Behavioural Science is a rapidly expanding field and everyday new research is being developed in academia, tested and implemented by practitioners in financial organisations, 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 Susan Thorp.
Susan is Professor of Finance and Associate Dean Research at the University of Sydney Business School. She researches consumer finance, focusing on retirement savings. She uses theoretical, empirical and experimental techniques to test consumer responses to advice, disclosures and choice architecture. Her research has been published in leading international academic journals including Management Science, the Review of Finance and the Economic Journal, and has attracted over four million dollars in public and industry funding. Susan is a member of the Steering Committee of the Mercer CFA Institute Global Pensions Index, a member of the Research Committee of the OECD/International Network on Financial Education and a Director of Super Consumers Australia.
Who or what got you into behavioural science? Strangely, it was ‘word association’ that got me into behavioural finance. Life-cycle finance, that I was (and still am) researching, is replete with individual, impactful “choices”. The standard finance models assume that people decide by solving complex stochastic optimal control problems, but I wanted to understand how people really made those choices. Providentially, Jordan Louviere, legendary choice modeller and Marketing professor was teaching a course on “choice” modelling at my university. I joined in, hoping for insight into personal financial choices. I found the mix of economics, psychology, experimental design and statistics was intriguing, and Jordan turned out to be a very generous mentor.
What is the accomplishment you are proudest of as a behavioural scientist? And what do you still want to achieve? I think that accomplishment would be contributing research that has motivated regulators and financial service providers to move beyond ‘disclosure’ as the best consumer protection tool. Research from our teams has influenced policy and practice, particularly around retirement savings. A related accomplishment is being part of the expansion of finance methods to include experimental and survey-based techniques.
In terms of future achievements, there are so many important problems to study, but I’m focusing on the particular vulnerability of financial well-being to cognitive and physical aging. This will take us deeper into collaborations with psychology, public health and sociology.
If you weren’t a behavioural scientist, what would you be doing? I’d probably be trying to solve stochastic optimal control problems.
How do you apply behavioural science in your personal life? Behavioural science is especially useful in thinking about how incentives, frictions and nudges can help tilt people towards any set of better outcomes. It helps with everything from assessment design in university coursework to managing faculty budgets. It’s also useful for recognising when I’m being manipulated – like why it’s so hard to “unsubscribe” or to un-check the default travel insurance box on the booking sites.
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 behavioural scientists need a thorough grasp of the fundamental rational models in their field so that they can frame the innovations that we need to better explain the complexity of the real world. Then we need open minds, patience, and respect for our colleagues’ disciplines so that we can work together to bring together different theories and methods. But most of all, we need to find people and their behaviour interesting! How do you think behavioural science will develop (in the next 10 years)? I think that the evolution of behavioural science as mainstream will continue - that behavioural approaches will not be positioned as limited ‘critiques’ of conventional modelling.
What advice would you give to young behavioural scientists or those looking to progress into the field? Find the people whose work you find inspiring, and whose values you share, and work with them. Which other behavioural scientists would you love to read an interview by? You, Merle 😉
Thank you so much for taking the time to answer my questions Susan, and you do flatter me - but I'm not sure that I fit the list yet of an interesting behavioural scientist, yet.
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!