Behavioural Economics 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 series (a collaboration between Etinosa Agbonlahor and Merle van den Akker) features 12 behavioural economists and behavioural scientists whose work and research is at the forefront of the field. In today's interview the answers are provided by Nattavudh (Nick) Powdthavee. Nick Powdthavee is a professor of behavioural science at Warwick Business School. Moreover, he is also the author of The Happiness Equation: The Surprising Economics of Our Most Valuable Asset and How Happiness Works. He really does love writing, Nick is also a columnist for ThaiPublica and The Momentum in Thailand.
Who, or what, got you into Behavioural Economics?
It was Andrew Oswald who first got me interested in the economics of happiness back in 2001, and from that my interest for its close cousin — behavioural economics — kind of grew from having done a lot of research into what makes us happy (and why we are not as happy as we would like to be). Basically, I thought that behavioural economics will be able to provide me with an even deeper insight into why we make systematic mistakes when it comes to choosing what is good for us in the long-run.
What is the accomplishment you are proudest of as a Behavioural economist?
My paper on “Would you pay for a transparently useless advice?”, which was published in the Review of Economics and Statistics. I got the idea from watching a Derren Brown’s TV special called “The System”. Co-written with my Yohanes Riyanto, we found that people are willing to pay for predictions of future coin flips — just because they saw a streak of correct predictions.
If you weren’t a behavioural economist, what would you be doing?
I’d love to be a stand-up comedian, but I’d never be smart enough to do that.
How do you apply behavioural economics in your personal life?
One of the behavioural economic principles that I’ve tried to apply in my daily life is to not let the fear of regretful action dominates my decisions. This is the idea that most of us tend to think we’d regret making foolish actions — i.e., doing something and it turned out badly — more than foolish inactions — i.e., not doing anything at all and find that it was a mis-opportunity. This thinking can lead us to choose not do a lot of things we’d like to do in our lives for fear of embarrassment. But we know from studies that we tend to regret “not” doing the things we wanted to do in the past, e.g., seeing enough of our friends and family, etc., much more so than the things we did. This is because we can always rationalise the things we did but turned out badly. However, it is much harder to rationalise things that never happened because we chose not to let it happen.
With all your experience, what skills would you say are needed to be a behavioural economist? Are there any recommendations you would make?
The ability to be openminded and to be kind.
How do you think behavioural economics will develop (in the next 10 years)?
I believe that researchers in our field will start to collaborate more with researchers from the natural sciences in an attempt to solve many of the world’s problems that today might seem unsolvable — like climate change, for example.
Personally I think Nick would make a cracking stand-up comedian, but given that he is a great behavioural economist, we won't advice him to throw the towel in yet. Thanks Nick! Want to read more? The previous interview was done with Andrew Oswald, and the next one will be done with Robert (Bob) Sugden. Want to get a more business-focus viewpoint for BE? Etinosa has done the same interview with BE practitioners in business, read those here.
