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 Joe Wiggins. Joe has worked in the asset management industry since 2004, and is currently employed as Director of Liquid Markets at a major asset owner. He has an undergraduate degree in Sociology and, in 2016, completed an MSc in Behavioural Science at the London School of Economics, for which he was awarded the Brian Abel-Smith Prize for outstanding performance. Since 2017 he has written the blog behaviouralinvestment.com, which focuses on all aspects of investor behaviour and decision making.
Who or what got you into behavioural science?
I have always been fascinated by people. I studied Sociology as an undergraduate, not because I had a particular career in mind (I had no idea what I wanted to do with my life) but because I was interested in the subject. I then fell into a career in investment management because that was the job I happened to get from the broad array I applied for (in a parallel universe I am probably a copywriter for an ad agency).
Working in investment and having a degree in Sociology I was something of an oddity. Whenever it was mentioned it was treated with disdain – “why are you worrying about people, when you should be thinking about economic models? Shouldn’t you be a social worker?” But actually, it was incredibly helpful. It allowed me to view the world through an entirely different lens to most other people.
The gap between behavioural science and sociology is narrow. One is focused on individual behaviour and the other the behaviour of groups, there is a huge amount of crossover.Knowledge of both subjects is essential to understanding financial markets, which at their core are about the decisions of individuals and groups.
The first person I read who directly linked behavioural science / psychology with investment was someone called James Montier. He was an investment strategist who focused on behaviour and often the reasons why investors made terrible decisions. His work shone out like a beacon from the standard investment fare, which is typically people failing to forecast financial markets.
As my attempts to apply behavioural concepts to my day job developed, I decided to pursue some more formal qualifications. So, I took a Master’s Degree in Behavioural Science at the London School of Economics, which was a relatively rare course at the time.
Shortly after completing that I started my blog.
What is the accomplishment you are proudest of as a behavioural scientist? And what do you still want to achieve?
I think it is my blog. I see the purpose of it as twofold. To help me think through ideas (I find writing really useful for this) and to help people make better investment decisions. The cost of behavioural mistakes in investing is huge and can have profound implications for peoples’ lives. If I can reduce these in some small way I would be delighted.
If you weren’t a behavioural scientist, what would you be doing?
I would say that if I wasn’t working in investment, I would be a behavioural scientist!
How do you apply behavioural science in your personal life?
It is usually in my hapless attempts at good parenting. I actually experienced a great example of behavioural concepts being played out in everyday life recently.
My son, who is ten years old, had a football match. His coach put GPS trackers on all of the players to monitor how far they had run during the match.
When I saw my son after the match I asked him how he had got on, he said: “Great, I ran 6km”, so I said: “That's good, but what was the result of the match?”, to which he replied: “Oh, we lost 7-0”.
There are two incredibly important and related behavioural drivers here. What’s measured is what matters and incentives drive behaviour.
In many cases to understand behaviour, you just need to know what the incentives are.
With all your experience, what skills would you say are needed to be a behavioural scientist? Are there any recommendations you would make?
Be open-minded, be healthily sceptical and be interested in why people do the things they do. (A basic understanding of statistics is also helpful).
How do you think behavioural science will develop (in the next 10 years)?
This has already started, but there will be a move away from identifying biases. To develop as a discipline it needs to be about more than finding an interesting anomaly and then publishing a paper about it, particularly if it doesn’t replicate or only appears in a particular environment.
Behavioural science will become far more nuanced and not just an increasingly long list of biases and nudges. There is likely to be far more debate around the context of our behaviour – why we behave in certain ways in certain environments – and whether behaviour that has been labelled irrational, is actually rational when viewed through a different lens.
One area I would like to see receive more attention is how emotions impact our behaviour. There has been some great work on this by people like George Lowenstein and Paul Slovic, but it often seems to be treated as a tangent to core behavioural science. I think how we feel is often the dominate driver of the choices we make.
What advice would you give to young behavioural scientists or those looking to progress into the field?
Keep your interests as broad as possible for as long as possible. The best behavioural science is a synthesis of a huge range of subjects – psychology, sociology, economics, neuroscience, statistics and plenty more. There is no need to specialise too soon.
Which other behavioural scientists would you love to read an interview by?
I am going to cheat and give three people, none of whom are behavioural scientists and, probably, all of whom would hate to be labelled as such:
Ole Peters – a fierce critic of aspects of behavioural science and the man who has made the concept of ergodicity (relatively) popular. This is the idea that in many areas the average outcome of a group is very different to an individual through time. This is why playing Russian roulette on your own is a bad idea! It is a quite complex topic, but has ramifications for many ideas in behavioural science.
Gerd Gigerenzer – Often seen as the anti-Daniel Kahneman (an unfair characterisation). Gigerenzer has long been an advocate of the use of fast and frugal heuristic to make decisions.
Charlie Munger – Warren Buffett’s sidekick and the man who has applied psychology to investing better than anyone else.
Thank you so much for taking the time to answer my questions Joe, always nice to have a fellow blogger on!
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!