The human exposed

Speaking at the MRS Customers Exposed conference in London, Hollingworth said that the rise of behavioural economics has led to a greater advancement in understanding of human behaviour over the last 10 years than in the last 100 years. But, he said, we must be aware of how much power this gives us, and the responsibility we have to use this knowledge wisely.

“Behavioural economics allows us to take advantage of the idea that human beings are cognitive misers”, said Hollingworth. “Our brains are very efficient – we want to make quick, intuitive, smart responses.” Using this understanding means that we now know how to play to human beings’ innate overconfidence and optimism bias, among other things. We can prime consumers to switch off the frontal cortex, which is where executive decisions are made.

Holingworth gave a number of examples of how this can be done, including the Obama campaign nudging voters to polling stations in 2008 by suggesting everyone else was voting. A similar approach was used by HMRC, he said: by putting out the social norm message “nine in 10 people in your town pay their tax on time”, a 15 percentage point increase in tax being paid on time was observed.

Examples from the health field used the “commitment bias” approach of making people sign a contract to commit to a behaviour — for example doctors decreasing prescriptions of unecessary antibiotics and type 2 diabetes sufferers increasing their adherence to drugs — not following through on this behaviour creates a “cognitive dissonance that the brain doesn’t like”, according to Hollingworth.

But, he says, this understanding of how to manipulate behaviour means we are “witnessing the unravelling of the human behavioural blueprint”.

“We are so empowered by this understanding that this leaves humans potentially exposed.”

To illustrate, Hollingworth described his work to uncover credit card companies taking advantage of context anchors to reduce minimum credit card payments, and loan companies taking advantage of default settings to increase loan amounts and duration to their advantage.

There are also those that use behavioural economics with good intentions but are unintentionally driving negative actions: for example using eyes on a poster to decrease bike theft at a university merely pushed this criminal activity down the road; while giving people the information that nine in 10 people don’t make a will or that 57% of parents don’t use online parental controls may be intended to shock people into action, but mostly has the opposite effect.

“We have the power in our hand to understand the human blueprint and act on that knowledge,” concluded Hollingworth. “But with great knowledge comes great power and great responsibility.”