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Kristen Berman: Behavioral economics expert on designing products that change behavior
00:28:16
We chat with Kristen Berman about how to design products that change behavior, and also about the darker side of behavioral design, which in extreme cases can create addictive products.
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- [00:02]
Kristen Berman
That's the advice I give people is don't rely on willpower. Don't rely on daily decision making to do your to do list. It's set up your environment and your life so that it's easy to do the things you want to do.
- [00:16]
Eli Woolery
Many of the most successful products launched in Silicon Valley lean heavily on behavioral design to increase engagement. Former Design Better guest Nir Eyal talks about this in his book Silicon Hooked and Indistractable. And today we have another expert in the field, Kristen Berman, who co founded Irrational Labs with professor and researcher dan Ariely in 2013.
- [00:36]
Aaron Walter
We chat with Kristen about how to design products that change behavior, and also about the darker side of behavioral design, which in extreme cases can create addictive products. We also learned how Kristen uses behavioral science on herself to achieve goals and encourage positive habits.
- [00:53]
Eli Woolery
This is DesignBetter, where we explore creativity at the intersection of design and technology. I'm Eli Woolery.
- [00:59]
Aaron Walter
And I'm Aaron Walter. If you're hearing this, you're not currently on our Premium subscriber feed. DesignBetter Premium subscribers enjoy weekly episodes. You get four episodes per month rather than just two. All are ad free, and you get invited to our monthly AMAs with the smartest folks in design and technology tech. You'll hear a preview of this episode, but if you'd like to hear the full conversation, please consider becoming a Premium Subscriber@designbetterpodcast.com subscribe that's designbetterpodcast.com subscribe. It's just seven bucks a month and it supports not only your personal growth, it also supports your design community. The podcast is available to everyone through our scholarship program. If you can't afford a subscription right now, just shoot us an email@subscriptionsecuriositydepartment.com and we'll help you out. We'll return to the conversation after this quick break.
- [02:06]
Meredith Black
Hey there. I'm Meredith Black, co founder of Design Ops assembly and formerly of Pinterest and Figma. I co host a podcast called Reconsidering alongside two of the design world's most respected voices, Bob Baxley, formerly of Apple and Pinterest, and Erin Walter, co host of this very podcast. Design Better Reconsidering is a show about looking at the big questions and challenges that we face in everyday life. With a fresh perspective, we dive into topics like building a fulfilling career, navigating tough conversations, making meaningful friendships as adults, and even handling life's biggest transitions like illness and loss. We bring in authors and experts to provide actionable advice and thoughtful guidance to help us all develop the skills needed to thrive as well rounded and healthy adults. We spoke with New York Times bestselling author and TED speaker Dan Pink on the power of regret and how we can make smarter decisions to deepen our sense of meaning and purpose. And Tina Roff Eisenberg, the founder of Creative Mornings, joined us live to talk about the importance of creating community and friendships. It turns out it has a huge impact on longevity and the quality of your life. And we spoke with MIT professor of philosophy and best selling author Kiran Setia about facing life's inevitable hardships in which ancient philosophers can teach us about living the good life. We explore so many topics and we'd love for you to give the Reconsidering Podcast a listen. Listen and subscribe@reconsidering.org that's reconsidering.org or find us wherever you get your podcasts. Reconsidering.org.
- [03:34]
Aaron Walter
And now back to the show.
- [03:40]
Eli Woolery
Kristin Berman, welcome to the Design Better Podcast.
- [03:43]
Kristen Berman
Great to be here.
- [03:44]
Eli Woolery
Well, we are excited to have you. I met you in person a while back at a substack bestseller event which was fun, but I have like a second degree tie to you because this is probably about, gosh, like 13, 14 years ago I got a chance to meet Dan Ariely. He was kind of like a visiting scholar at the venture capital firm I was sort of working through at the time. And he had a lot of great stories and was obviously had this view on behavioral design and design that was just very compelling. So maybe you can walk us a little bit through your origin story because I know you started Irrational Labs with him back in 2013 I believe.
