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FEATURE1 November 2011

Ingrained in the brain

Behavioural economics Features

Behavioural economics has taken hold in the minds of market researchers. Nick Southgate explains why it’s here to stay.

Behavioural economics is certainly fashionable. It has been embraced at the highest levels of government. The co-authors of the most popular books in the area, Cass Sunstein and Richard Thaler of Nudge fame, find themselves respectively advising Barack Obama and David Cameron. The Cabinet Office’s Behavioural Insights Unit uses ideas from behavioural economics to make government and public services more efficient by being more human. Their annual report details changes to the way prescriptions are managed, taxes are collected and smoking, alcohol and obesity tackled. Businesses are also enthusiastic, with products inspired by behavioural economics being launched by brands as different as Westpac Bank and Domino’s Pizza.

However, fashions are superficial. Why should we believe that the influence of behavioural economics should turn out to be substantial? The House of Lords recently completed an enquiry into behaviour change as a policy objective. They were more cautious than the flagwavers in the White House and Downing Street. An evidence base needs to be built, more questions need to be asked and, while there is promise, much remains to be proved.

In market research we can no longer claim the influence is superficial. The launch of products and indeed whole agencies embracing behavioural economics is a substantial development. Our question has to be one of longevity.

Here are five areas where behavioural economics will, I believe, have a lasting impact on market research.

1. Framing

“The way a question is framed influences the answer. The point is so obvious it becomes invisible and consequently we forget how important it is. Behavioural economics reminds us”

Early papers by Daniel Kahneman and Amos Tversky, the founding fathers of behavioural economics, applied a simple psychological effect to economic decisions: framing. Their research shows how people’s response to a decision is dramatically shifted by the way it is framed, despite the content of the proposition remaining the same.

Research is the business of asking questions. The way a question is framed influences the answer. The point is so obvious it becomes invisible and consequently we forget how important it is. Behavioural economics reminds us.

A recent Esomar paper called ‘The Game Experiments’ by Jon Puleston and Deborah Sleep demonstrates how powerful the framing of a question can be. For example, ask people to list their favourite foods and on average they offer a list of six. Ask them to imagine how to spend an unlimited budget on their favourite food in a supermarket in only two minutes and they list 35. The paper has dozens of such examples. These are not small differences. They matter.

Puleston and Sleep point out the benefits of increasing the depth of response and the willingness to participate in research. When it is fun to fill in a survey more people do, apparently with greater concentration.

The more profound point is about accuracy and veracity. When different phrasings of questions can produce such variation, extracting the correct meaning becomes a matter of interpretation and skill. This can only strengthen the researcher’s value to clients. Only a skilled practitioner can tell you when you are learning about the answer and not just the question. Anything that reasserts the importance of research’s basic craft skills should be welcomed.

2. The social v the individual

Behavioural economics is full of examples of people’s decisions being influenced by what they believe other people do. As HM Revenue and Customs discovered, simply adding a line to letters stating that most people pay their tax on time increased the speed and levels of compliance. Research has invested a lot of time in asking individuals about their own beliefs. BE shows that this can only ever be part of the answer. We can no longer ignore that people do not act solely on their own beliefs and opinions.

Clients therefore need to know about collective beliefs as much as they need to know what individuals think – and they also need to understand how these two forces interact. This is a rich area for research to explore. It offers huge opportunity for qualitative researchers to reappraise group effects. Traditionally these were seen as a series of distortions that should be warned against and eliminated. Now, with careful analysis and interpretation, group effects can be embraced as findings in their own right. Focus groups are mini-experiments in the social spread of ideas. Similarly, in qualitative research establishing people’s beliefs about others’ beliefs can prove to be as useful a predictor as merely establishing their individual beliefs. People like Mark Earls, author of Herd, have been making this point for some time. Those lone voices are becoming an influential group no one can ignore.

3. The shallow v the deep

An area of more provocative challenge comes in the psychology that underlies the new behavioural sciences. As Nick Chater of Warwick Business School puts it, it is not the hidden depths of consumer motivation but the hidden shallows we should investigate.

He’s talking about the idea of the ‘cognitive miser’, a model of human cognition that assumes people try to think as little as possible. If we can deal with something by not making a decision (ignoring it, doing the same thing again, doing what other people do) that passive non-decision will tend to crowd out an active decision.
The challenge for research is to find better ways to report on decisions that aren’t made. These non-decisions are just as important as conscious, contemplated decisions, if not more so. Detecting them could lead to an increase in observational research (BrainJuicer’s mass ethnography methodology, described here, is one such response) but it could also lead to entirely new kinds of research.

4. The lab v the ‘real world’

Although some behavioural economists use market data, many do not, instead using focused experiments to show the impact of a single behavioural change.

Dan Ariely’s work on fake goods is a useful example. His claim is that people who use fake branded goods become more dishonest than those who use the real brands. He establishes dishonesty by contriving a situation: participants are asked to take a test and some are given the opportunity to cheat. The increased levels of cheating indicate increased dishonesty.

In comparison market research predominantly looks to reflect the real world directly. Necessary as this is, it limits what market research can be. The opportunity to build a new laboratory-based market research is an exciting one. It can bring a robustness and scientific credibility to models and methods that is grounded outside the industry.

