Behavioral Science Companies

Behavioral science companies specialize in understanding and leveraging human behavior to help organizations overcome challenges and make informed decisions. By applying principles from psychology, economics, and sociology, these companies develop data-driven strategies that enhance client interactions, optimize workforce management, predict consumer behavior, and refine product design, among other objectives. Their expertise allows businesses and organizations to implement practical solutions grounded in behavioral insights.

The Basic Idea

Have you ever noticed that you sometimes make decisions that aren’t in your best interest? Perhaps you splurged on an expensive meal instead of putting money aside for groceries, or procrastinated on an important project only to scramble at the last minute to get it finished. 

Despite our best intentions, we often make choices that don’t align with our long-term goals. This universal human quirk has fascinated scientists for decades, inspiring a wealth of research in various social science fields by experts keen on understanding human behavior. Today, behavioral science companies are turning this academic research into practical solutions for businesses, non-profits, and public organizations.

What exactly do behavioral science companies do? Their work typically involves developing behavioral interventions to help organizations tackle pressing challenges by gently nudging people toward better choices. Here are some key areas of focus:

• Policy Implementation: Behavioral science companies might work with governments to design policies that encourage citizens to adopt desirable behaviors, such as health compliance and sustainability.
• Organizational Decision-Making: Policy Implementation: Behavioral science companies might work with governments to design policies that encourage citizens to adopt desirable behaviors, such as health compliance and sustainability.
• Organizational Decision-Making: These companies address cognitive biases that can hinder decision-making, allowing organizations to make evidence-based choices that align with their overarching business goals.
• Product Design: Behavioral science companies also apply data-driven insights to product design, helping companies create products and services that better align with consumer behavior.
• Consumer Behavior: These companies often work with brands to design choice architecture that nudges consumers toward behaviors that drive sales, leveraging psychological principles to increase engagement and conversions. 
• Employee Engagement: Within organizations, behavioral science companies might provide advice regarding workplace design, training programs, incentive structures, and communication strategies to improve employee engagement, satisfaction, and performance.
• Risk Prevention and Compliance: These companies also leverage insights from behavioral science to help organizations prevent fraud, improve cybersecurity, and ensure regulatory compliance to mitigate common business risks.

Beyond consulting, behavioral science companies often engage in ongoing research and experimentation to understand what drives human behavior. This might involve testing behavioral theories and concepts in real-world settings to identify effective intervention strategies that might work outside of clinical research environments. 

Behavioral science companies may also run workshops and training sessions to help businesses apply behavioral principles and overcome common barriers to implementation. These workshops can equip teams with the tools they need to leverage behavioral insights in their operations, whether their goal is to enhance company culture, drive sales, or streamline organizational decision-making.

Many industries rely on behavioral science companies, including tech, finance, healthcare, education, marketing, and the nonprofit and public sectors. For example, tech companies might consult a behavioral science company for help designing a user interface that caters to their users’ natural preferences. In healthcare, behavioral science can help teams improve medical adherence to treatment plans. Governments might employ behavioral scientists to help design policies that address social issues. Across diverse sectors, behavioral science companies play a crucial role in shaping effective decision-making.

• Product Design: Behavioral science companies also apply data-driven insights to product design, helping companies create products and services that better align with consumer behavior.
• Consumer Behavior: These companies often work with brands to design choice architecture that nudges consumers toward behaviors that drive sales, leveraging psychological principles to increase engagement and conversions. 
• Employee Engagement: Within organizations, behavioral science companies might provide advice regarding workplace design, training programs, incentive structures, and communication strategies to improve employee engagement, satisfaction, and performance.
• Risk Prevention and Compliance: These companies also leverage insights from behavioral science to help organizations prevent fraud, improve cybersecurity, and ensure regulatory compliance to mitigate common business risks.

Beyond consulting, behavioral science companies often engage in ongoing research and experimentation to understand what drives human behavior. This might involve testing behavioral theories and concepts in real-world settings to identify effective intervention strategies that might work outside of clinical research environments. 

Behavioral science companies may also run workshops and training sessions to help businesses apply behavioral principles and overcome common barriers to implementation. These workshops can equip teams with the tools they need to leverage behavioral insights in their operations, whether their goal is to enhance company culture, drive sales, or streamline organizational decision-making.

Many industries rely on behavioral science companies, including tech, finance, healthcare, education, marketing, and the nonprofit and public sectors. For example, tech companies might consult a behavioral science company for help designing a user interface that caters to their users’ natural preferences. In healthcare, behavioral science can help teams improve medical adherence to treatment plans. Governments might employ behavioral scientists to help design policies that address social issues. Across diverse sectors, behavioral science companies play a crucial role in shaping effective decision-making.

