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 interview is part of a series interviewing prominent people in the field. And in today's interview the answers are provided by Rory Sutherland.
Rory is the Vice Chairman of Ogilvy, and has co-founded a behavioural science practice within the agency. Before this, Rory was a copywriter and creative director at Ogilvy for over 20 years. Before his life-changing (for many of his fans) career at Ogilvy, Rory has been President of the IPA, Chair of the Judges for the Direct Jury at Cannes, and has spoken at TED Global. He is also an author. having written: 'The Wiki Man', (Amazon prices reaching £2,345.54, depending on whether the algorithm is having a bad day), and the newly published 'Alchemy: The Surprising Power of Ideas That Don't Make Sense.' Let's hear it from this powerhouse!
Who or what got you into Behavioural Economics?
I was a classicist at university, but for various reasons – my brother is an astrophysicist – I spent much of my time hanging out with mathematicians. I had taken Maths as one of my A-levels, too, and have always been fascinated by statistics.
But I have also long been fascinated by the relationship between statistics and psychology – how people will hastily contrive fairly simplistic explanations for statistical phenomena and then, once having post-rationalised them to their own satisfaction, will spend very little effort looking for alternative or complementary explanations.
I remember once an occasion where a direct mail campaign worked very well in London and very badly in Edinburgh. One explanation – the favoured one – was that there had been more mass media support for the campaign south of the border. A colleague of mine (who was from Edinburgh) maintained that the explanation was cultural – that a free offer aroused far more suspicion among Scots than among the English. Of course either explanation could be true – or indeed both or neither. But it suited the interests of the advertising department to believe the former explanation – and so that became official doctrine.
Business is awash with confirmation bias – almost as much as academia. The great strength of business is that it pays you to change your mind when new findings emerge. In other fields it is generally career destroying.
In my early days in advertising, I used to refer to "That thing which has no name". So frequently was I confronted with results to experiments in marketing which bore no semblance of standard economic logic, that I was convinced that there was a wholly missing science, yet to be created, to explain why behaviour so frequently defied conventional rationality.
About ten years later, through becoming addicted to science and economics blogs, I finally discovered that there was such a science, and that a book was about to be published in the US called Nudge. I ordered it from Amazon.com via FedEx, making me one of three people in Britain to read it on the date of publication.
The other two were the Prime Minister, David Cameron, and his then advisor, the brilliant Rohan Silva, who had recommended it to him.
So, as with so many things (Robert Frank would be proud of me for saying this) I attribute my strange role as Britain’s leading Behavioural Science impresario to a mixture of good luck and good timing.
What is the accomplishment you are proudest of as a Behavioural economist?
The most important role to date has been in helping to encourage the UK government to adopt a wait-and-see approach to e-cigarettes, when the instincts of the establishment were to ban them. I have been called the Walter Raleigh of vaping.
The explanations as to why people smoke (largely advanced by non-smokers in the healthcare industries) always struck me as fairly banal. Anyone like me who has actually smoked knows that it is as much a habit as an addiction. Moreover the interesting property of nicotine in tobacco smoke is that – depending on how you inhale it – it acts as either a stimulant or a relaxant. All smokers unconsciously learn to use a cigarette to achieve both effects.
It struck me that a technology which aped the delivery of a cigarette, without the noxious chemicals produced by burning leaves, might be a breakthrough in smoking cessation – something to be welcomed rather than feared.
I also knew enough behavioural science to spot that people who had devoted their lives to encouraging outright quitting would instinctively hate the idea of an alternative developed by entrepreneurs rather than by health specialists. So behavioural science allowed me not only to predict that vaping might be valuable in helping people quit – it also helped me predict that there would be a knee-jerk urge among health specialists to ban the technology before open-mindedly asking what benefits it might bring.
If you weren’t a behavioural economist, what would you be doing?
Advertising is essentially anthropology for greedy people. I would still be working in the field, but with no useful framework on which to hang findings and ideas. I think by now I would have become mildly cynical and depressed.
But the other field which fascinates me most is evolutionary psychology. I regard evolutionary psychology as an essential sounding-board to use alongside behavioural economics. For instance, some human traits – a love of foods with a high glycaemic load, say – may have evolved for a different environment, and so be undesirable in a world of abundant refined sugars. (Darwin 0, Thaler 1).
On the other hand there may be cases where evolution is simply better at maths than economists are: some recent work in ergodicity economics – you should interview Ole Peters, perhaps – suggests that in a non-ergodic environment (such as, um, real life) loss aversion and sunk-cost bias may not be irrational at all. (Darwin 1, Thaler 0).
The most interesting cases may be those where the underlying instinct might be innate, but the means by which it is expressed can vary, and can vary between socially beneficial and socially harmful expressions. Status seeking may be one fascinating challenge of this kind. I can’t envisage a world in which people are unconcerned by being held in low esteem by others, but I can envisage a world in which high esteem is better obtained by owing a Tesla than a Porsche Cayenne.
How do you apply behavioural economics in your personal life?
I'm still married. So something seems to work. But I’m still fat, too. Like George Lowenstein in your earlier interview, my success in applying behavioural science to overcome emotional predispositions seems rather mixed.
Actually I do believe that time restrictive diets – the 5:2 diet (fasting two days a week) or the 16:8 diet where all your eating takes place within a tightly defined 8-hour window of the day – do work, and represent a significant behavioural advance over calorie-counting. They are one of the field’s proudest successes. Indeed, whenever I have tried them, they work on me. But my working life is too much of a mess to make it easy to adhere to them. But this year, maybe, just maybe!
With all your experience, what skills would you say are needed to be a behavioural economist? Are there any recommendations you would make?
Breadth of curiosity. There is no substitute for this. David Ogilvy described one of the hallmarks of a good copywriter as being “an extensive browser in all kinds of fields” and the same applies to this field. Many of the best practitioners have weirdly disparate backgrounds.
But it also helps - a hunch of mine - to suffer from mild dyspraxia, or some other form of non-neurotypical affliction. I am weirdly disfunctional in many ways, and find everyday routine activities oddly exasperating, which makes me highly attuned to bad experience design, and more likely to notice the environmental causes of action or indeed non-action.
People with mild physical disabilities or people who are not neuro-typical are often of disproportionate value in design and social science, since they perceive things which pass ordinary people by.
How do you think behavioural economics will develop (in the next 10 years)?
It will form part of a wider movement to improve decision-making in business, policy-making and everyday life through a new approach to economic thought. (see below).
Which other behavioural economists would you love to read an interview by?
Ole Peters, Nassim Taleb and those other physicists who are starting to find flaws in economics on mathematical or statistical - as distinct from anthropological - grounds. And perhaps Sir Paul Collier or Steve Keen. It is essential that those people who have spotted the harm done by too narrowly cleaving to economic assumptions form a broad coalition – whether their objections are mathematical, empirical, epistemological or ethical.
Thank you so much for doing the interview Rory! Thanks especially for the in depth and long answers, I'm sure they'll give many others a deeper insight into the interaction between marketing and behavioural science :D 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!