How to achieve your goals using behavioural economics
February 2023
What makes one person go to the gym—and keep going—while another person gives up and stays home? Why are some of us able to achieve monumental success, while others can't seem to stick to a routine full of healthy habits? It all comes down to behavioural economics, or the subtle art of understanding and affecting how we make decisions and take action.
Behavioural economics takes elements from psychology and economics to understand how and why people behave the way they do. It looks at the way we make decisions and takes into account that people do not always make what would be considered the “rational” choice even when they have everything they need to do so.
James B. Duke Professor of Psychology and Behavioural Economics at Duke University and the founder of The Center for Advanced Hindsight, Dan Ariely says, “One of the wonderful aspects of human nature is that we draw motivation from a wide range of aspects.”
“Think about something like running a marathon. On the surface it looks like running a marathon is a miserable activity where people are suffering, but in reality, people get tremendous satisfaction from it. Although not much momentary satisfaction, they get another form of satisfaction.”
He explains that when we work towards personal growth breakthroughs, we have to motivate ourselves to go further.
“Running marathons, climbing mountains, writing books and starting new businesses – they all show that we have this capacity to draw on a wide range of types of motivations, and in recent years we've been trying to add to these motivations. Things like pride, identity, ownership, and a INTERNAL sense of progress add to the mix of the motivation equation in order to get people to behave in a way that would ultimately be good for them,” says Ariely.
How motivation steers us toward personal growth
Ariely's research into behavioural economics proves that if we want to achieve growth, we need to be rewarded for making healthier choices every day, as opposed to only rewarding ourselves for achieving an ultimate big-picture goal.
When trying to develop healthy habits, we should focus on rewarding the behaviour instead of the outcome,” he says.
Ariely, who has written three New York Times bestsellers as well as opened his research center, fully understands the pain of getting started with a new endeavour. “When we think about physical activity, like running, it just seems like it's going to be miserable and painful and unpleasant and so on. And so we don't engage in it.”
So how do we fix this demotivation? “There are two facts to this. The first is that once we're in the task, things change. We think less about the misery and we are able to enjoy the activity. The second is that, over time, the unpleasant aspect of the activity becomes less while the enjoyable aspect increases. The goal is to get people to take the first step of their fitness journey and incentivise them to do so.”
Ariely explored how different strategies to motivate and incentivise people to stick to their goals work. He explored social accountability like sharing progress on Facebook, a points system where people could win or lose money depending on behaviour, and app control where certain smartphone apps were blocked based on certain behaviours.
Offering tangible rewards for making the right decisions
Studies have shown that giving yourself small but immediate rewards when you achieve your goals helps you move towards your bigger goals. It’s important to note that these rewards should be supportive of your goal so that they don’t undermine your efforts. For example, rewarding yourself with a healthy dinner out is going to be more supportive towards your health goals than rewarding yourself with dessert.
Whether you create a personalized reward system or use Manulife Vitality – a program that rewards you for everyday things you do to live a longer, healthier life – the principles of behavioural economics encourage people to make small, healthy changes to help them achieve their health goals.
The rewards don't have to be huge – maybe you get a smoothie when you work out 3 times a week or a new book when you prepare meals for a month. The theory holds that these rewards will motivate you to make wiser, healthier choices, and ultimately, to live a healthier life.
One of the main lessons in behavioural economics is that the environment matters. People generally know the importance of eating well, exercising, and taking their medications on time. But they're not able to change their environment, so these learnings don’t impact their behaviour. Ariely suggests apps may be a way to impact a person’s environment directly.
“If people can take their phone with them and this could be a reminder and act as a decision or nudge tool at the moment of temptation, the odds of improving behaviours are much, much higher,” says Ariely.
A study conducted in British Columbia and Newfoundland found that an app combined with small but immediate digital rewards helped people reach their individualized goals over 12 months.
You know what you want, and what you need – now all you need to do is figure out how you will reward yourself to get there!
Our six tips for personal growth breakthroughs
- Set a realistic goal to break through. If you have never run before, try a simple parkrun, at whatever your pace. If you are a 5km runner, try a 10km.
- Understand what motivates you. Are you motivated by an indulgent breakfast or a weekend getaway? Use this in your personal reward system.
- Push yourself to break through and take the first step. Focus on the reward, not the pain of getting to and through your race.
- Take that goal and break it up into smaller parts. For bigger goals, reward yourself regularly after each step forward. For instance, if your bigger goal is to run a marathon, reward yourself after each small step you take towards that goal. Run 10km? Why not!
- Evaluate your goals. Have you set your goals for your personal growth too high or too low? If you aren’t growing for either reason, reassess them.
- Set new goals and keep them going. Once you enjoy the reward of a goal, set a new one. Each goal achieved is a step up the ladder to your personal growth. Eventually, you will reach the top
Please always check with a medical professional to ensure these strategies are right for you.
