Coaching Using Principles of Behavioral Economics

Every day, we make decisions on topics ranging from personal investments to schools for our children to the meals we eat to the causes we champion. Unfortunately, we often choose poorly. The reason, Thaler and Sunstein, authors of Nudge: Improving Decisions About Health, Wealth, and Happiness, explain, being human, we all are susceptible to various biases that can lead us to blunder. Our mistakes make us poorer and less healthy; we often make bad decisions involving education, personal finance, health care, mortgages and credit cards, the family, and even the planet itself. Decision makers do not make choices in a vacuum. They make them in an environment where many features, noticed and unnoticed, can influence their decisions. The goal of Nudge is to demonstrate how thoughtful “choice architecture” can be established to nudge us in beneficial directions without restricting freedom of choice. The person who creates that environment is, in the authors terminology, a choice architect. 

Reading more on Nudge in the various web references gave me more and more the feeling of just how remarkably similar the role of a choice architect is to that of a coach. Here's why: 

• Anyone  who indirectly influences the choices people make, the authors say, can be called "choice architect". A coach does exactly that, hence he is a  "choice architect" too.
• Choice architecture, can be used to help nudge people to make better choices (as judged by themselves) without forcing certain outcomes upon anyone. This is one of the basic tenets of coaching. 
• The tools described by the authors (though differing in nature and application) sound very similar to the ones a coach would use. For instance, the tools highlighted are: 
• Expecting error (the coach tool: empathy) 
• Understanding mappings (the coach uses assessments to map client needs) 
• Giving feedback (a primary coaching tool)
• Structuring complex choices (the coach is a clarifier)
• Creating incentives. (the coach uses small wins as incentives so client is motivated for the big wins)

The remarkable similarities set me thinking. How could one incorporate the discipline of behavioral economics on which the book is based, with the practice, and business, of coaching?

This article is my attempt to do just that.

Applying Principles of Behavioral Economics to Coaching

The use of behavioral principles is fundamental to any coaching practice. Behavioral economics can help coaches understand better what every coach always understood, albeit unwittingly: That people are not rational.  Any new understanding of people's behaviour can only give coaches a better understanding of how exactly coaching works. Or how they can make it work better. 

Stephen Covey the personal development guru applied his mind to why humans behave the way they do and what they could do to avoid human susceptibilities that lead to wrong decisions. The result was his book The 7 Habits of Effective People, and the first of the seven habits is Be Proactive. Proactive people, says Covey, are those who are in control of themselves and do not surrender to a stimulus in the external environment but use their personal power to deal with the stimulus, whether people or situation. How are they able to do this?

Stephen Covey's Proactive Model

Proactive people know that there is a gap between a Stimuli and Response and within that gap is their freedom to choose the right response to maintain control over their self and be above circumstances.

What about people who are not proactive? Often, resistance to change is the result of lack of clarity because of a conflict between the rational and the emotional mind which comes in the way of allowing any change to stick. Ideas, and in turn change, is effective when it stays with you over time and changes the way you think.

Weaving the two models together- Thaler and Sunstein's derived from behavioral economics and Covey's based on new age theories of personal development, could, I realized, help create a useful model for coaching: Nudge Coaching

In his Proactive model, Covey talks of the four tools humans have at their command to effectively exercise their freedom to choose. The four 'hot buttons of pro-activity' being:

1. Self-awareness
2. Imagination
3. Conscience
4. Independent Will

Through the process of Nudge Coaching applied to each of the four 'hot buttons of proactivity', the coach would be able to resolve the conflict between the rational and emotional mind, and makes change happen.

The Nudge Process of Coaching 

Choice architects, according to Thaler and Sunstein, can have considerable power to influence choices. Or to use our the authors preferred language, they can nudge. The authors explain this term as "...any aspect of the choice architecture that alters people’s behavior in a predictable way without forbidding any options or significantly changing their economic incentives." Most important from a coaching point of view - nudges are not mandates.  

Coaching clients are busy people who are trying to cope in a complex world and cannot think deeply about every choice they make. They adopt rules of thumb that sometimes leads them astray. The Nudge Coach brings organization and structure to the contexts in which people take decisions. Choice architecture does not seek to reduce choices - just influence them in order to improve the client's lives, as judged by themselves. Humans are susceptibile to various biases and hence the way an issue is framed makes a huge difference to the success of a coaching engagement. In other words, people are nudgable. In the Nudge coaching process, a coach helps clients to structure their choices and create strategies that makes it easier for them to do things that improve their lives. He uses four types of nudges to achieve these coaching goals:

1. Nudging Client Self-awareness: Faced with important decisions about their lives, people often make pretty bad choices—choices they would not have made if they paid full attention and possessed complete information, unlimited cognitive abilities and complete self-control. They adopt rules of thumb that sometimes lead them astray. The explanation, according to Thaler and Sunstein, is rooted in some well-documented human behavioral quirks that are amplified by information overload and trying to cope in a complex world. All this leaves people with little time to think deeply about every choice they have to make. The Nudge Coach helps create awareness of their cognitive abilities and the resources available to them for better self-control.
2. Nudging Client Imagination: Sunstein and Thaler have spent a lot of time thinking about how people can be encouraged to make better decisions, and they offer some intriguing ideas. Their central thesis: People will make better choices if they are given a clear and well-designed set of options that acknowledge and offset human idiosyncrasies. For helping client's design and structure the options available to them,  the coach has to take into account his knowledge of behavioral science. By helping to rightly structure the choices available to the client, a coach helps to nudge clients to do the 'right' thing.
3. Nudging Client Conscience: Mythologist Devdutt Pattanaik explains that the ideas of right or wrong, good or bad exist only among humans. No animal is good or bad - only humans would pity the antelope being being made meal of by a predator such as a a cheetah in a National Geographic documentary. Humans are greedy, unlike animals, who stop eating once their stomachs are full. Thus says Pattanaik, humans have the capacity to be worse than animals (greedy) and better than animals (generous). And it is in these subjective choices - greed vs generosity, right vs wrong and good vs bad that the coach, by structuring choices available to the clients, helps them to to improve decisions about their health, wealth and happiness.
4. Nudging Client Will: One of the basic tenets of behavioural economics is that people do not always take rational decisions. They have  status quo bias and change doesn't come easily. For reasons of laziness, fear, and distraction, many people will take whatever option requires the least effort, or the path of least resistance. All these forces imply that if, for a given choice, there is a default option—an option that will obtain if the chooser does nothing. The solution - helping coaching clients first make their choices, and then hold them accountable to their choice. Holding them accountable can at times  make the client feel challenged. A useful approach to overcome this is the one akin to the program in gmail. Every time a user mentions the word attachment but does not include one, prompts a pop-up, “Did you forget your attachment?” Similarly, by reminding the client of his commitment to the choice he has made, the coach can nudge the client will in non-threatening manner.

The Nudge Coach

By keeping an eye on the four nudges, a coach aka a choice architect can improve the outcomes for clients on their journey of the head and heart to fulfill their potential.