3 Ways Nonprofits Can Leverage Behavioral Economics

Photo by TEDxPioneerValley2012

I participated in a panel discussion on social fundraising this past Monday with Katya Andresen, Roger Craver and Carie Lewis.

We spoke for about an hour and a half on a variety of topics, strategies, tool and best practices.

Understand People First

One question towards the end was particularly insightful, asking what should nonprofit leaders focus on given that social media is changing so rapidly.

My answer/guess: while it is true that the Internet will continuously change at an increasingly rapid pace, human beings have not, and will not change for thousands of years to come. It’s therefore in our best interest to understand how people behave and why they make decisions.

Katya Anderson took this further, stating that there’ve been countless recent breakthroughs in brain science that shed light on behavioral economics. She referred everyone to a webinar she did called “Homer Simpson for Nonprofits: The Truth about How People Really Think and What It Means for Promoting Your Cause.”

Behavioral Economics is essentially the study of irrationality. In other words, where economists typically assume that all behavior is rational, behavioral economists don’t assume anything. They simply observe how people make consumer decisions.

Kayta points out three insights derived from behavioral economics that nonprofits can use:

  1. Small, Not Big–The bigger the scale of what you’re communicating, the smaller the impact on your audience.
  2. Hopeful, Not Hopeless–People tend to act on what they believe they can change. If your problem seems intractable, enormous, and endless, people won’t be motivated to help.
  3. Peer Pressure Still Works–People are more likely to do something if they know other people like them are doing it.

You can view the entire webinar below, and download that PDF transcript here.

Note: Since this webinar scientists have discovered that the limbic system is where all major decisions happen!