- [04:20]
Kristen Berman
Yeah, Dan is wonderful. So basically Dan and I teamed up. I was a product manager at Intuit, got really excited like many people did around 2006, 2007 around behavioral economics and what it means for the product design and overall product and marketing community. At that time it was not even a buzzword. People didn't even know it and started working with him to do some side research to talk with startups and really kind of codify some of the insights as it applies to teams and how you could use that to grow your product. And then Google brought us in and we ran their behavioral economics group, started it and ran it for about three years so really got the opportunity to do rapid experimentation at scale. We worked with over 25 teams from self driving cars to YouTube to AdWords. The team still exists there and so that's exciting. And throughout that process Dan and I started Irrational Labs, which is basically a consulting company where we help teams from finance and healthcare and tech apply the principles of human decision making and psychology to change behavior. So here we are now and doing the same thing a decade later.
- [05:34]
Aaron Walter
Tell us about behavioral economics, because usually what I hear is there's user research, but behavioral economics is maybe a broader view of things. Is that right? How do you define that?
- [05:46]
Kristen Berman
Exactly. So basically, the idea with behavioral economics is the assumption that people don't always act rationally. We may say one thing and we do another. We even act against our best interests. And so the field of behavioral economics, and I sometimes say behavioral science, basically studies these behaviors. And I would almost say it kind of sits at the crossroads of psychology and economics, where it's looking at the effects of the cognitive, emotional, social effects on our decisions and ultimately the actions that we're taking in the product world. It's basically the translation of those insights, those psychologies, how we make decisions. We then say, that's behavioral design. How do you take those understandings of the human brain, the human condition, and apply that actually to the environment that we're in? And maybe the most contrarian kind of idea with behavioral economics in general is that the environment of decision making affects us potentially more than our attitudes, preferences, or beliefs. So what I mean by that is I personally really like M&MS. If M&MS. Are sitting next to me right now, I would be eating despite being on a podcast.
- [06:51]
Aaron Walter
Impossible. Especially if they're peanut. M&Ms.
- [06:53]
Kristen Berman
Yeah. And so it's, you know, my attitude, preference of belief doesn't change towards M&MS. But if you move them farther away from me, I eat less of them. If you cover the jar, I eat less of them. And so this design of our environment in the physical world is so intuitive to us that it affects our behavior. You know, if the wine glass is bigger or smaller, I drink more wine. We intuitively understand that and how it affects our behavior. And many times we just forget that that's pervasive across most of our decisions. And so behavioral scientists, we study that, we study digital environments, we study how people behave in digital environments, and then we use that to help kind of design the behavior that they want to do when they're entering your product or your environment.
- [07:35]
Aaron Walter
Let's maybe pull this apart a bit more, because so often, especially in companies where we're working with engineers, product folks, maybe business thinkers, they think very rationally, you're irrational labs like, you're looking at the irrationality of human behavior. And my Premise is that the reality of human behavior is most of it is irrational. Most of it is we don't really understand what is driving the decision making process. There are many people who don't believe in free will, even like we could go very philosophical on that. But could you help us understand what drives human behavior?
- [08:19]
Kristen Berman
Yeah. There are a lot of forces acting on us every minute, every second of the day. And I think you hit it on the head when you said we don't fully understand these forces. So if you were to ask people, and we, our team did, why are you saving for retirement? Or why aren't you saving for retirement? People come up with all these wonderful answers about how they care about their kids and their legacy, or if they're not saving, how they are offended that we'd even ask that question because they don't have money to save. And yet what we know, the answer is why are you saving for retirement? Is the age old because you were opted in, you were auto enrolled into retirement savings. And so the ability for us to understand those forces. And that's kind of why some user research, when we ask people why did you do something? That's good to know why they think they did it. But is that really why they did it? And you know, in our world, when we look at why people actually do something, it is some of this like cognitive and logistical friction. So it was easy to do or it was hard to do. It took a lot of time to think and make a decision. There's a lot of uncertainty, of procrastination and then we look at the motivating factors. So those like cognitive and logistical friction are some of the things that get in our way. What are the things that propel us to do something? And we look at present bias. We are motivated by immediate things. We look at norms, we're motivated by what other people do. We look at endowment effects, we're motivated by what we put effort into. So there are all these factors out there that drive us to act that aren't related to our fully cognitive process of saying, well, I evaluated the time and utility and cost about this and then I decided to take action. And our brains don't just work like that. Most often some people, we all know people who. It does, right?
- [10:00]
Aaron Walter
Yeah.
- [10:01]
Eli Woolery
So getting people to switch products or change their behavior is very challenging. Going back to that VC firm I mentioned, I was there as part of an accelerator where we were working on product ideas and some of the advice from the other entrepreneurs and residents and VCs there was like don't create a product that you're trying to change people's behavior. At the same time, you think of some really successful startups like Airbnb, they got people to rent out a room or a part of their house, which was not something that was really that commonplace before. So if you're a designer or you're thinking about doing a startup or new project, how do you think about changing behavior?
