Influencing Financial Behavior: From Changing Minds to Changing Contexts

Abstract

This article reviews interventions that are effective in changing behaviours in ways that enhance financial capability. Traditionally, behavior change has been seen through the lens of “changing minds”: if we can change the way people think—their beliefs, attitudes, and goals—then we can change the way they behave. More recent developments in behavioral theory show that “changing contexts” can have a powerful effect on behavior: we can change behavior by sometimes quite subtle changes to the environment or context within which decisions are made. We focus largely on the influence of context and provide examples from current UK banks that have changed the “choice architecture” of their products.

Keywords:

• Behavior change
• Consumer behavior
• Context effects
• Choice architecture
• Retail products

ACKNOWLEDGMENTS

This paper is based on work commissioned by the Money Advice Service (formerly the UK Consumer Financial Education Body). We would like to thank Money Advice Service for their support throughout the research. Charles Adriaenssens contributed to the work for Money Advice Service and his insights have been included in this paper. We would also like to thank Andy Newton and Sarah Smith at the Money Advice Service for providing comments on a draft of this paper.