The science of solving complex problems

Inside behavioural economics

Most complex business problems boil down to human behaviour. Ultimately, how people behave strongly influences how products, services and organizational processes are designed and how stakeholders embrace them.

As emerging threats and opportunities rapidly change the business landscape, organizations that truly understand what drives customers and employees to think or act the way they do will prevail.

Behavioural economics is at the centre of this. It shows we don’t always make decisions in a rational and calculated way. We often use thought processes that are intuitive and gut-driven rather than deliberative and planned, leading us to:


  • misjudge important facts



  • be inconsistent in our perception of events and judgment of alternatives


  • miscalculate probabilities or the likelihood of an event occurring
  • be influenced by decisions of those around us
  • be sensitive to the way choices are framed and presented
  • prefer smaller but immediate rewards over larger delayed ones
  • attribute value in relative (rather than objective) terms

You can’t force people to be more rational, but by recognizing and anticipating cognitive biases using behavioural science and data analytics, you can design targeted, cost-effective interventions that nudge people toward better decisions and behaviours. It’s about addressing the inefficiencies that stand between you and the best outcomes for your organization and stakeholders.

Gallup research shows that companies applying behavioural economics principles outperformed peers by 85% in sales growth and more than 25% in gross margin during a one-year period.



Test your cognitive biases

Explore how they affect your daily decisions


Unlock value through behavioural interventions

Behavioral economics - social norms

Social norms

Informing debtors of prompt repayment norms in their town resulted in
a 15% increase in payment rates

Behavioral economics - status quo

Status quo bias

Shifting an opt-in to an opt-out saving strategy for employees increased enrolment rates by 25%

Behavioral economics - framing


Providing a low-value option increased the perceived value (and likelihood
of purchase) of remaining options by as much as 52%

Behavioral economics - personalization


Including a client’s name in a reminder text message has shown a 10% improvement in debtor payment rates



Why are our societal investments falling short?

Watch our “Designing for Humans” video to find out. 

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Merging economics and human behaviour

Unlike traditional economics—which assumes people make decisions logically and rationally—behavioural economics merges human behaviour and economics to show how people really make decisions and why they behave the way they do. In essence, it’s about designing solutions that align with how people actually behave.


“When we talk with clients about applying behavioural economics with advanced analytics at their organization, they’re always excited. The two naturally align as a problem-solving tool.”

— Melaina Vinski, Behavioural Economics Lead, PwC Canada



Steps to designing solutions

Here are steps organizations can take to design business solutions that align with how people behave.

Think people-first

In today’s competitive marketplace, behavioural economics will be a success factor as it fundamentally keeps people at the centre of your business strategy, helping you deliver standout customer and employee experiences. By looking at your stakeholders’ actions through a behavioural lens, you can align your services and processes with what people value and how they really behave. For example, since people tend to be averse to change, set the default option to be one that they’d choose if they had the time and information to decide. 

The shift to being a customer-centred organization requires an agile mindset and new capabilities across the business. In the 2016 PwC Strategy& Customer Strategy survey, global executives found that having a customer strategy was of high importance, with more than 80% saying their investment in customer strategy over the next three to five years would equal or exceed what they invested in 2016. In the end, helping people make the best choices improves customer loyalty, enables true digital transformation and gives organizations a competitive edge.

Drive change with analytics

More and more, organizations are using analytics to make their big strategic decisions, and with historical customer data available at our fingertips, it’s easier to find behavioural patterns and trends than ever before. Combining behavioural science with data analytics puts what we know about the way people think and act at the forefront of how we design, implement and track business solutions. And in instances when data quality is an issue, qualitative exercises like journey mapping, surveys and interviews can provide direction to where interventions would be most effective. 

Rather than relying on observations or focus groups—which are subjective and can be riddled with biases—behavioural economics uses advanced data analytics and modelling to get a holistic view of how your organization works and pinpoint the right levers for behavioural change. Interventions are then designed and applied to these levers to solve the problem. What’s more, since these solutions are based in an organization’s proprietary data and unique challenges, they provide a sustained competitive advantage and drive greater value through better customer and employee experiences.

Take problem solving to the next level

In the near future, everyone will be looking at their strategies through a behavioural lens. Behavioural economics will be an essential part of all businesses’ problem-solving tool kit. Industry leaders are already using these analytical and behavioural methods to solve their business challenges. From the translation of the business problem into a behavioural one to the design and implementation of interventions, we believe there are four phases organizations can move through to turn their understanding of their customers and employees into action.

  1. Learn about your sore spots 
    Use data and analytics, or customer journey maps, to fully understand the issues and inefficiencies underlying your business problem.
  2. Identify the problem behaviours 
    Use the principles of behavioural economics and behavioural science to design targeted nudges that shift behaviour.
  3. Test your interventions 
    Pilot test the top interventions and perform calculations to ascertain the value and impact of interventions.
  4. Enhance the stakeholder experience 
    Once you’re confident about the intervention, you’re ready to scale it up. The ideal outcome is that your change helps your target audience make better choices, giving you a sustained competitive advantage.


By unlocking the power of data to change behaviours, organizations can improve operations, be more responsive to stakeholders and transform their businesses.

Ramy Sedra, Data and Analytics Consulting Leader, PwC Canada



How behavioural science helps solve today’s business challenges

While applying behavioural economics in public and private organizations is still fairly new, its benefits in both sectors are clear. The process of aligning your existing services and processes with what we know about human behaviour can be as simple as changing the way a communication is framed, how it’s displayed or what time of day it’s delivered. Here are a few examples of solutions behavioural economics offers to today’s organizations across many sectors and business functions:

Behavioural economics - human resouces

Human resources

Behavioural economics has been useful in designing incentives that align with what matters most to employees, allowing them to choose actively the trade-offs they make with financial rewards, vacation time and bonus structures. This leads to levels of sustained productivity that are otherwise difficult to attain. Behavioural economics has also been valuable in the hiring of new talent and promotion of diversity in the workforce. When hiring managers carefully implement interventions to counter biases in the hiring process, they’re able to more effectively bring on talent that’s best for the job rather than talent that just looks best for the job.

Behavioural economics - disability insurance

Disability insurance 

Using behavioural economics systematically in communications can have a profound effect on whether an injured worker will return to work. And for those workers who ultimately do go back to work, it can affect the amount of time it takes them to recover and the likelihood they’ll keep working after returning.

Read more about using behavioural economics as a competitive advantage in the insurance sector.

Behavioural economics - personal finance

Personal finance 

Behavioural economics can counter our tendency to “spend now, save later,” tackling the trend toward risky leverage among Canadian consumers. As a result, customers are able to save more for retirement, which reduces financial reliance on the state (and therefore the taxation of citizens), and they’re more likely to maintain a balanced mental and physical state. In addition, it increases how much financial advisers are able to invest.

Behavioural economics and strategy

It’s all about modifying your existing strategies to align with what we know about human behaviour—the way people think and act.

Opportunity awaits

Leading organizations are already seeing the benefits of viewing their business challenges through a behavioural lens and putting people at the centre of their strategy. From there, the applications—and opportunities—are almost endless.

Give us a call to learn more about how behavioural economics and advanced analytics can help you turn your vision into a reality.

Contact us

Ramy Sedra

Data and Analytics Consulting Leader, PwC Canada

Tel: +1 514 205 3972

Melaina Vinski, MSc, PhD

Behavioural Economics Lead, PwC Canada

Tel: +1 416 941 8383 ext. 16661