The dinner party kit: a bluffer’s guide to behavioural economics
Now that Cameron and Obama are talking about behavioural economics you need an opinion on it. And one that’s better than ‘I read a bit of.. ermmm, that book, Nudge, yeah’. So here’s your dinner party cheat-sheet for behavioural economics. It’s short and memorable, just like a good whisky (from Scotland. Or whiskey, from any other country, if you’re that way inclined).
Start with a quote. Either of these will do – they’re broadly the same. I offer two so you don’t bore yourself.
“Just as no building lacks an architecture, so no choice lacks a context”
That’s from Nudge, if you’re feeling all Saturday night ITV. (And it’s on pg 236, if you’re counting.). Or
“…despite being generally capable and smart, we are highly context dependent.”
This is by Jack Fuller from an Australian research group called Per Capita Research. A much less well known source, if you want to be all Wednesday night BBC4 (just after Das Boot and before Puccini’s La Boheme (without subtitles)).
Once you’ve established the common ground you introduce the three biggies. Three is good – any more and it feels like High School, any less and it feels like Playschool. There are more than three, but don’t go there – you’ll kill the ‘party’ bit of dinner party.
Done. You can leave it here, but I bet you’ll want to add an example or two. So we wrote you some. Pick the short version or the long version, or mix and match.
The short version: Imagine a monastery. A young monk asks, ‘Can I smoke while I’m praying?’ which gets a big fat no in reply. Later he re-frames the question ‘Can I pray when I’m smoking?’… he’s told he can pray whenever he likes.
The long version: The medium sized coffee is the most popular in coffee shops. If we were rational actors in a rational world driven by an internal engine that commanded our desires, we’d calculate our need and ask for a coffee size similar: perhaps ‘330ml – the volume of a fizzy drinks can’, or ‘those screw=top bottles, half a litter I think?’, or perhaps ‘the approximate volume of my mug at home’. We don’t. We aren’t. It’s not. The frame.
2. Loss aversion
The short version: The pain of loss twice as bad as the pleasure of gain of equal size.
The long version: It doesn’t have to be loss of money – it can be loss of reputation. The Yale Environmental Sustainability Index is a country-by-country relative measurement. One year Norway came second. The prime minister – rather than crowing about Norway’s success – wanted to overtake Finland to become number one. Loss. Aversion.
3. Social norms
The short version: Social norm is about not being a weirdo.
The long version: When towel reuse signs in a hotel mentioned that ‘three quarters of guests who stayed in this room reused their towels’ 50% of guests did the same. Only 30% reused towels when told it would ‘help save the environment’. That simple word change alone would save 7 trillion gallons of water if every hotel on the planet did this.
Then you follow this with that joke about ex US President George Bush who squealed ‘how many!?!’ when one of his aides told him ‘3 Brazilian soldiers’ were killed in Afghanistan…