BE101x - BEHAVIOURAL ECONOMICS IN ACTION
INSTRUCTOR: DILIP SOMAN
Course Opens: 04 April 2016
How can we get people to save more money, eat healthy foods and engage in healthy behaviours, and more generally make better choices? There has been a lot written about the fact that human beings do not process information and make decisions in an optimal fashion. This course builds on much of the fascinating work in the area of the behavioural sciences and allows the student to develop a hands-on approach by learning its methods and more importantly, how it can be harnessed by suitably designing contexts to “nudge” choice. In three modules, learners will be able to a) explain and interpret the principles underlying decision-making and compare the nudging approach to other methods of behaviour change, b) learn how to critique, design and interpret experiments; and c) design nudges and decision-tools to help people make better decisions. Learners will also witness and participate in topical debates on like “does irrationality impact welfare?” or “Is nudging manipulative?” If you’ve been fascinated with the buzz surrounding behavioural economics but are not sure how to actually use it, this course is for you.
This self-paced course is made up of lessons, units and modules. A lesson is a cohesive unit of content that should take you around 10 - 30 minutes to complete. A unit is a collection of lessons that comprise a larger unit of learning. A module represents a major subsegment. BE101x has three modules.
Each of the three modules is comprised of two units. Within each unit are a number of different lessons.
- Each lesson typically includes between 1 - 3 videos and at least one short quiz (not for grades) to test your understanding of the material that was just presented.
- Lessons may also include supplemental readings, discussions and assignments.
- Each lesson is structured around 1-2 clear learning objectives.
- The length of unit is variable, and is usually determined by natural divisions in the content. A unit may be as short as 3 lessons, or may include 6 or more lessons; the average length is around 3-5 lessons. Think of a unit as a set of lessons that may be covered in one week of a standard university course.
- Most units conclude with a review and a Skills and Knowledge checklist (for grades) that require you to assess your competence at the skills and knowledge covered in the unit.
Please see the diagram below for an illustration of what a unit and lesson is.
Since the course is always open you and your peers may begin the course at any time. There are no hard deadlines in a self-paced MOOC and you can adjust your study plans to go as fast as you want or as slowly as you wish. We strongly suggest you work through the units in the sequence that we have structured them under the Courseware tab. Likewise, we recommend you follow the lesson order as structured within each unit.
The learning objectives for each of the three broad modules of the course are for you to:
1) Develop an understanding of the philosophy and the principles underlying the field of behavioural economics, and to understand the differences between choice architecture / nudging and other approaches to behaviour change
2) Identify factors that constitute rational decision making
3) Learn to create decision-points that can help curb consumption and increase savings
4) Understand the principles of mental accounting, choice overload, self-control and the effects of payment mechanism on spending
1) Understand the key elements of an experiment, to differentiate between three basic types of experimental designs, and to gain an insight into ANOVA and regression techniques for analyzing data
2) Develop criteria for deciding between laboratory and field experiments
3) Develop some intuition about intuition, and use data to model and understand it.
4) Understand the concept of a consumption vocabulary and identify situations where it can aid decision-making
1) Use a prescribed process for designing your own nudges, and to identify specific resources and tools you will need to execute a nudging strategy
2) Develop an understanding of how to audit a decision context
3) Learn about ways in which several governments around the world have embedded behavioural economics into welfare and policy initiatives
4) Identify specific ways in which you can use decision-aids to improve your decision-making, and to help others around you
5) Apply some of the ideas we have learnt in this course to other policy tools, for example disclosure
At the beginning of each unit, we will identify specific learning objectives for the unit before proceeding to the material.
The topics covered under each module are as follows:
Key Concepts and Choice Architecture
Topics Covered: What is Behavioral Economics and how is Nudging different from other techniques of behaviour change; What is rational choice; A theory of decision points
Major Principles of Behavioural Economics
Topics Covered: Mental accounting, Choice overload, Self-control, Effect of payment mechanism on spending
Topics Covered: The basics of experiments (terminology, design), Analysis of results, Lab and field studies, Examples of experiments
Tools for understanding preferences
Topics Covered: Understanding intuition, Decision analysis, Judgment bootstrapping, Educating intuition, Developing a consumption vocabulary
Guide to Nudging
Topics Covered: Nudging – A progress report, Getting started, Nudger’s toolkit, A practitioner’s guide
Decision Aids and Wrap-up
Topics Covered: Some recent examples, decision aides, disclosure and smart disclosure
In each unit, we will present a debate on a current topic in behavioural economics. You will see a video in which several leading scholars or practitioners (from the world of policy and business) present their viewpoint on a given topic. After viewing the video, you will be asked to:
1) Vote on which side of the debate you endorse
2) Participate in a discussion forum dedicated to that topic.
