2017 Behavioral Economics

Top 5 Things We Learned About Behavioral Economics in 2017

2017 was a big year for Understood Connections and Behavioral Economics.  A lot of things happened, but here is our list of the top 5 things we learned.

  1.   Behavioral Economics (BE) is Legit!

Richard Thaler, one of the fathers of BE, won this year’s Nobel Prize for Economics.  For years, classic economists paid little attention to this blend of psychology and economics but the truth is now obvious: people often don’t act in rational ways when making decisions and BE tells us why.  Watch Thaler’s Nobel Lecture

  1.   Some People Think BE Is Mind Control

A high profile prospect turned down our proposal to help his organization connect better and on a deeper level with his customers.  He decried BE as manipulative and smacked of big-brotherism.  He believed his customers should utilize free-will, unencumbered by undue influence.  Meanwhile, he spends heavily on marketing campaigns that may hurt instead of help, and trains his salesforce on ways to deal with common consumer objections, unknowingly using supposedly irrelevant factors to further impact the behavior of his customers. Perhaps we have a different definition of “undue influence”.  Read our blog You’re Already Doing It to understand more.

  1.  Consumer Beliefs Matter  

Consumers bring their beliefs with them when engaging with a brand, company, product and/or service.  These beliefs drive experience and evaluations, which are points of view that every company needs to keep in mind when creating marketing messages.  Taking our own advice, and realizing we were missing a valuable connection with clients, we changed our name from Understood Productions to Understood Connections. We’re not a media production company, which is what people thought - no matter how hard we tried to say we produced solutions; but we do create connections that are understood.  See what we did there?  Watch this interesting video that shows what Apple fans want to believe about their beloved brand.

  1.   BE Really Works

A FinTech wanted to help their consumers save more of their tax refunds.  Most households get tax refunds in the US, and the average size of tax refunds for households with incomes of less than $50,000 average $2,200.  By using a BE concept called pre-commitment, the organization significantly increased the amount of money these households saved, and increased deposits by ~ $1mm.  Your financial institution can do it too: Tax Time Savings Plan

  1.      We Lie About Telling the Truth

Most of us consider ourselves honest people, but most of us have told at least one lie in the recent past.  How do we reconcile that?  Behavioral Economics teaches us that fudge factors let us rationalize those little dishonest moments.  More disturbing is the finding that as far as dishonesty goes, there truly is a slippery slope.   One small dishonest moment often leads to another.  We watched a fascinating documentary from behavioral economist Dan Ariely.  We were so impressed by the work that, in partnership with the producer/director Yael Melamede, we created a workshop Truth about Dishonesty in the Workplace  which helps companies identify and minimize those fudge factors.  

What will make our top 5 list for 2018?  Connect with us and perhaps we will share your story!

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