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Behavioural Economics? What’s that then?

25th August 2017

 
 

A rebranding of psychology in the business world.

 
 
The above is an answer offered by the brilliant Rory Sutherland (who is one of the pioneers in this space, due to the work he is doing at Ogilvy Change) to the question of what is Behavioural Economics? And it probably is the best way to explain just what Behavioural Economics is.
 
It’s a rebrand that’s been long overdue. As it is one that’s already making huge inroads in changing/shaping perceptions – like all strong branding initiatives achieve.
 
Unsurprisingly, behavioural economics is concerned with consumer behaviour – focussing on peoples thinking to gain insights into why they behave the way they do. So yeah, psychology basically. But as crazy as it sounds; if you were in the business world and you tried to organise a meeting with all the top levels of management, and on the invite you used the word ‘psychology’ – then there’s a high chance, that attendance levels would be pretty low. Whereas if instead of using psychology as the descriptor, you used ‘Behavioural Economics’ – then you can bet your bottom dollar that those attendance figures will be considerably higher.
 
Hence the importance of that rebrand.
 
Therefore, brand ‘behavioural economics’ is allowing psychology to be discussed in the business world. It’s essentially changing the vocabulary to cater for those who make the business decisions.
 
 
 
 

Behavioural economics is just marketing science

 
For effective marketing to take place, marketers must spend considerable time and effort analysing the target audience that they want to engage. Given this is a crucial component of marketing, it’s pretty clear that there is a need for psychology, oops sorry – behavioural economics for when doing this.
 
Simply, as communicators, we’re looking to change/influence behaviour. And so how we present information, and direct a persons thought process, is vital in pushing people towards a certain outcome.
 
When it comes to pushing people, you might be familiar with Nudge theory. It’s a concept within behavioural science. And it’s something that has been made a tad famous by the British government.
 
They have a behavioural insights team – also known as the Nudge Unit. Which has proven to be extremely successful in helping to improve government policy and services, by making small changes to a person’s environment to help influence their behaviour – and in doing so saving the government stacks of cash.
 
In pretty crude terms:
 

Nudge marketing refers to deliberately manipulating how choices are presented to consumers. Its goal is to influence what consumers choose, either to steer them toward options that the marketer believes are good for them or simply to stimulate purchases and increase sales.

Harvard Business Review.
 
 
The above is obviously only achieved through solid understanding and implementation of behavioural economics. It begs the question then, shouldn’t all organisations have their very own Nudge Unit?
 
Well actually, most organisations sort of do – in the form of their Internal Communications department. They probably just need to strengthen their understanding / capabilities of behavioural economics to give it the nudge it really needs.
 
 
 
 

Conclusion

Hopefully this has helped to briefly introduce behavioural economics to you (It’s a pretty vast area for further exploration!). And that we’ve shown that it’s no longer the sole preserve of academics – it’s hugely important for business communicators too!
 
To hit home it’s importance a bit more, let’s quickly look at what’s important when changing people’s behaviour:
 
Steps to go trough when changing people’s behaviour – in simple terms.
 
1. Define the problem. What is it you are trying to change?
2. Who is the audience you are trying to change?
3. Understand the behaviour you’re wanting to change, and what’s driving it
4. Measure the change in behaviour
 
Clearly each of these steps would hugely benefit from the involvement of behavioural economics.
 
What do you think? Should every organisation have its very own Nudge Unit? Well, at the very least, we believe they should all be using behavioural economics.
 
If you need help in changing the behaviour of those in your organisation, then get in touch. We’ve implemented many successful employee behaviour change campaigns.
 
Until next time…
 
Rima
 
 
 
 

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