At the Marketing Research Association’s recent Corporate Researchers Conference, Stephen Paton (@StephenGPaton) of AGL, an Australian power company, shared his experiences with Behavioral Economics (BE). For Stephen, BE is critical to differentiating the research he provides from commodity survey research. BE helps him provide value to his company, show his internal clients how to influence situations, and predict the unknown.
Now every insights project at AGL starts with a Behavioral Economics model:
- What is the behavioral challenge?
- Which BE concepts could be involved?
- What are appropriate responses to mitigate those behaviors?
“As a result, a lot of people who would normally not come to us before now do,” said Stephen. “They can do surveys as easily as I can. But the BE concepts, the social cues, they look to me for.” Even AGL bills now incorporate BE, to help promote energy efficiency, using social norms by showing how much electricity a customer is using compared to neighbors. “Our organization has got the message across that we should use BE. We have come up with some really good, really different ideas.”
BE even helps him understand his internal clients. “Lots of biases are in play when dealing with people in organizations:
- “Confirmation bias – when you are right you get a dopamine release, your reward mechanisms fire. Alternatively, when the results don’t agree, you give them the results, but they ignore it.
- “Optimism effect – everything will be all right.
- “Power of the default – they would much rather do nothing.
“When trying to share results with managers, when you understand some of these concepts, you start to understand how and why you have to frame information…. We’re now in a nice place to be. The insights function has grown every year. Our budget has grown every year.”
Want to integrate Behavioral Economics into your own research? Here are the resources Stephen shared to help you get started:
- A Beginner’s Guide to Irrational Behavior, Dan Ariely
- Predictably Irrational, Dan Ariely
- The (Honest) Truth About Dishonesty, Dan Ariely
- Thinking, Fast and Slow, Daniel Kahneman
- Influence: The Psychology of Persuasion, Robert Cialdini
- Herd: How to Change Mass Behavior by Harnessing Our True Nature, Mark Earls
- Nudge: Improving Decisions About Health, Wealth, and Happiness, Richard Thaler
- The Psychology of Price: How to use price to increase demand, profit and customer satisfaction, Leigh Caldwell
- Applying Behavioral Economics to Market Insights, CEB
Originally published on ResearchAccess.com