Design This: You


[In my previous articles, I applied behavioral insights to help millennials get started on investing. Here, I introduce ideas to help us craft our own investing environment, based on how we really think and behave, not how we ought to.]

Design is never neutral.

Take this experiment. At work, people presented with savings as a default option, by automatic investments of part of their salaries into a retirement account, nearly quadrupled their savings relative to people requiring to opt into a savings plan.

Default options are sticky. We are prone to status quo bias; we favor the existing reality rather than exerting the mental effort to change. Simply, our brains seek to minimize effort and maximize pleasure.

When it comes to millennials and investing, which is the most likely scenario? Choosing between meeting friends after work? Or, studying those saving plans to opt into the most lucrative one (that is, after befriending Investopedia to grapple with the financial jargon and trying to visualize your needs in 30+ years)? What would you rather do? Well… that’s just what a recent Financial Times poll on millennials found; they tend to prioritise spending time with friends, often at the expense of thinking about saving: “managing money well and promoting short-term happiness are often seen as in direct conflict and where this conflict occurs short-term happiness usually wins.”

However, saving doesn’t have to be zero-sum game. Designing environments conducive to automatic action can help us have it both ways.

Default options are critical not only to work with the grain of our ubiquitous status-quo bias, but also to help reduce loss aversion. Loss aversion is our tendency to perceive losses as greater than gains. Try asking friends whether they prefer earning £100 or avoid losing £100. They’ll generally prefer not losing £100. We like holding on to what we have. While saving generally translates into future wealth, we may also perceive it as loss: less money to spend today. But, if we design strategies to earmark our earnings by deducting a portion for savings with automatic investments we can help bypass loss aversion.

Choice architecture: Better decisions, less effort.

The experiment above shows the power behind “choice architecture” or the blueprint that determines how options appear in our environment. Popular examples include restaurant menus or even something as silly as target marks in a urinal. Aside from the order, layout and framing of information, choice architecture also involves the way an environment is designed to interact with the people who come in contact with it, through incentives and feedback.

Note that I’ve made no mention of who the “architect” is. How often do you ask yourself this question? Businesses and policy makers have long used choice architecture to influence social and consumer decisions. At the individual level, however, there is more ground to build on how to become our own “choice architects” to behave in the ways we intend to. At least there is growing appetite to design personal environments that help us make better decisions without the unwanted efforts and luckily today products allow for more personalization to help us do just that.

Design you

You can alter how you present yourself with options and information to behave as planned. Here’s a simple framework to get you started on how to become your own choice architect:

  1. Attitude: do you perceive savings as losing money you can use now? Recalibrate your thinking to reframe savings as a gain and temper loss aversion.

  2. Perception: do you find yourself struggling to spend less? Earmark your income as soon as it is transferred to account for the money you’ll put aside for savings. This simple accounting trick changes your reference point, similar to setting your watch five minutes earlier to avoid being late. (You know you’ve done it, but it still works.)

  3. Intrinsic motivation: what are your existing preferences? Are you visual? Choose a mobile banking app that can keep track where your income and expenses go every month.

  4. Extrinsic motivation: do you have trouble keeping yourself accountable? Surround yourself with people that can pinch you when you’re steering away from good habits or use tools with social sharing features for a dose of healthy social pressure.

  5. Reinforcement: do you find it easy to start something new, but hard to keep at it? Design regular reminders to meet small, clearly listed milestones.

While these questions seem arbitrary, they’re based on the main tenets behind behavior change. By applying choice architecture, you’re more capable of achieving your goals without the additional effort that makes it all seem less appealing. Whether it’s better health -- or greater financial well-being -- your odds are better when you’re the architect of your own future.

So go ahead. Start designing.

For further browsing and reading check out:

  1. Video: Ted Talk on techniques to help us manage and practice choosing by choice expert Sheena Iyengar (fast forward to minute 10.25 for ideas on how to become your own choice architect to improve savings).

  2. Article: how digital tools and digital nudging can help with saving @HBR

  3. Experiment: researchers test and discuss different savings commitment devices @RAND

  4. Blog post: quick read on crafting your "habit environment" (or becoming your own choice architect) @ZenHabits


This article was written by our guest contributor Rebecca Van Roy, Behavioral Science Consultant.

Rebecca consults on what drives human behavior and how to improve and predict decision making. She has worked in tech, health, international development and energy in Washington DC and London, helping organizations design better products and services. She holds an MSc in Decision Sciences from London School of Economics, an MA in Communication and Digital Technologies from Johns Hopkins University and a BA in International Economics from University of Richmond.  She can be reached at