Where’s our Silicon Valley?
The French anthropologist Claude Lévi-Strauss (1908-2009) – the father of modern anthropology – notes that Western societies constructed distal concepts such as geography and astrology before developing the proximal ones, such as psychology. He’s right – we’ve taken a while to focus on the brain. And still, today, it’s more common to try to solve problems ‘out there’ with technology and products, rather than ‘in there’ with psychology.
Are we missing a trick? In a word, Yes.
From energy use to tax-take and gym visits, tweaking the proximal interface – our ‘in there’ psychology – affords us immediate and persistent change.
Scroll back to California in the noughties, and you’ll find Mark Martinez from Southern California Edison dealing with spikes in demand in the same way many electricity generators do – through complex technological forecasting and running costly ‘quick start’ gas fired power stations. He tried a new approach, which involved firing off peak demand price alerts to his customers via email, automatic phone calls, and text messages. It was well meaning. It was sensible. It was hopeless.
He wasn’t sure what to do. He had seen some ‘Ambient Orbs‘ – a glass globe which glowed different colours based on input – hacked by users to show stock prices, ovulation dates (yes, really), and energy use at home. So – on a hunch – he bought a hundred or so, programmed them to listen to Southern California Edison electricity generation numbers and handed them out to the same customers he’d been emailing, phoning, and texting. The Orb glowed turquoise during inexpensive off-peak hours and red when the price of electricity was high. Among those gifted, peak-hour energy use dropped by 40% according to Clive Thompson in Wired Magazine. (Check out these real-world stats from Ambient Devices)
Martinez describes the Orb as being relatively benign until it glows red, which is a perfect description
Tim Stout, when he was the vice-president of energy efficiency at National Grid in Massachusetts, said in a 2009 article by Grist.org that technological solutions are the default solution to energy production efficiency, but
‘changing consumer behavior is the next wave of savings that needs to be tapped.’
In his opinion, the psychology is required. And it comes in many forms.
In Norway ‘informative billing’ approaches have seen non-painful reductions in energy consumption of up to 15%. Disaggregated billing (such as pie chart breakdowns) shows use at the appliance level and prompts useful investment by homeowners, which is very logical response. The greater clarity in amount and cost afforded by other ‘informative’ methods such as metering, trailing averages, seasonal comparison, and daily weather-based suggestions, to name a few, bring clarity and immediacy to a traditionally opaque and distant purchase.
Indeed, in 1994 Kempton and Layne said of traditional energy billing ‘consider groceries in a hypothetical store totally without price markings, billed via a monthly statement . . . How could grocery shoppers economise under such a billing regime?’
We’re lost without the psychology. The benefits of aligning reality with our psychology are not the province solely of energy-use.
The UK government coalition’s Behavioural Insights Team was established in July 2010 to use cognitive-behavioural theories to help refine decision making in
Halfway around the world, in a similar – and earlier – test the psychologist Michael Wenzel worked on [rightcol]Australian tax compliance using a similar normative approach where the most successful message was in the injunctive mode stating that although many thought that other people weren’t honest – ‘in reality normal social practice was honesty in tax returns’. This saw the value of the return on the ‘deductions’ part of the tax form where food, travel, and other expenses are documented, drop from $286 to $151. A crude projection of this $135 reduction onto the approximately 5 million Australians who make claims on the ‘deductions’ section would see an extra $675,000,000 of gross income declared. The psychology is certainly valuable.
And as much as you can stop burning cash, you can start burning carbs.
Two Harvard undergrads were inspired by their Harvard Behavioural Economics course to start up a not-for-profit gym called Gym-pact, which is designed specifically to combat temporal discounting (a dimension of construal useful to economists) by charging customers when they don’t go, rather than when they do. Why? For all but
So where is the epicenter of all these thrusting business-forward approaches?
Sherry Coutu writes excitedly in Wired UK about growing tech start-up hubs in New York, London, Berlin, and of course, Silicon Valley. But tech hubs are not behaviouralists’ ground zero. (And if you read Alex Madrigal in The Atlantic, even the tech hubs are not the tech startups’ ground zero:
That's my essay on the last five years. Basic point: we need a new paradigm for tech startups. Mobile-local-social happened. Now what?
— Alexis C. Madrigal (@alexismadrigal) April 18, 2012
Bill Aulet, MD of the MIT Entrepreneurship Center speaking to Susan Johnston in the Boston Globe, recognizes the verve of Silicon Valley in behavioural businesses such as Gym-pack, and yet laments the fact that they can’t grow in that environment
“There [Silicon Valley], they think you solve problems with technology. But these companies that have innovative business models and are based off behavioral economics have proven to be extraordinarily successful.”
He’s right, behavioural-informed businesses are successful – extraordinarily successful. Perhaps because the Howard Stevenson definition of entrepreneurship as
“ . . . the pursuit of opportunity without regard to resources currently controlled”
is turned on its head simply because behaviourists have the resources ‘currently controlled’ in the form of peer-reviewed psychology and empirical testing. A behavioural business can deliver on its promise from a standing start. Are they a type of ‘entrepreneur+’?
Whether that characterization helps or hinders, it’s thanks to the work on the ‘business of behaviour’ by Gym-pact, Wetzel, the Behavioural Insights Team, Martinez, Stout, Kempton and Layne, and many, many others that we are engaging finally with that ‘in there’ proximal concept of psychology rather than the ‘out there’ distal concepts such as geography and technology. Claude Lévi-Strauss would be pleased.
All we need now is our Silicon Valley.