The Strategists Choice

This book has done more to advance and popularise the field of Behavioural Economics than any other

 

On the first day as a Collective Upstarts intern, I’d only ever met an ad strategist once before.

I was keen to find out as much about advertising strategy as I could. Where to start? The strategist’s desk ‘Desk’ doesn’t paint the picture well enough, I think ‘approaching bookshelf’ is much closer to reality.

Each book is evidently well read – tattered and dog-eared. As someone with a keen interest in behavioural change, I was instantly impressed to see the shabbiest of them all was a familiar Penguin-orange and white book. Not the lightest read. No, this is ‘Thinking, Fast and Slow’ by Nobel Prize winner, Daniel Kahneman.

This book has done more to advance and popularise the field of Behavioural Economics than any other.

One of the fundamental principals outlined is dual process theory. The idea that we have two modes of thinking; System 1 is fast, automatic and error prone. It runs on what is known as heuristics (mental shortcuts). It’s what enables us to instinctively know when someone is talking about us when we enter a room, or dodge a fast object, or even drive the whole way to work without realising how we got there. It’s good enough to get us by and serves us well when we either don’t have the time or the willingness to properly think about something.

That’s where System 2 comes in. It’s much better at processing complex decisions and is more reliable, but it requires so much more effort. It enables us to solve equations but also make the long-term-good decision to stick out dry January. *ahem*

Something I hadn’t come across, just south of the strategist’s emergency Rosé, was a 53 page thick document from the UK’s Behavioural Insights Team outlining four simple ways to apply behavioural insights: EAST.

Make it easy, attractive, social, timely. It sounds like common sense, but these small changes can have big impacts, or the nudge effect as it’s called.

Sometimes all it takes is a simple word change. We know people don’t really like making decisions, so prefer to choose the default option.

In 1995 within France and Austria the majority of citizens signed up to organ donation. Yet the UK, Germany and Denmark had opt in rates between 4% and 17.7%. The reason for such low participation rates is because of one word.

When asked if they’d like to donate, the first countries are asked:

Check the box below if you do want to participate in the organ donation program.

The other three including the UK included are asked:

Check the box below if you do not want to participate in the organ donation program.

The only difference is the first option implicates that the default option is to donate.

Since the UK adopted the wording change, organ donation has increased from 17.7% to 62%.

It goes to show that a more human-centric understanding of problems is necessary to optimise existing systems.

The soaring popularity of Behavioural Economics is not only good for organisations, but it is also good for individuals, offering them an experience that feels better and isn’t any harder than it needs to be.

To close, behavioural research shows we are loss averse; more motivated by loss than gain.

So don’t miss out, and join Collective’s thinking by reading:

  • Thinking, Fast and Slow – Daniel Kahneman
  • Nudge – Cass Sunstein and Richard Thaler
  • Predictably Irrational – Dan Ariely
  • EAST: Four Simple Ways to Apply Behavioural Insights

 

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David Fanner is currently undertaking a Planning Internship at Collective London through Collective Upstarts, our student advertising placement scheme. David has a keen interest in Behavioural Economics and studies Creative Advertising at Falmouth University. An all-round nice chap.