Behavioural Science is a rapidly expanding field and everyday new research is being developed in academia, tested and implemented by practitioners in financial organisation, development agencies, government ‘nudge’ units and more. This interview is part of a series interviewing prominent people in the field. And in today's interview the answers are provided by Ian Bright.
Ian completed degrees in economics at the University of Melbourne, Australia and the Australian National University and worked as economist in the Australian Public Service in the 1980s before travelling for a year. After that he took up a positon in working as an economist covering financial markets in Australia before immigrating to London in 1990 where he continued to work as an economist for Barings Bank and then Baring Asset Management until 2003. He then worked in a variety of roles covering financial markets in Asia before he joined ING Bank in 2009 with the role of setting up projects that helped to understand, explain and publicise how people make financial decisions. This inevitably led to a substantial amount of work associated with behavioural science. The aim of these projects was to help improve the bank's understanding of consumer decisions making when it comes to money. Ian left ING in February 2021. His main research interests have been, and continue to be, in pensions and personal finance although he has been known to annoy many with his refusal to have his interests pigeon holed.
Who or what got you into behavioural science?
In 2009, I was hired by ING to build a global version of a programme that had been successful in the Netherlands economics department. Instead of concentrating on financial markets, that programme focused on how economic developments, such as inflation and changes in government budgets, affected people’s lives. This approach worked well at a national level because it had direct relevance to well-defined groups with common concerns. It was more difficult to translate to an international product because the concerns and experiences of people in different countries vary. However, one topic that was common across countries was understanding how people made decisions about money. For example, understanding why many people delay adjusting their spending and saving when economic conditions around them changed or why they do not change banks when offered higher interest rates elsewhere. Behavioural economics offered some explanations. As a result, a website (eZonomics) was set up that explained ideas from behavioural economics – such as procrastination and inertia - that were relevant to how people manage money. Each article was targeted at a retail banking audience, so was written in a non-academic style while maintaining accuracy with the original research. One of the best decisions I made at that time was to employ a professional journalist (the marvellous Martha McKenzie-Minifie) to run the website and write most articles. The eZonomics website eventually migrated to the consumer section of the ING Think website. We also set up a European survey of consumer attitudes towards money and banking.
The timing was fortuitous. 2009 was a time when behavioural economics was being popularised. The books Nudge and Predictably Irrational were published only a year earlier.
What is the accomplishment you are proudest of as a Behavioural scientist? And what do you still want to achieve?
I don’t consider myself a behavioural scientist. I think of myself as a practitioner in financial markets that uses a variety of tools picked up over nearly 40 years working in banks, asset management companies, brokers and public service. The accomplishment I am most proud of, even though it forms only a small part of what I have done professionally, is my work as a pension trustee over the past nine years. By melding behavioural and hard finance, I was able to introduce an understanding of the differing requirements of members with defined contribution pensions and those with defined benefit arrangements. As to what I still want to achieve, see my comments later about integrating data science and behavioural science.
If you weren’t a behavioural scientist, what would you be doing?
I would probably have continued working as a “standard” economist in a brokerage firm, asset manager or pension consultant.
How do you apply behavioural science in your personal life?
I have always been risk averse when it comes to money. I suspect this comes from a family background of never being in need but knowing that money was tight. This risk aversion has proved useful for me. For many years I followed a tough budget regime forcing myself to save into my pension before spending. I also had mental images of the person I wanted to be in the future. Having moved on a few years and met my once-future self, I continue to review the pictures of my next future self. More recently, I have forced myself to place frictions in the way I use Twitter so that I use it less. I find the information on Twitter useful but the app in particular, as opposed to the website, is designed to be addictive. As a result, I removed the app from all my mobile devices and set up two factor identification on one device only. I can access Twitter using desktop mode but have to jump few hurdles.
With all your experience, what skills would you say are needed to be a behavioural scientist? Are there any recommendations you would make?
I think the most important is a willingness to question why others may think and act differently to you. You then need to apply some ways to assess whether they have good reasons for their opinions and actions. I fear there is too much of an approach in behavioural studies to assume people make the “wrong” decision, instead of trying to figure out how people think. They may have very good reasons for making a decision or acting in a way that you do not expect. This is difficult. You are constantly challenging yourself. You must develop good communication and observation skills. Increasingly, you also need good knowledge of data, statistics and experimentation techniques to allow yourself to assess whatever evidence you can gather. These observations are not restricted to behavioural economics. The work of mainstream economists such as Esther Duflo and Dani Rodrik seem to suggest similar things.
A very important aspect in working in industry is to understand what management in the company wants when it comes to using behavioural approaches. Be careful about being dragged into a quasi-marketing role.
How do you think behavioural science will develop (in the next 10 years)?
Three ideas.
First, it will become less confident in its body of knowledge. The replication crisis is part of this necessary change, but it extends to the way we think about issues and the relative importance of behavioural compared with other explanations. For example, I find it insufficient to emphasise behavioural approaches to helping people save when a key element for many is that they simply do not have enough income. The key issues here are associated with macroeconomics and income distribution rather than behaviour.
Second, the field will become even more data and evidence driven. Jeroen Nieboer and Patrick Welsh have summarised the necessary future very well in this blog post. Matthew Salganik’s book Bit by Bit is also useful to help think about these issues. In particular, research that incorporates surveys of consumer attitudes with administrative or transactional data to form hybrid data sets will become both more useful and more prevalent. An increasing amount of work is being released where researchers and/or regulators co-operate with banks, other financial institutions , online companies and social media groups. When it comes to personal financial behaviour, the relatively new field of household finance (JEL code G5) in economics is pioneering in this approach. The CEPR Network on Household Finance and its biweekly presentation of papers is well worth following. I consider research in this field has much to offer behavioural science.
Third, there probably will be greater study of decision making in groups rather than as individuals. More extensive work needs to be done to incorporate aspects of network theory.
Which other behavioural scientists would you love to read an interview by?
May I suggest three? First, Jason Collins. He thinks deeply, writes clearly and is not afraid to challenge orthodoxy. Second, Phil Newall. He is the most interesting person I have heard speak about and take action on behaviour and gambling. Third, I always love to hear from my former colleague Nathalie Spencer.
Thank you so much for taking the time to write down these amazing answers Ian. I will make sure to reach out to your suggestions, but the interview with Jason Collins has already been published here.
As I said before, this interview is part of a larger series which can also be found here on the blog. Make sure you don't miss any of those, nor any of the upcoming interviews!
Keep your eye on Money on the Mind!