Behavioral Science: A branch of science that studies human behavior through experimentation and observation. Behavioral scientists study the factors that influence judgment and decision-making, including conscious thoughts, unconscious biases, environmental factors, and social influences. The goal of applied behavioral science is to apply insights from this research to help people make better decisions.

Cognitive Bias: A systematic error in thinking that affects our judgments and decisions. These biases lead us toward decisions that align with our subjective reality but might go against logic or rationality. Behavioral science companies work with organizations to identify and mitigate biases in decision-making.

Debiasing: A process of reducing the influence of cognitive biases.¹ Behavioral science companies often employ debiasing techniques and interventions to help organizations make decisions that are rational and beneficial for all. This often involves implementing behavior incentives, bias awareness training, and nudging.

Nudging: A technique used to influence behavior in a predictable way, without limiting an individual’s freedom of choice. This involves altering the environment to increase the likelihood of a particular behavior. For example, grocery stores can encourage people to choose healthier options by shelving nutritious foods at eye level.

Choice Architecture: The process of deliberately crafting decision-making environments to influence decisions by presenting choices in a way that guides people toward desired behaviors. Choice architecture refers to the overall environment in which choices are presented while nudging refers to the specific design changes employed to influence choice.
Behavioral Economics:A field concerned with understanding how people make economic decisions. Unlike traditional economics, which assumes people always make rational decisions, behavioral economics involves studying the various psychological, cultural, and social factors that influence economic decisions in the real world.

Behavioral science as a discipline began in the early 20th century thanks to contributions from behavioral psychologists like John B. Watson, Ivan Pavlov, and B.F. Skinner. Early experiments in the field sought to understand how our environment shapes behavior and uncover insights into the cognitive processes that govern decision-making.

The practice of applying behavioral science principles to real-world problems gained prominence during WWII. At this time, behavioral science was applied to the American war effort to tackle issues of morale, training, and food rationing.²

This period also marked an increase in concern for social issues like public health, education, economic development, and industrial productivity. As a result, many philanthropic organizations introduced significant funding to tackle these concerns. For example, the Ford Foundation established the Behavioral Sciences Program in 1951 to explore practical applications of behavioral science for addressing real-world problems.³ This incentivized social scientists to experiment with applied behavioral science, leading to a growing recognition of the importance of understanding human behavior in organizational settings. 

Soon after, experts began applying behavioral science principles in various corporate settings. Bell Laboratories was one of the first companies to conduct customer-oriented research and use behavioral data to design user-friendly products.⁴ The commercial success of these behavioral science applications encouraged more companies to jump on board, and researchers began exploring new research methods and strategies for translating theoretical ideas into actionable interventions.
Eventually, we saw the formal establishment of companies dedicated to conducting behavioral science research and applying principles to solve practical problems in business and technology. What started as a handful of behavioral science teams at the turn of the century has recently grown into a much larger collection of corporate and nonprofit organizations. According to a recent international survey of behavioral science teams, three-quarters of existing teams have started up since 2014.⁵

Today, many major businesses have their own behavioral science teams, including Walmart, Coca-Cola, financial firms like NASDAQ, and aid organizations like Save the Children. Around half of all companies with behavioral science teams are specifically involved in behavioral science consulting.⁵ These contracting firms range from large organizations with over 200 employees to smaller behavioral science-focused consultancies.

Behavioral science companies work across various sectors from finance and healthcare to marketing and public policy. In working with these various organizations, behavioral science teams have made a significant impact on serious issues like public health, poverty, sustainability, and educational attainment.

These companies have also helped businesses provide better customer experiences by tailoring products and services to the psychological tendencies of their users. This has led to the design of increasingly intuitive user interfaces and products that make our lives easier — a win-win for businesses and consumers.

The relatively recent growth of behavioral science companies has also driven increased awareness of their value. The growing popularity of behavioral science initiatives is reducing resistance among organizations and removing barriers to implementation, positioning behavioral science as a critical tool for solving business problems—a tool that can be justified even in tight budgets.

Academic Rigor in Applied Behavioral Science

Academics often raise concerns about the integrity of behavioral science research conducted by these companies.⁵ Some academically-trained behavior scientists argue that behavioral science companies aren't doing “real behavioral science.” Researchers have even been accused of data fabrication while conducting behavioral science research for brands.⁶

Some of these accusations are likely related to the lack of transparency in the field.⁷ Businesses are hesitant to divulge the secrets of their behavioral science applications, and this can hinder trust among academics and critics. 

Despite these criticisms, behavioral science teams are largely using well-established practices and techniques.⁵ The majority of these teams collaborate with academic partners and measure the success of their interventions with A/B tests or other randomized controlled trials. While a few outliers may be engaging in questionable research practices, the majority of behavioral science companies are conducting legitimate research using reliable methods.

