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The Brainy Business | Understanding the Psychology of Why People Buy | Behavioral Economics

Nov 22, 2019

Litter is found just about everywhere you find people. Discarded wrappers and dropped pieces of paper aren’t meant to be cluttering up our parks, running trails, and sidewalks. Yet, litter is everywhere. It’s a problem that hasn’t been solved. Today’s guest is someone who looked at this problem and used intuition and research to create a solution. 

I am so excited to have Michael Manniche, CEO and founder of The Littery as my guest. When I learned about The Littery in a post on LinkedIn, I knew instantly it was a perfect example of behavioral economics being used to create a business to help the planet and people from all countries living on it by turning litter…into lottery tickets.

In today’s interview, Michael shares how he first invented the name (it contains the problem and the solution). Michael has always felt that litter is totally unnecessary. He also understood that litter was a behavioral problem. The solution would need to be something strong enough to change that behavior. He then shares his research and how he has built a business model that pays people prize money to stop littering. This is a great example of how behavioral economics can be used in business and in making the world better. 

Show Notes:

  • [03:27] The problem and the solution are in name The Littery. (“litter” + “lottery”)
  • [04:07] Michael has always felt that litter is totally unnecessary.
  • [04:52] He wanted to find a motivation strong enough to change the bad behavior of littering. 
  • [05:48] Lotteries have been around for over four thousand years and all over the world. 
  • [07:44] Michael had a theory that a lottery incentive could stop littering. He did a test in his home country of Sweden and the results were better than he expected. 
  • [09:14] It's actually incredibly easy to change behavior with the right driver or motivation. 
  • [11:31] To test the concept, Michael went to a movie theater. They had students measure litter on the floor, in bins, and for correct sorting. 
  • [14:07] Patrons were offered an opportunity to win €5000 or free movie tickets if they put their trash in the correct place. 
  • [15:41] After one month, across four locations, the litter in the bin was now 100% and correctly sorted! 
  • [19:35] The success of the test encouraged Michael to leave his job, get investors, and start his company.
  • [20:29] You put an app on your phone. When you open a smart bin and throw something in, you get a digital lottery ticket sent to your phone. 
  • [21:38] It's also a goal to sort recyclables correctly. There is a camera in the bin that checks the sorting process. You don't get a ticket if things aren't sorted correctly. 
  • [23:33] The AI and image recognition was more difficult than Michael thought it would be. The lighting and things have to be exactly the same as it would look inside of a bin. 
  • [30:02] He incorporated in Latvia (and moved to Sweden to support his dream), because he had Latvian investors. 
  • [31:02] The next phase will be piloted in the Paris area. In the future they will use the city litter contract money to purchase the bins and pay the lottery prize money. 
  • [32:47] The business model depends on procured contracts. Having a new solution is a challenge for procurement. This stage they are also raising funds to help finance the pilot programs. 
  • [34:52] Some partners include a large waste management company and Coca-Cola. 
  • [35:33] 10% of earnings will go to charity. Winners can also donate to their charity of choice. 
  • [41:01] Optimism bias and framing comes into play when you think about how picking up trash can give you a chance to win a lottery. 
  • [42:14] Now, when Michael looks at a cigarette butt on the ground, he sees a lottery ticket. Hopefully everyone will have that same opinion soon.
  • [44:31] Humans want to behave as the norm. We are also prone to enjoy competition. Michael has incorporated many of these things into the app. 
  • [46:35] If anybody wants to invest reach out to Michael. 
  • [49:02] Michael is learning that behavioral science is super intriguing. 
  • [50:35] Using incentives to influence the larger group is the plan. 
  • [51:41] “When litter hits the bins everybody wins.”

Thanks for listening. Don’t forget to subscribe on Apple Podcasts or Android. If you like what you heard, please leave a review on iTunes and share what you liked about the show. 

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