The unconscious consumer

Week three in my behavioural economics series inspired by Dan Ariely’s MOOC Beginner’s Guide to Irrationality.

The unconscious consumer

When something is restricted, such as choice, people fight to get it back. This is known as a psychological reactant – things that are outside your consciousness that affect your purchase/decision. Some people build up resistance to messages such as eating healthily and exercising more because they feel it is restricting their freedom of choice. In fact sometimes this pushes them to do the opposite of what you want them to do. Indirect persuasion is when someone is persuaded to do something without causing this backlash reaction.

 

Brief brand exposure

People in the west are exposed to between 5000 and 10,000 brands a day. This is too many to consciously process in a meaningful way. Subliminal exposure to brands affect behaviour. It is better to use brands strategically for your own means than to have brands try to influence you unconsciously. For example if you’re a swimmer and you want to shave a second off your personal best you may want to consider buying the same warm-up parka that Michael Phelps wore at the Olympics. The first time you wear it you may feel daft and think that there’s no way you’re going to swim faster just because you’re wearing it. You’ll probably still feel the same the second day. But three weeks in, you’re not going to be consciously thinking about the fact that you’re strategically wearing Michael Phelps’ jacket but that association between the jacket and Michael Phelps and how fast a swimmer he is going to be activated at some level, below your conscious threshold – you hit the pool, you swim, you cut the time off. this also works for creativity, intelligence and just about any aspirational goal you may have. Which is why I wear shoes like Fred Astaire!

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Opportunity costs

It’s incredibly difficult to look at trade-offs – should I have a coffee from the coffee shop or should I save the price of a daily coffee and buy something at the end of the year? Instead we look at shortcuts for example caring about the method of payment or relative prices.

Money allows the market to operate efficiently – imaging how much longer the weekly shop would take if you had to barter for everything. Money is all about opportunity cost: where is the money coming from; what else could it buy; what are you giving up by choosing one thing over another. When faced with a finite amount of money like a weekly pay packet it is easier to understand trade-offs but in today’s world with credit, loans and bank accounts trade-offs are obscured.

Relativity

We often think of money in relative terms and not absolute terms. Salary satisfaction is influenced by comparisons to co-workers. When surveyed people would rather work for £67,000 a year where they are on the top earning rung, rather than for £70,000 when they are the lowest earner in their team.

Next time the topic will be the pain of paying and mental accounting.

Tune of the week

Kendrick Lamar ft. Jay-Z – Opportunity Knocks

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Paris or Rome?

Well, I thought I was going to be talking about persuasion this week but apparently I was looking at my social psychology notes instead of my Beginners Guide to Irrationality but the two disciplines are inextricably linked anyway. In fact, I think social psychology and behavioural economics are so important for us all that they should both be taught as core subjects in school.

Instead of persuasion I’m actually sharing Dan Ariely’s thoughts on decision-making.

The decisions we make often aren’t the best for us, either in the short or long-term – a glass of water or a glass of wine, an apple or a bag of crisps, spend now or save for later. The choices we make are influenced by the choice sets laid out in front of us and often these choices are difficult to evaluate. In the open market we are often given weighted choices, choices which have asymmetric dominance – this is called the decoy effect.

Dan uses this holiday analogy to explain. You are offered an all-expenses paid trip to either Paris or Rome. Most of us who have been to either will have a favourite but suspend those thoughts an imagine you have no preference. You wouldn’t be sure which to choose. No imagine the same offer but if you choose Rome, coffee isn’t included in the deal. You probably still wouldn’t be sure. But, given the choice between Rome all-expenses or Rome minus coffee and you’d definitely choose Rome which then makes Rome all-expenses seem better than Paris all-expenses. The contrast makes the desirable option even more attractive.

Another example of this will be recognised by readers of the Financial Times or Wired magazine. Their subscriptions go something like this:

  • online subscription £59
  • print subscription £125
  • both online and print £125

In lab conditions 16% of people chose the web subscription, 84% choose the combination and no one chose just print. However if offered just web for £59 or both for £125, 68% chose web and 32% chose both.

By offering the print subscription it defined the framework to evaluate the options and it make it look like you’re getting the online version for free.

Anchors

Once a particular number is introduced it becomes the reference point from which prices are judged. The first decision we make becomes an anchor that influences future decisions. In the lab Dan tested this by making people think of the last two numbers of their social security number then asking how much they would be willing to pay for a bottle of wine. This with higher numbers were willing to pay significantly more than those with low numbers, and remember – those numbers were arbitrary.

