25 Things I learned from Behavioural Economics (part 1)



On Saturday the third of October I will turn 25 years old. It is true. I am ancient now. Quarter of a century. Damn.


Anyway, I thought it’d be “cute” to write about 25 things I have learned from being in behavioural science, or behavioural economics, if you will. And how you can make use of this very valuable lessons too. Now I wrote the article and it’s so long, I figured I’d split it into 2 parts. So here is part 1!





1. The sunk cost fallacy is real. Very real. Just because you have already spent years on it, doesn’t mean you should spend another couple of years on it, if you know for a fact those years will be miserable, and might not lead to the desired result anyway. Sometimes you need to just cut your losses. Again, this is not an excuse to quit the PhD. But it sure as hell is a reason to never do it again…



2. Not everything with the words “behavioural economics” on them will actually give you any insight into how the human mind works. Behavioural economics has become a super hyped term after it’s won 2 Nobel Prizes and given rise to many a pop science book (Ariely, anyone?). But just because someone is claiming they do behavioural science, that doesn’t mean they actually are. Always check sources and ask for scientific proof of their methods!



3. It is entirely possible that behavioural science is just applied psychology, with its marketing jacket on. Psychology has gained itself a really bad, pseudo-science type, reputation. Which is obviously very unfortunate, because it has a wealth of information and insight. Don’t dismiss the entirety of psychology because of Freud. We’re not all psycho-analysts who are obsessed with your mother!



4. Just because it worked once, doesn’t mean it’ll work again. Replication crisis who? There’s no way in hell you’re reading this post, or are an avid reader of this blog, and don’t know about the replication crisis. Not everything works all the time. Some things literally only worked once. And sometimes you need to dive a lot deeper into why things worked, or didn’t work, rather than just taking the headline result at face value. Put your critical thinking cap back on!



5. WEIRD is weird. But it’s everywhere. In addition to the critical thinking required for approaching results and methods within behavioural science, keep in mind that samples are an important factor in driving results. Too much research has focused on populations from Western, Educated, Industrialised, Rich and Democratic countries. This does not give us an overarching theory of how ALL people behave.



6. So far, social media is the best example of applied behavioural economics you could possibly study. Whether you’ve seen the Social Dilemma or not, it’s a pretty clear explanation of how behavioural science has been applied to make sure you can’t get off Facebook. Stimulating addiction, dopamine releases, irregular interval reward systems, FOMO, social pressure, social comparison, targeting (directed adverts), confirmation and echo chambers are just some of the terms that became visible throughout this documentary. All of these are grounded in behavioural science, or psychology. Look into classical and operant conditioning, or the fundamentals of (behavioural) addictions to learn more!



7. Goal setting is the best way to hold yourself accountable. And actually achieve your goals. Whether you’re a SMART, a COM-B person or prefer applying both. If you want to change your behaviour, you better figure out how to do it systematically. Behavioural science has a massive catalog on behavioural change, showing how clear goal-setting, measurement and timely reinforcements really do help. Also see the next point (8).



8. Behavioural science doesn’t do anything if you don’t apply it. It’s nice to know you’re biased as fuck. And other people are also biased as fuck. Now what? Hit back to points 1 and 7, you do have to integrate this stuff into your own life to benefit by it.



9. You’re not the only irrational person out there. If you’re getting frustrated because you are hyper aware of your own “irrationalities” and other idiosyncrasies that lead you to making system 1 based mistakes, others are doing just as “badly.” You’re not alone, most people suffer from these things. And of course, if you look back at point 7, there’s loads you can learn about changing your behaviour, if you so desired!



10. Irrationality isn’t the problem. Coming back to point 9, irrationality is also a massively overused and loaded term. Being irrational is seen as deviating from the homo economicus, the perfect decision making machine. It’s seen as bad. But it’s not. It just is. Also, what does it mean to be rational? To be devoid of emotion? To spend six years finding the perfect mobile phone in a continuously changing market, never committing to anything? I don’t think so…



11. Emotions matter. In addition to what is now essentially becoming a thread rather than a list of bullet points: irrationality is often linked to letting your emotions seep into your decision-making process. For a long period of time emotions were seen as destructive, later on as just distracting. Neither is correct. Your emotional state matters for both your decision-making process, but also for how you feel about those decisions afterwards. It’s all subjective, but it damn sure is important.



12. Objectivity isn’t always better than subjectivity. Objective measures are the bread an butter of science. Shame that we don’t deal with protons but with people. People have behaviours which are classified as objective. However, their experience of their behaviours, the outcomes of those behaviours and that of the behaviours of people around them are entirely subjective. An experience is always subjective. That’s not a problem, that’s the nature of the thing. And if you’re studying something that is inherently subjective, you should adapt your measures too. Just because it doesn’t generalize as easily, doesn’t mean it’s not important. End rant.





As I said before, putting all 25 lessons into one article would have lead to a piece of over 2000 words, which seemed a bit, you know, overkill. So next Thursday I'll make sure to release part 2, which will have the remaining 13 lessons! What have you learned from behavioural economics so far?

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