Behavioural Science is a rapidly expanding field and everyday new research is being developed in academia, tested and implemented by practitioners in financial organisation, development agencies, government ‘nudge’ units and more. This interview is part of a series interviewing prominent people in the field. And in today's interview the answers are provided by Daniel P. Egan. Dan is the Director of Behavioral Science and Investing at Betterment, where he integrate behavioural finance and passive investment management to help customers achieve their goals. Betterment is a behaviourally informed investing platform where everything is designed to make good behaviour automatic, and bad behavior difficult. Dan researches what drives, and how to prevent harmful financial behaviour. This includes how to increase savings behavior, reduce speculation and increase planning by them more affectively powerful. If you need any advice on finance or fintech, Dan is your guy!
Who or what got you into Behavioural Economics/Science?
I was always interested in psychology, especially higher-order cognitive functioning and logic. But also how societies function, what their limits and organization are. So I ended up studying both cognitive psychology and economics, and never really picked one.
A small example - when I travelled abroad with my family in high school, I wondered how well people actually translated foreign prices into their own currency, or if the raw number still influenced their thinking: both cognitive psych and economics!
What is the accomplishment you are proudest of as a Behavioural economist/scientist?
Just having made a career of this. It wasn’t clear or easy, and required a lot of hustle and work. There are my accomplishments along the way, but the clearest is that I’ve somehow managed to make this into a full time job at a number of places. That requires many skills outside just reading research and experimentation: it’s required understanding businesses, learning design and software programming, presenting and writing. It’s required a very broad set of skills.
If you weren’t a behavioural economist/scientist, what would you be doing?
Now that I’ve been doing this for over a decade, I honestly don’t know. If a fish wasn’t a fish, what would they be?
How do you apply behavioural economics/science in your personal life?
We’re more rational/less emotional about things that are further into the future, so I always try to have tough conversations as early as possible - I generally find that both parties (myself included) have more productive discussions that way.
I try to outsource as much routine/cognitive labor as possible, so that my attention is spent on creative, important work that only I can do.
Finally, I try to take myself out the specific situation, and see how the system I’m working in operates. Often a small change to the design of the system is more effective than trying to change the people inside the system.
With all your experience, what skills would you say are needed to be a behavioural economist/scientist? Are there any recommendations you would make?
It clearly varies by exactly what you want to do, but I’ve found these all invaluable over the years:
Design: Being able to design prototypes of UI’s, interactions etc. You can do this in powerpoint, or use designer software like Figma, Sketch and Principle. A dynamic picture (gif) is worth a million words.
Communication: it’s hard to get people to change products and services without a clear message and story. Taking an abstract academic example, and being able to turn it into a personal, motivating and clear story about what needs to change is critical. You’ll need to convince other people that what you do is important.
Coding: now, before you run away screaming, you don’t have to become a full fledged software engineer. It helps a lot to know how code works, databases etc, and to have a little bit of experience so you can work with those people. It is also incredibly useful for running analysis; sometimes to show that a potential change would have value, sometimes to analyze the results of an experiment. Being able to code has unlocked many opportunities for me.
How do you think behavioural economics/science will develop (in the next 10 years)?
I think we’ll reach a saturation of ‘cool stories’ (and potentially unreproducible results), and organizations will want to see impact and value delivered. So an understanding of metrics, how to work with others, and get through a full change cycle will continue to be important. I think we’ll see more and more ‘applied’ examples, though they’ll be smaller and more focused than some of the extant examples.
I think we’ll start getting more complicated, with individual differences and contexts playing more and more of a role in what will be impactful: the stories will become more nuanced, and so the overhead of tracking what works and doesn’t will go up.
Which other behavioural scientists/economists would you love to read an interview by?
Dan Lockton, a designer. I’d love to hear how he gets his inspiration, but also how he thinks about scale and interaction with organizations.
Thank you so much for these amazing answers Dan! It is (unfortunately) true that the ability to code will open up many doors for a behavioural scientist. But I promise after a while it isn't that hard anymore, and sometimes (if things work...) it's even, slightly, fun.
As I said before, this interview is part of a larger series which can also be found here on the blog. Make sure you don't miss any of those, nor any of the upcoming interviews! Keep your eye on Money on the Mind!