance.

Is the Startup Lab the Right Place for You?

Apart from our focus on high-impact problems that are behavior-driven, the central pillar of the Startup Lab is research application—so we’re looking for entrepreneurs with a rabid curiosity about the nuances of behavioral economics and how to apply concepts through research exploration and execution.

Though we seek startups that share our value and understanding of experimenting, we often have to remind entrepreneurs that there’s no magic formula. Exploring research and figuring out what works in the context of a specific tech platform is a process that requires testing. All the time.

Teams that readily understand this will be better equipped to seek, understand, and find value in the CAH’s resources. Leveraging behavioral economics requires buying in—learning the language of academic research and navigating relationships with social scientists. If your team is ready to dive in and figure out what implications behavioral science has for your company’s development, then we want you.

[1] Camerer, C. (1999). Behavioral economics: Reunifying psychology and economics. Proceedings of the National Academy of Sciences96(19), 10575-10577.

[2] United Nations Development Programme. (n.d.). Sustainable Development Goals. Retrieved from http://www.undp.org/content/undp/en/home/sustainable-development-goals.html

[3] World Health Organization. (n.d.). Infographic: Sustainable Development Goals (SDGs). Retrieved from http://www.who.int/sdg/infographic/en/

[4] Keeney, R. L. (2008). Personal decisions are the leading cause of death. Operations Research56(6), 1335-1347.

[5] Center for Disease Control. (2016, April 28). Hand Hygiene in Healthcare Settings. Retrieved from https://www.cdc.gov/handhygiene/science/index.html

Are you insatiably curious about what drives decisions, shapes motivation, and influences behavior? Does your startup’s success hinge on the ability to affect positive behavior change that helps people live happier, healthier, and wealthier lives?  

The Startup Lab supports problem-solvers by making behavioral economics findings accessible and applicable. 

To learn more, visit our FAQs (includes information on the Startup Lab investment structure and other logistics) or connect with us at startup@danariely.com

Apply for the October 2017-June 2018 Startup Lab program by June 30th at 5pm EST.  

Apply Now.