The debate portion of the course gives you the opportunity to interact with your fellow learners and also to use their thinking (and those of the experts) in shaping your own opinions about our ever evolving field.
The materials within each unit are organized by sections, and further as lessons within each section. Each unit will begin with an overview that summarizes the learning objectives and topics covered in the unit, and also reminds learners of course requirements. Each lesson could take several forms (or a combination of these forms):
1) Videos: Videos are short (anywhere between 5-10 minutes) and could either be in the form of the instructor delivering a lecture, or slides with a voiceover.
2) Text: Some units are in text; either as short articles or bullet point summaries and reviews of some topics
3) Practice Quizzes: These are extremely short quizzes. Their goal is to reinforce the key learning from the unit that immediately precedes the quiz.
The materials are arranged in a sequence that makes the most logical sense from the perspective of learners who are beginners to this area. Learners with a background (or expertise) in some of these topics could choose to skim through some of these units or bypass them entirely. The practice quizzes should help you make this decision.
All the materials required to complete the course are available to all learners online. However, students who might want additional materials could purchase a copy of Dilip Soman’s book “The Last Mile: Creating Social and Economic Value from Behavioural Insights” (University of Toronto Press: 2015). The book is available online at the University of Toronto Press site (http://www.utppublishing.com/The-Last-Mile-Creating-Social-and-Economic-Value-from-Behavioral-Insights.html) or at e-retailers like Amazon (http://www.amazon.com/The-Last-Mile-Behavioral-Rotman-UTP/dp/1442650435)
Learners are urged to communicate with the instructor, the teaching assistants and their fellow learners through the BE101x discussion board. Given the large number of learners, it may be difficult for your teaching team to respond to all questions immediately, so posting the question to the discussion board increases the likelihood that you will get a response quickly.
In addition to the general BE101x discussion board, there will be six additional discussion boards, each dedicated to the debate topic in a given unit.
The goal of the research corner will be to expose learners to some new and interesting research done by leading academics from the University of Toronto and elsewhere. You will find a number of short videos under the research corner. In each video, a behavioural researchers talks briefly about recent research. We encourage you to digest, reflect and comment on these research corner videos in the discussion boards, and we will relay any interesting comments and suggestions back to the particular researcher. The content of the research corner is designed to be a supplement to the course. However, you will not be tested on this material during the final exam.
EXPECTATIONS AND ASSESSMENT
Learners can choose to get either an Honour Code Certificate (for free) or a Verified Certificate for a fee. In order to get a certificate, learners should: a) complete the assessment as described below, and b) participate in online discussions
Learners who choose to take BE101x for either a Honor Code or Verified certificate will be assessed as follows:
1) A final exam (60%): The exam will have a number of multiple choice or true / false questions and should be attempted after you have completed all the units.
2) A reflection on the debates (20%): You will be asked to complete a very short reflection piece. You will be asked to choose one of the debates you saw and answer some questions about your initial opinion on the topic and how that opinion changed. This assignment will be self-assessed.
3) Skills and Knowledge Checklist (20%): At the end of each unit, learners will be given a checklist of skills and knowledge that they should have learnt in that unit, and will be asked to do a self-assessment on these items.
In addition to above, we expect and encourage learners to actively participate in debates and discussions. Learners who complete all these three components and achieve a score of 70% on the total assessment will earn a certificate of accomplishment.
Dilip Soman, Professor at the Rotman School of Management, University of Toronto. Dilip does research on interesting human behaviours and their applications to consumer welfare, policy and financial literacy. He is also interested in research on poverty, global health, education and development in the global south. In his past life, he has degrees in engineering and management, worked in sales and advertising, consulted for several organizations, and taught at Colorado, Hong Kong and now in Toronto. When not working, he spends time on photography, reading, taking weekends seriously and agonizing over successive Indian cricket teams.
Joonkyung (Joon) Kim is a Ph. D. student at the Rotman School of Management, University of Toronto. She received her Bachelor’s and Master’s degree in business administration from the Seoul National University. She is interested in researching physical and psychological factors which can lead people to change their existing opinion, thinking and behavior. In her capacity as the head teaching associate for this course, Joon will be leading and moderating discussion boards and will help with generating and curating content.
FINAL COMMENT: WHAT’S IN A NAME?
"What's in a name? That which we call a rose
By any other name would smell as sweet."
Shakespeare, William, Romeo and Juliet
There has been some recent debate and discussion about whether the term “Behavioural Economics” is the best label to describe the content that is typically described by this term, or whether it should be broadly labeled as “psychology” or “Judgment and Decision Making.” We agree with much that has been said, but in this course will steer away from the debate. In this course, we will discuss any behavioural insights that have implications for economic decisions and have economic consequences for both the individual and societies as a whole. This will be our working definition of behavioural economics!