The decisions we make are influenced by past decisions but unfortunately we remember our actions far better than our emotional states when we made the decision to act.

Learning from our mistakes

There are three main lessons we can take from behavioural economics:

  • we have many decision biases
  • we don’t have good intuition and don’t recognise our faults
  • we need to look to the results of experiments rather than using intuition

We should test government policies before implementing them, in the same way physicians have to test procedures and drugs.

We should work like computer hackers and break procedures down into discrete, exact steps and figure out which points are the best at which to intervene.

We should critically examine where improvements in behaviour can be made.

Doubt your intuitions.

Experiment more.

Tune of the Week

Ella Fitzgerald – Undecided

 

Welcome to Easy Street

So I’ve been back in the online classroom again for the past five weeks – I just can’t help myself. I started Dan Ariely’s Beginners Guide to Irrationality last year but I had two other courses running at the same time, then I went to France for a week and couldn’t catch up so I ditched all three. I guess the lesson learned from that was to do one MOOC at a time.

I’d recommend this course to comms people, especially if you work in the public sector where many campaigns are about changing behaviour and winning hearts and minds. Basically Dan’s course is a foundation in behavioural economics and his books and academic papers are cited by the Cabinet Office’s Behavioural Insights Team in their work. It’s not for the faint-hearted as there are about five 20-minute lectures a week, at least five academic papers to read, two quizzes a week and two written assignments if you want to so them. Dan himself is a bit of an entertainer and his lectures and pretty entertaining.

He starts by looking at visual and decision illusions – how we aggregate information over time which should help us to make decisions but invariably doesn’t. We think we know the answer to something but we’re usually wrong – the Foundation of Irrationality. Traditional economics works on the theory that we make rational decisions but if we did we wouldn’t let our credit card bill run up, we’d eat healthy food, exercise more and plan for the future. Now I don’t know about you, but I’ve come to realise that I don’t think rationally. This course has given me some insight to the bad decisions I make and mechanisms to make better ones.

Like visual illusions we rely on contextual information to make all sorts of judgements and decisions and our brains interpret information by incorporating our expectations into our perceptions.

For an example of this watch the film below – this isn’t the exact one from the course but it’s the same principle.

So what’s this got to do with comms? Well, as comms professionals we can influence the architecture of choice. Decisions are influenced by:

  • environment
  • defaults
  • complexity

Us humans tend to take the path of least resistance and we don’t realise how much defaults matter. We have bad intuition and don’t realise that defaults, whether put there on purpose or not, make our decisions for us. What’s worse is we create stories to justify our actions. The best example of a default is organ donation. How can Belgium have a 98% consent rate while the Netherlands next door only has 27.5%? It can’t be down to religion or culture as these are practically the same in each country. It’s down to whether you have to opt in to donate or opt out to not donate – in the Netherlands you have to opt in whereas in Belgium you have to consciously opt out, which not many people do. We’re basically lazy and will follow the path of least resistance, especially if deviating from the default is more complex. Forced choices require a decision and doing nothing is not an option. People generally avoid changes, even if they are minor and even is another path is clearly better.

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Dan’s very real example of this was a study of patients presenting with a sore hip who are then referred to specialists for a hip replacement (the default). Half of the doctors are then told that the specialists forgot to try Ibuprofen and the other half are told they forgot to try both Ibuprofen and Piroxicam. in the first group all patients were recalled to try Ibuprofen. In the second group only 28% were recalled and a massive 72% were sent straight for a hip replacement – it was simply too complicated to recall them to try both drugs. Scary stuff.

As comms people we should be aware of defaults – some are unintentional but create barriers to the behaviour we want to see but others can be used to get the results we want. For example, what could we do to make it less likely that people would save for retirement? We should:

  • ask people to opt in
  • provide lots of complex, difficult choices, preferably in a booklet
  • stress the importance of the decision

Does that sound familiar? Think council tax reductions, healthy eating, exercising. Badly designed defaults are everywhere.

I challenge you to spend a morning actively looking for defaults on your websites, in your leaflets and in your online forms and then you’ll have some insight into why they’re not working and people aren’t doing what you want them to do. It’s not their fault.
Remember – give them the path of least resistance.

Next week I’ll share some of Dan’s thoughts on persuasion.

I’ve got data and I’m not afraid to use it

A couple of weeks ago I did one of the most intense training days of my career. Luckily the trainers gave us ample breaks, wonderful healthy food and plenty of encouragement so at the time it didn’t seem that intense. It’s now I’m back at work and reflecting on those nine hours trying to work out how to apply my new knowledge that I realise how much of that learning I have to rationalise and consolidate with what I already know and do.

