Ogilvy UK vice chairman Rory Sutherland kicked off the final day of the ARF Re:think conference in New York with a call for advertisers to embrace behavioural economics.
The problem with business, Sutherland said, is that it relies too much on rational ‘system two’ decision making, at the expense of the more instinctive and emotional system one. “Nobody ever got fired for making a rational decision”, said Sutherland, and most research feeds this. Boardrooms, in particular, prioritise numerical measures over real human understanding to an unhealthy degree. “If you use an abstract noun,” Sutherland said, “it’s as if you just farted.”
But the idea that we can – or should – rely on rational decisions is a “glorious self delusion”, said Sutherland. The rational decision isn’t always the most intelligent one, and many of our most important life decisions (should I marry this person? Should I buy this house? What should I eat?) don’t submit easily to rational analysis.
This doesn’t mean marketing and advertising don’t work – they clearly do (some of the time at least). It just means we often “don’t know why”. Marketing people need to start understanding heuristics – the instinctive ‘rules of thumb’ that system one uses to make decisions – and researchers are the ones who should be teaching them about it.
One area of life that has harnessed system one thinking brilliantly is religion. “God is a great behavioural economist,” Sutherland said.
Take for example, religious rules about eating, which tend to be clear and absolute, appealing to heuristics. Jewish dietary law, instead of issuing complex rules about pig husbandry, simply says ‘no pigs’, and people adhere to it. Fasting is another example. “There’s no mention of dieting in the Bible,” said Sutherland. “You don’t get, ‘Moses went into the desert and he went on a low-carb diet for five days… When God wanted a working time directive he didn’t do what they did in France and say you can only work 35 hours a week, he said on the seventh day, you rest. These instructions, apparently arbitrary, are psychologically very intelligent.”
Another heuristic relevant to advertisers - and that research has tended to overlook - is that consumers understand the significant investment of money, time and effort that an ad campaign represents. They conclude, quite sensibly, that brands they recognise from advertising are less likely to let them down, because they have invested in building a reputation.
Behavioural economics also offers marketing a language that appeals to CEOs and CFOs, Sutherland said. “Marketing has created a language which is absolutely repellent to anyone who isn’t in marketing. If you start talking about behavioural economics, about system one and system two… you’ll get your finance director really interested. In fact, to your terror, he may turn out to be really rather good at it.”