Boosting economic growth with behavioural insights
The first story we look at is from the UK’s behavioural insight team, commonly known as the “nudge unit.” In it, David Halpern talks about how behavioural economics has not had a huge impact on economic policy, however, that could be about to change. He mentions that economic policy, at least in the macro-sense, still holds on to the view that humans are rational utility maximisers. However, the UK’s new Industrial Strategy seems to demonstrate a shift in thinking, with the idea being that markets are actually filled with “behaviour based failures”. If governments can help to prevent some of those behaviour based failures then growth rates may see a boost (and may be more evenly spread). But how?
There is a focus on four potential areas where governments may be able to provide some help:
What is most interesting to me about this story is the seriousness with which governments (in this case the UK government) are taking the application of behavioural science to their wider industrial strategy. Should businesses do the same? I think so.
Using behaviour to help nudge consumers towards smarter, more environmentally-friendly food choices
Kristof Rubens discusses how, despite the best intentions of Flemish citizens, there is often a gap between desired environmentally friendly behaviour and reality (“the intention-behavior gap”). In this article, an experiment at Colruyt supermarkets studies if some of the guiding principles of behavioural science can nudge people in the right direction in terms of their buying habits. Three experiments were put in place:
These experiments clearly underline how relatively straightforward experiments can provide meaningful results.
We should also remember that unconscious behaviour impacts those looking at unconscious behaviour
In our third article, Helen Edwards looks at how marketers need to be aware of how their own behaviour can be irrational, not just the customers they are targeting. She discusses five principles of behavioural economics and how marketers maybe aren’t quite as logical as they think they are. Examples include:
Tennis and risk aversion
With Federer’s epic victory in the Australian Open still fresh, Bri Williams provided an interesting connection between behaviour on the court and customer behaviour. As humans have a tendency to strongly prefer avoiding losses to acquiring gains, tennis-playing humans tend to hit their second-serve much more conservatively. The link with customer behaviour is that minimising perceived risk can be hugely helpful if you are looking to drive certain types of behaviour.
The idea discussed is that you should break down the potential risks your customer might face into four categories:
Ways to help make your office a little greener
And finally, we take a look at this article on making your business greener by changing social norms, via Will Hanmer-Lloyd from Total Media. As the article begins, “71 per cent of UK citizens are “very or fairly concerned” about climate change, while nearly the same percentage believe that climate change poses a high level of risk to people’s health and wellbeing.” As with Flemish citizens earlier however, action rarely matches the concern, particularly around something as large as “global warming”, where any single action can feel like a drop in the ocean, and the impact is probably some way off into the future.
Will goes on to talk about three techniques that can be implemented in your office that make it easier to nudge people in the right direction. I’ll touch on two of them. The first one I found particularly interesting: rename the “bin” to “landfill” - reminding people of what actually happens when it gets taken away.
The second reminds us that we are usually more conscious of what those around us are doing (we are attuned to social norms), so focusing any messaging towards what other people are doing with regards to reducing their carbon footprint are likely to be more effective than high-level environmental benefits.
When communicating a message, internally or externally, to clients or to investors and partners, be aware of the power of social norms to motivate action.
That wraps it up for January, my thanks to the authors of all five articles! If you have any questions on the topics raised or want to discuss how the principles may be applied across your business, connect directly and let’s chat.