Economic theory suggests that people make logical decisions based on available information. Unfortunately, this is not always the case because people also are influenced by many “unconscious” factors that do not drive rational behavior. While people do not always make rational choices, their choices can be predicted by studying human behavior. This field of study is called behavioral science.

This paper reviews the kinds of insights that can be leveraged from behavioral science to improve collection results.

What is behavioral science?

Behavioral science, the scientific study of human behavior, suggests that the way we behave is driven by two systems:

  1. A conscious system that is reflective and rational.
  2. An unconscious, or automatic, system driven by the environment. This unconscious system motivates people to make instant decisions based on context, without an awareness of the reasons.

What capabilities do companies need to exploit behavioral Insights?

Behavioral science techniques increasingly are being used by a variety of debt collection agencies to significantly improve response rates at very little additional cost. As more is learned about how to apply these techniques in the collections area, the value of insights gained through behavioral science will continue to increase. Yet, this is not a “one size fits all” science. Regional differences will necessitate different approaches for different jurisdictions and populations.

Key success factors fall into two broad categories:

  1. Gaining insights: Companies need to test the effectiveness of current strategies and continually experiment with new approaches using statistically valid trials to determine what works best and for whom.
  2. Deploying insights: Insights alone are not enough. Companies need to use new insights to design and build predictive models that result in optimum collection strategies. They then need to deploy those strategies using an automated and systematic approach, continually evaluate them, and modify them quickly and flexibly, as necessary.


Companies have an opportunity to significantly increase collections by employing behavioral science techniques and predictive modeling to help customers make better decisions. The key is to establish a strong and proactive analytics capability within a “test and learn” environment. Companies can then develop and maintain fully optimized and highly effective treatment strategies that derive maximum value from a new understanding of how their customers behave in real life.