Ethical Concerns

Ethical issues make up another common critique of behavioral science companies and the field of applied behavioral science overall. Research suggests that the most common purpose of these teams is to encourage product use and increase sales, which raises important questions about manipulation and consent.⁵ For instance, 41% of behavioral science teams surveyed reported that virtually no members of their target audience knew about the organization’s use of behavioral interventions. Another 18% said only a few users were aware of these tactics.

Perhaps this lack of transparency is justifiable when behavioral interventions are used to benefit users, such as encouraging healthy lifestyle behaviors or promoting financial well-being. However, this can be problematic when techniques are used for commercial gain without the explicit consent of consumers. This issue highlights the need for ethical standards and transparency among behavioral science companies to ensure outcomes are positive for all.

What better way to illustrate the value of behavioral science than to present a couple of case studies from The Decision Lab’s own work? Here are two impactful examples of how behavioral science companies can work with nonprofit and government agencies to produce positive outcomes for everyone.

Behavioral Science Applied to Debt Repayment

American Financial Solutions (AFS) is a non-profit organization offering credit and debt counseling. Noticing that several clients were struggling to stick to their debt repayment plans, AFS approached TDL for help creating an influential messaging strategy to encourage their clients to adopt new financial habits. TDL reviewed and analyzed public data on debt management—along with AFS’s client data—to uncover the psychological motivations and barriers that led to unsustainable financial habits. 

TDL then worked with AFS to develop targeted messaging and design nudges to help clients stick around through the onboarding process and gain greater control over their financial situation. These onboarding nudges produced a 50% decrease in client drop-outs, resulting in millions more dollars in debt repaid than clients would have achieved through the original onboarding system.

Leveraging Behavioral Science to Improve Organizational Governance

Health Canada launched the Organ Donation and Transplantation Collaborative (ODTC) in 2018 to improve Canada’s organ donation systems through multi-stakeholder collaboration. However, the ODTC faced challenges navigating the diverse perspectives of stakeholders, with opposing viewpoints often leading to decision-making gridlock. TDL was brought in to help refine the governance framework and make the ODTC more efficient and effective.

TDL employed various evidence-based behavioral science techniques to help the ODTC adopt a more structured decision-making process. These strategies were chosen to mitigate potential sources of bias, reduce information overload, and ultimately align stakeholders on an effective governance framework. TDL’s work led to several changes to the framework that adequately addressed everyone’s needs while creating a decision-making system that works efficiently.

Applying Behavioral Science In An Organization

This article provides a comprehensive look at how behavioral science overlaps with many organization roles, but also how it differs from fields like user research, design, data science, and product marketing. Learn about the unique value behavior science brings to the table and why each of these adjacent roles can benefit from behavioral perspectives.

Behavioral Science and the Future of Agriculture

Recent technological innovations in the agricultural industry have proposed new solutions to the challenge of meeting growing food demands, but the agricultural industry has been slow to adopt these new tools. Behavioral science could offer solutions by uncovering barriers to adoption and providing interventions to encourage technology adoption. Check out this article to learn all about it!

1. Ludolph, R., & Schulz, P. J. (2017). Debiasing Health-Related Judgments and Decision Making: A Systematic Review. Medical Decision Making. https://doi.org/10.1177/0272989X17716672
2. Mabee, C. (1987). Margaret Mead and behavioral scientists in World War II: Problems in responsibility, truth, and effectiveness. Journal of the History of the Behavioral Sciences, 23(1), 3-13. https://doi.org/10.1002/1520-6696(198701)23:1<3::AID-JHBS2300230102>3.0.CO;2-U 
3. Pooley, J. (2020, April 22). A ‘Not Particularly Felicitous’ Phrase: A History of the ‘Behavioral Sciences’ Label. https://doi.org/10.31235/osf.io/uzqdj 
4. B. L. Hanson (1983) Human factors and behavioral science: A brief history of applied behavioral science at Bell Laboratories. The Bell System Technical Journal, 62(6), 1571-1590, doi: 10.1002/j.1538-7305.1983.tb03499.x
5. Wendel, S. (2020, October 5). Who Is Doing Applied Behavioral Science? Results from a Global Survey of Behavioral Teams. Behavioral Scientist. Retrieved August 2, 2024, from https://behavioralscientist.org/who-is-doing-applied-behavioral-science-results-from-a-global-survey-of-behavioral-teams/
6. Simonsohn, U., Nelson, L., & Simmons, J. (2021, August 17). [98] Evidence of Fraud in an Influential Field Experiment About Dishonesty. Data Colada. Retrieved August 2, 2024, from https://datacolada.org/98
7. Wallaert, M. (n.d.). Closing the business-behavioral science gap. Retrieved August 2, 2024, from https://mattwallaert.com/closing-business-behavioral-science-gap/