- [10:37]
Kristen Berman
Yeah, I think actually this is kind of, you know, everyone thinks about what are my competitors. And actually, the biggest competitor you have is the status quo. The thing that people are doing right now. The biggest predictor for I will exercise today is if I exercise yesterday, I didn't, so I likely won't exercise today. But your customers are the same way. And so you really have to kind of fight this status quo. And so the advice to kind of go with what people are doing has worked, right? We see Amazon. You're just making it easier for me to order something online. At some base level, they're making it dramatically easier by having it be one click. Uber and Lyft are just making calling a taxi dramatically easier. These are taxi companies at the base. And even in some of the biggest things that I think this is Lyft data that was published. It was like, for taxis, it took you 20 plus minutes to stand in the middle street in San Francisco when it was launched. And it took like, under 10 for Lyft. @ the base level, the innovation was making something somebody was already doing easier. And then you also have these, like, much more of a category defining Airbnb, which is like, you're actually making kind of a normative change here. And that is way harder to do and takes a lot of time. You know, I think we look back at these startups and we're like, oh, it just happened overnight. And obviously that's not true. We had language around this. We had the sharing economy that people were talking about that supported normative changes like this. You know, we had the idea that hotels were getting more expensive, and so people were looking for alternatives. This was, you know, we can't underestimate timing here, but norm change is obviously much more difficult than kind of fundamentally making something dramatically easier. So I would always start at making it easier to figure out the big innovation breakthroughs.
- [12:19]
Aaron Walter
And the mother of all challenging behaviors is getting people to switch a product that you've already got some inertia with this existing product. And now I'm trying to lure you over to my product, which is, you know, marginally better or maybe I think dramatically better. How do you think about the switching process and how we should design for that to make that compelling and more attractive to consumers?
- [12:49]
Kristen Berman
Yeah, it's difficult. So I want to say at first of all, there's no, like, one magic bullet. Like, with most solutions, most things are kind of incremental, and a lot of effects go on top of one another. But I think when we're thinking about people waking up and having stuff to do during the day, you have to imagine that they're taking care of their kids, they're answering emails, they're distracted by their phone. And so your job, your benefit, has to be so motivating that they're prioritizing that over. And this is the whole, like, vitamin versus painkiller sort of thing that we all analogy. No, but we call this present bias that the benefit has to be so motivating. So, well, let's take Chime. How did Chime win against Challenger, or it's a challenger bank. How do they win against classic banks? In the very beginning of Chime's life, they went really hard on no overdraft fees. And they even did, like, a study where they found that most of their users have $200, $300 a year in overdraft fees.
- [13:46]
Aaron Walter
So that is bonkers to me.
- [13:48]
Kristen Berman
Bonkers. And then they had people see this and they said, now will you switch? And switching rates were very low, even with this idea that you were paying. Why? Because we're optimists. Well, I'm an idiot before, but I won't be an idiot again. And we have this idea that our future self will be better than our current self. And so you're fighting these biases. Chime very quickly changed and all others kind of went with it to a more immediate benefit. Get paid two days earlier. So this is the main benefit of these Challenger banks, is that you actually deposit your paycheck in there. And because of how their ach works comparative to banks, they're getting actually money faster. And so the terribleness of changing banks, which we all know is so hard, was actually small compared to the benefit of getting paid two days earlier. And so that's what startups should be looking for, is a really compelling benefit that would motivate me to do something different today and take that action. Then once you have that motivation, it's day one, day two. It's not like in a week I'm coming back and reevaluating your app and saying, like, oh, well, should I try it again? That is your motivation. Moment in the very beginning. Because you've gotten their attention sometimes, too.
- [15:01]
Eli Woolery
If you're thinking about kind of a product innovation, it's easier to almost like, automatically change people's behavior sort of by default. And the case study I'm thinking of is a bit older, but IDO helped Bank of America come up with this program called Keep the Change. And the research they did before coming up with the idea, they noticed that this had been people writing more checks. But they noticed that oftentimes the mom in the household who was in charge of finances was rounding up her checks in the checkbook, and just to make sure she had that extra. A little tiny cushion in the checking account. And they're like, huh, that'd be interesting. What if we rounded up the purchase amount and put that into a savings account, essentially? And so just by default, you're helping people, it was a small amount, but build up their savings gradually. So kind of an interesting approach to, like, behavior change through a default action.