This is already happening. In December I’m taking part in the IPA’s first fast-track behavioural economics training course run with Warwick Business School’s behavioural sciences lab. Participants, including people from some of the big research agencies, will design and run a behavioural experiment as part of the course.

5. Information v inspiration

Should research tell you about facts or possibilities? Does it provide information or inspiration?

Once one accepts that choices can be designed and outcomes radically altered, it becomes harder to believe that asking people what they do now is a good way of establishing what they will do next.

“Changing behaviour is a top-table conversation. It can give research the credibility and clout the industry so often complains it lacks”

Behavioural economics suggests a world of research that is about possibilities. Research establishes not what people already do, but what they might do. The generation of hypotheses, their testing and piloting are all within the skills of the research industry. Discovering, designing and executing behaviour change ideas is something market researchers can easily do. Once again, it involves research more intimately in organisations. It demands more skill but creates more value.

The implications
Changing behaviour is a top-table conversation. It can give research the credibility and clout the industry so often complains it lacks. These opportunities are within the industry’s reach. And it is because they are so many and varied that we will see behavioural economics make a substantial and lasting impact on market research.

Nick Southgate is behavioural economics consultant to the IPA, editing publications, assembling evidence for the House of Lords and helping design training courses including the Fast Track programme with Warwick Business School, which is running 30 November–2 December


Read more:

  • BrainJuicer’s Orlando Wood on how ideas from behavioural economics were applied to a mass ethnography study on excessive drinking
  • Helen Nuki of Monkey See looks at how behavioural economics can help reveal the hidden influences on people’s choice of breakfast cereal

7 Comments

8 years ago

I love BE. I also am aware of the real pressures driving behavioural change in research buying decision - speed, cost, authenticity need to go hand in hand. I see a real danger of research going back precisely to the scientific/ boffin corner - no really practical solutions, plenty of questions, issues......we're in the business of sales/ marketing, not scientific conundrum.

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8 years ago

Circumstances are ever changing around a person and there is marked influence of the day to day happenings on the human behavior. Every individual has a particular mind set to words the fellow people and various worldly issues. Mostly, the people have 'safety fears' always at the back of their mind- may be safety during crossing a road, at the work place, career related fears, health issues and so on. You can not expect any one to behave consistently in all the situations as varying conditions around [ to be precise even the weather conditions] affect the human behavior. Feelings that are deeply set in the psyche can be reformed, improved, altered to some extent through regular counseling, impressing upon the individual good and bad aspects and even "imposing diverts' but can not be rooted out for good any way. I have come across few persons with preconceived notions installed upon them right from childhood and accordingly they are grown and developed their habits. It is rightly said that the "habit becomes second nature."

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8 years ago

@Edward04 (comment 1) Obviously I would think this - since I'm employed in a team calling itself Labs - but a reconnection of research with boffinry doesn't sound like such a bad thing to me. Of course you're right that if we ONLY concerned ourselves with "scientific conundra" business would dry up sharpish, but it's not a binary opposition: a research business which can't find room for curiosity and a willingness to experiment isn't worth the name. The research industry has certainly become more business-minded and client-centric since I've been in it. But too often this has been interpreted to mean that *every* person employed by a research agency has to be business-minded and client-centric. The behavioural economics trend is putting a welcome spotlight back on people who are passionate about finding out why people do things. If that can't be linked with business operations then it's probably a wasted effort - but it's not necessarily the job of the passionate individual to find that link: research is a team game.

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8 years ago

Tom - I'm all in favour of better methods, that help us get to what drives decision. Better to me also means scalable, validated and demonstrating impact. It's complicated, don't think everyone ever thought otherwise. My concern is that just because stuff is new doesn't mean it's better. I am also conscious that there is much verbal bashing of trad. research going on - surveys becoming almost synonomous with old-fashioned. If that's the case, why is the uptake of many of the shiny new tools out there relatively slow?

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8 years ago

Edward - I think the answer to your question is the same as the reason why change management per se is hard, and the 'new' science can help here too; the brain prefers the status quo because reflective cognitive activity consumes energy. That's why it operates to heuristics or defaults ie it's evolved to be as efficient as possible because we need energy to survive. With that come known biases such as loss aversion and the Semmelweiss reflex (the tendency to reject new information or paradigms that contradict our views). That's before we get to any pressures caused by the vested commercial interests of suppliers of 'trad' research ;-)

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8 years ago

I think it's also possible Edward's focusing a lot on the Blogosphere, which can be characterised as a chattering class but I prefer to think of it as the hipster class of research ;) Fashion-driven, culturally alert, restless, sensation-seeking etc etc. - a lot of what we get excited about might never reach the mainstream, but some of it will.

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8 years ago

I am so pleased to see an article on Research Live about behavioural economics / behaviour change. As someone who started life in market research and has subsequently moved into the behaviour change field commissioning research, I am constantly surprised that the research industry has been seemingly slow to respond to the opportunites presented within behaviour change for researchers. We need more conversations like this to further the debate and develop a deeper understanding of the widespread implications and opportunities for the research industry. Thanks NIck!

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