Photo: Vacancy by Brent on Flickr
Back in the last century when I was at university, I decided that, rather than study just Economics, I would take a joint degree in Economics and Psychology. That allowed me to avoid the Econometric classes which I would most likely have failed. It also meant that I was simultaneously studying one social science that was all about individual behavior and another that assumed that there was no such thing. These years later it's not surprising that I am drawn to behavioral economics which brings human behavior back into the economics equation.
1) Three questions on Behavioral Economics: Dan Ariely
Dan Ariely's book "Predictably Irrational" helped popularize behavioral economics, showing how people tend to behave irrationally in a predictable fashion. In this post he provides an introduction to behavioral economics by posing and answering three questions: 1) What is behavioral economics (and how is it different from standard economics), 2) Even if consumers make mistakes from time to time, wouldn’t the market fix these? and 3) Isn’t behavioral economics a depressing view of human nature? Key quote: "We are more like Homer Simpson than Superman."
2) How Call Centers Use Behavioral Economics to Sway Customers: HBR
How we love to hate call centers. We're talking to humans but often they are acting like robots, following a script with no deviation until the final: "Is there anything else we can help you with today?" is asked. This post explores how some call centers are throwing away the script in favor of a more behavioral-based approach and are teaching their reps to use simple word choice to generate better customer perceptions about their calls. The good news--you'll feel better. The bad news--you're being manipulated.
3) $9 footlong? Subway teaches you how to raise your price: Thought Gadgets
Subway was a victim of its own success with its $5 footlong sandwich. As Ben Kunz says in this post, the $5 price point wasn't leaving much room for profits. So how has Subway tried to escape? It's launched a whole array of other products including a $9 sandwich featuring beef and bacon to muddy the waters and create a new reference price, a concept first introduced by pioneer behavioral economist Richard Thaler.
4) Complementary goods: Choice architecture edition: Nudge
Speaking of Richard Thaler, here's the blog launched to support Nudge, his own bestselling book. Thaler is interested in choice architecture--creating a decision environment: "To help nudge people to make better choices (as judged by themselves) without forcing certain outcomes upon anyone", a philosophy which Thaler calls "libertarian paternalism." In this post, Thaler looks at the idea of complementary goods from a choice architecture perspective. Classic complementary goods would be hot dogs and hot dog buns. Choice architecture complementary goods would include other things used in combination, whose arrangement together, say in a store, might promote better decision making. Beer and condoms, for example.
5) Economics Behaving Badly: The New York Times
In this Op-Ed piece, George Loewenstein and Peter Ubel argue that behavioral economics is now being asked to solve problems it wasn't meant to address: "Indeed, it seems in some cases that behavioral economics is being used as a political expedient, allowing policymakers to avoid painful but more effective solutions rooted in traditional economics." They give as one example the nation's obesity epidemic. They argue that instead of the behaviorally-oriented approach of calorie labeling, the more effective and simple solution would be to increase prices on unhealthy foods. But that's not being done because it would be less palatable politically.
6) Re: Everyone: YouTube
The week could not pass without tribute being paid to Old Spice and its YouTube/Facebook/Twitter campaign produced by Wieden & Kennedy featuring Isaiah Mustafa. In the course of the week, Mustafa responded to an amazing number of blogger comments with personalized videos. By the end of the week, Old Spice had four of the top 10 spots on the AdAge Viral Video chart. I actually missed the whole thing since I was en route back from vacation in Spain. But what a tour-de-force. This particular video signaled the end of the event that has significantly raised the bar for everyone going forward. For more information on how the campaign was executed, read this summary on ReadWriteWeb. Silver fish hand catch!
That's it! Now that I'm back from vacation, some chance that I might actually post something next week. More thoughts and comments also occasionally available on Twitter (@martinjbishop).
Saturday, July 17, 2010
Photo: Vacancy by Brent on Flickr