After 60 Years, it’s high time we harness the power of Behavioral Economics.
Daniel Kahneman, the Nobel laureate and founding father of behavioral economics, passed away just over a year ago, leaving behind a legacy that reshaped our understanding of human decision-making. When I mention his name, people light up and say, “Oh yeah – he wrote Thinking, Fast and Slow. I loved that book!” and recount some memorable glitch in human decision making from the book.
What is most fascinating is their response to my follow-up question: “What do you differently because of that book?” Cue the awkward pause… almost without fail, the answer is:
Not much.
The Book That Changed Minds—But Not Behavior
Thinking, Fast and Slow was a 2011 bestseller for a reason. It distilled six decades of research – Kahneman’s and others’ – into a gripping narrative about how our brains systematically get things wrong. We fall into patterns. We rely on flawed shortcuts. We’re overconfident, distracted, and biased.
And yet, despite the clarity of these insights and the documented consequences, most organizations… haven’t done much about it.
Why?
The list of our innate vulnerabilities is long and growing (to save time, scan Wikipedia’s List of Cognitive Biases). And here’s the kicker: education doesn’t help much. In fact, being smart or highly educated often makes us even more vulnerable to these traps. We get better at rationalizing, not necessarily at reasoning.
The cost? Wasted time. Wasted capital. Bad calls. Missed opportunities.
It adds up to billions—quietly lost to flawed thinking.
The Puzzle of Non-Implementation
Despite the widespread recognition of Kahneman’s work, the translation of behavioral economics into consistent real-world solutions has been halting and incomplete. This puzzling gap is evident across business, government, and nonprofit sectors.
I could rattle off a list of the known biases (e.g. Overconfidence, Anchoring, Availability, Survivorship, etc.) and I guarantee you would recall seeing many of them in action, from the front lines to the C-suite, falling prey to these pitfalls. So why don’t organizations implement effective, principle-based practices to protect their businesses and decision makers from these dangers?
The Chicken and the Egg
The cruel irony of Behavioral Economics is that Behavioral Economics explains why we don’t apply Behavioral Economics.
Let’s break down the big three roadblocks:
- Flawed Benchmarks. We judge ourselves by our peers.
“But everyonemakes decisions this way,” we think. Sure—but that doesn’t make it good. Only in a few industries (like energy or pharma) has behavioral thinking actually caught on. Everywhere else? Obsolete business-as-usual is all they have known. - Bias Blind Spot. Once aware of Behavioral Economics, we spot biases in others — but not in ourselves. We have a blind spot, an inability, to accurately judge our own vulnerability to biases. And the higher up we go in our careers, the worse it gets. We start believing our success means we must be seeing clearly, but nothing has changed.
- I. Joe Fallacy. Knowledge is not half the battle. Reading about blind spots and biases is not the cure. Think of it this way: You might see me wearing rose-colored glasses and might even convince me I am wearing rose-colored glasses. But as I proceed to make decisions, I still perceive the world through those rose-colored glasses and do not see all the other colors – so my decisions do not improve. Awareness isn’t the cure. Designing systems that counteract our biases is.
It is very understandable – even predictable– that organizations are slow to embrace the science of Behavioral Economics. Changing culture is hard. Admitting vulnerability is uncomfortable. Building systems that reflect actual human behavior—not idealized versions of it—takes guts, time, and leadership.
But the cost of inaction is staggering. Every decision made without behavioral insight risks being less effective than it could be.
A Legacy and a Challenge
To truly honor Kahneman’s legacy, admiration isn’t enough. We need implementation. That means moving from “that’s interesting” to “we’re doing this.”
The tools are here. Proven frameworks and techniques are available. Now it’s on us.
Strategic Bets 