Decoded’s Code in a Day course came highly recommended by a colleague at Socitm but I could never justify attending as we have in-house developers. Imagine my glee then when they started a Data in a Day course and my gratitude to my boss for being allowed to go.

The morning started with a brief introduction to data and its history which included coxcomb charts devised by Florence Nightingale in 1857 to show the causes of death, by month, during the Crimean War. Although these charts are misleading – the data maps to the radius of each wedge, not the area – whether intentional or not, they helped her make her case that soldiers were dying of disease and not of the wounds they received during fighting. Her diagrams make us assume her conclusions without analysing the data behind them.

Florence Nightingale's infographic

From there we had a look at open data sources including UK Government open data and data from Transport for London. This part struck a chord and will with most public sector organisations. TfL and the Government are too busy creating the data to also think about nifty ways to use it so they open it all up for developers to use for the apps some of us use every day. One of my reasons for wanting to do the course was to understand how open data could help reduce the number of FoI requests we deal with – maybe if the data was there in a format developers and journalists could use, people would stop phoning.

Our first practical session had us creating Google charts using datasets from the United Nations which got me thinking about the data local authorities sit on. This was my second reason for doing the course. Stats and figures swim in front of my eyes. Words are my game but complex data sets don’t work with words alone – pictures can be better (back to Florence and her dying soldiers). I’ve been doing a lot of work with Mosaic data lately and nothing tells a senior manager the story about their service users like a pen picture, complete with an idea of the family, the house they live in and what they like to do in their spare time. Sometimes an infographic can be more persuasive, not only with managers but with the public too. I’m keen for us to use infographics for things like the council budget, not only on our own website but also to go out to the local papers for them to use.

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I’ve always thought that the Guardian is particularly good at infographics and I remember seeing their Government spending bubble graph and being impressed. The guys at Decoded showed us it again and then they showed us something even better. The Daily Bread is an interactive infographic which lets you see exactly what each penny of the taxes you pay are being spent on. But what’s nifty about this is that the data updates in the background so it’s always current at the front end. Imagine if you could put to bed once and for all exactly what people’s council tax pays for.

We also looked at some cutting edge visualisations some of which are simply beautiful to look at, mouse over or take inspiration from but next to useless as they stand (my opinion, not Decoded’s):

  • Movie Galaxies is a fisheye visualisation which shows the relationships between characters in films

  • US gun deaths in 2013 is an emotive visualisation with real-time data driving it

  • Out of sight out of mind is a visualisation of all the US drone strikes on Pakistan driven by live data maintained by the Bureau of Investigative Journalism

  • Tweetping is mesmerising and shows the world’s Twitter activity in real-time

Our afternoon practical session saw us using the Twitter API and Python to create charts/visualisations comparing four different Twitter accounts in real-time. I chose Westminster, North Lanarkshire, Falkirk and Fife. Had I realised we’d be looking at sentiment I’d have used @mentions but I ended up looking at the tweets the four councils were putting out rather than what people were saying about them so the sentiment was always going to be positive. I’ll have to go back into the code and change that to see what the charts come out like.

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That took up most of the afternoon and, given my limited coding skills, was the most challenging bit – but I did it.

After that we looked at the fabulous D3 website. There you’ll find the code that makes a lot of data visualisation work, all open source and free.

And after all that my ears started bleeding and my head exploded. Only kidding – after that everyone on the course kicked back, had a chat then headed our separate ways.

I probably don’t have the confidence to tackle a big data visualisation myself but I now know that these fancy, interactive infographics aren’t done by smoke and mirrors and powered by hamsters on treadmills. They’re only as good as the data you start with but from there on in it’s a combination of art and science – a bit of coding know how and a designer’s eye. Luckily we have all three elements in spades at South Lanarkshire Council. I just have to get the finger out and get people to hand over their data.

I firmly believe that knowing your way around data and the stories it can tell is an essential tool in today’s communications toolbox so I’d thoroughly recommend this course and the many data journalism MOOCs that are springing up.

For those of you in the Scottish public sector I’m talking with Decoded about getting them up to Scotland for some tailored pop-up sessions. If you’re interested drop me an email at carolyne.mitchell@southlanarkshire.gov.uk and tell me what you’d like to be able to do with your data, the challenges you face and what you’d like the Decoded team to cover.

We all have quality data – we shouldn’t be afraid to use it.

Tune of the week