- [15:49]
Kristen Berman
Totally. By the way, one other fun finding is go to the gas station the next time. And we do this at the gas station too. So we try to get to the round number. There's no reason why we can't end on a random 75 cents, but we love getting to that round number. And so that's another psychological insight they used, which is generally people like round numbers. And so you're getting to this core insight, doing the thing that people are already doing, using a psychological insight to do it, and then making it easy for them to enroll.
- [16:18]
Aaron Walter
You kind of touched on this idea of those first impressions, like when people try a product for the first time. And this is something I see a lot of product teams just discount or not put enough stock in. There is a principle called the primacy effect, which is basically that first impression you have with the product. It's sort of like make or break. You either keep going with that and it becomes sticky or it doesn't. When you work with companies, do you talk about those first impressions and how to shape that?
- [16:48]
Kristen Berman
Yes, we call it a mental model. So you're basically coming into a product and forming quickly a mental model of the product. And. And it's very hard to change that mental model later. I'll give you an example. We worked with one Medical, which is folks who probably live in the Bay know one Medical. Others. It's basically a UX layer on top of healthcare that makes it much easier to book a doctor's appointment at the very basic level. They sell through employers. And this is very difficult. Imagine you're like a Google employee or something. You get a random email that says, look, we've offered this benefit of one medical and you have to figure out like what the heck this is. Is this important for me to do. It's free. Very interesting. And so what they were finding is that yes, people were signing up because you get a free benefit, but they weren't actually booking appointments with providers or doctors. So one medical asked us, how would you increase the amount of people who book, who actually use our service? And what we did is go through, we call it a behavioral diagnosis, which is like a journey map on steroids, where we're looking at every single step, every single decision that people are making to get to that provider moment where you're booking. And then we looked at the psychologies that affect people on each of those steps and what we found is two things. One is that when people come in, they didn't actually have a mental model of what one medical did. Their homepage says, get care. What is care? If you're coming and clicking a button to have a healthcare thing, you probably have some issue, I have the flu, I have my knee hurt, Something's going on with you. Get care is an abstract, future oriented way to frame that.
- [18:18]
Aaron Walter
It's also a phrase that has never been existed in my brain, never been brain. I've never thought, hey, you know what I need today? I need care.
- [18:25]
Kristen Berman
Yeah. And you'll find this with health in general is that because it's hard to narrow. They serve so many populations with diverse segmentation that they go to the like least offensive way to say the thing that solves it for everyone.
- [18:38]
Aaron Walter
And so the biggest umbrella.
- [18:40]
Kristen Berman
Right, Exactly. And so the other observation we had is the benefit of one medical is actually their Achilles heel as well, which is they have so many doctors. So you go to one, it was like 20 plus doctors, you could book them in the next day, you could do it virtual or in person. And all these doctors are highly qualified. But you put in front of me a list of 20 doctors and I'm like, well I should look them up. I don't want to be silly and book somebody who's not qualified. And so by giving people all of this choice, we actually caused them to have more procrastination and delayed the decision. And so we did something pretty contrarian is we took over their onboarding and we recommended one doctor, which is wild, right? Because the benefit of one medical is all of this choice. And yet in the very beginning in the onboarding, we made it longer. Because we asked them, you can just book with this provider, do you want to set a time right now? And we offered only virtual appointments, which was again, we're not saying virtual or in person. In person you have to figure out how you're going to get there, all these things. And we limited the number of time slots. And so by having these two psychological insights, we're able to do something that basically solve kind of this mental model. We provide you with providers, we offer doctors and then limit the choice. And by doing this we increase bookings by 20% going through the flow for the first use of people there. So using these things actually can really change. These are kind of small changes, have big effects. That doesn't always happen, but these are possible when you understand the psychologies that you're targeting.
- [20:10]
Eli Woolery
So there can be a dark side to behavioral design and thinking of products like social media. And we had a guest on the show a few years ago named Nir Eyal and his work kind of in the early days of some of these social media platforms which he wrote about in the book Hooked, drove a lot of these companies to develop very addictive products. And he followed up with this book Indistractable, which wasn't exactly mea culpa, but it's like here's how to not be distracted by the product products that we created via Hooked. But yeah, just curious how you think about that, how you think about, you know, sort of the ethics of behavioral design when it's applied to products.
- [20:46]
Kristen Berman
Yep. The thing that companies should think about in this case is what is the incentive that you're putting on your designer or your product manager. We worked with a large lending company and we had a really nice kind of like aligned incentive model where if it worked, if the intervention we designed worked, we would get paid more. And you know, this is lovely, but what it did is cause me to be a predatory lender. I was then suggesting and at the time I was working on grant funded low to moderate income financial decision making research by which I was one of the most pro social people in the industry. And yet when I turned around and was working for a lender with a different incentive, my behavior changed. So I don't blame the people within these companies for designing different types of things that could be addictive or could have negative long term effects. It's the incentive the company is giving them to do this. And for us, when we're working with teams, what we do is actually take away the outcome. You know, we focus on the outcome, retention, engagement, all These things, we're really focused on the behavior. What is the behavior that you want someone to do? And more often than not, the behavior is actually aligned with the user intent, the users coming in to do something, job to be done, et cetera. I find that when we do that with teams, we focus ruthlessly, we call it uncomfortably specific key behaviors that actually the ethics kind of solve themselves because you're aligning with the user intent much more. But this is a problem in all fields. The idea that you're designing or you're creating something that has unfortunate consequences for people, but you may have some immediate benefit from a quarterly KPI bonus that you may get is kind of the conundrum that we're talking about.
- [22:36]
Eli Woolery
And sometimes too, it's sort of those unintended consequences down the road that you might have to scenario out or think about. The case study I'm thinking of that came through our design program at Stanford is Juul, which is the founders, I believe, and they've said had very good intensive, like moving people away from cigarettes to a less harmful product. And I think in a lot of ways that worked. But what maybe they didn't understand down the road was that these products would be very heavily marketed towards teenagers and ended up increasing nicotine use amongst teenagers. So kind of like, you know, thinking about how do you kind of game out those scenarios down the road when you're trying to develop a beneficial product.
- [23:13]
Kristen Berman
Totally. And Juul's a really interesting one. Right. Because if you were to think about the biggest health risk that people still have in America, it's smoking. And by the way, the biggest cost that we pay to our health insurance system is people who smoke. They cost us a lot of money. We can say they die early, but they still cost us a lot of money. And so it's not unreasonable to say, to have a moral debate about even if teens get addicted to nicotine, are you saving lives? Like, what is one life worth versus a teen addicted to nicotine? That is a moral debate that companies should have. And there's probably no right answer, but these are like the good conversations that can actually then create design principles that drive product decisions, that drive kind of like what markets you're going into by adding flavors to Juul. That was a big one, right? Like you could have Juul without flavors and maybe it'd be less enticing to teens. And so there were probably some design decisions there that if they had had that kind of back of the mind discussion, may have changed.
- [24:11]
Aaron Walter
One thing that I see a lot inside of teams is most folks don't really buy into the idea of behavior. They really like to look at the analytics of the behavior of like, here's where people are going, here are the things that they're doing. And if they did that thing, then they'll go do this thing over here that we really want and that's our OKR or KPI we're trying to hit. How do you talk to skeptics or folks who are less convinced that qualitative research or qualitative thinking about behavior is valuable for us?
- [24:47]
Kristen Berman
We really think about our goal is to get people to do something differently because otherwise they shouldn't have come into your startup or your team or your product. That's their goal too. If you're going into headspace, you want to meditate. And so the idea then is not that people understand your product, but it's that they're actually doing something differently. And so sometimes we talk to teams about just the action. People kind of know this word action that they're going to take. I think what you're hitting on though, is some kind of chain of thought that is around. If I get 10 friends in Facebook, then I'm a sticky user. And so my goal is to motivate someone to get 10 friends.
- [25:24]
Aaron Walter
It's like looking at the world like Mr. Spock, when reality is the world is full of Kirk, you know, divorced from reality of how humans behave.
- [25:35]
Kristen Berman
It's really hard for us, by the way, to think about this because we don't think social proof is the thing that works on most people. Most times when you're not confident in some decision. If you're very confident, by the way, social proof may not work, but it's very hard for us to think about ourselves like a sheep that just goes along with a herd. That is an uncomfortable idea for us.
- [25:54]
Aaron Walter
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- [26:36]
Kristen Berman
Foreign.
- [26:40]
Aaron Walter
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