How to Sell the Serious Stuff to Homer Simpson
During the last 40 years significant scientific progress has been made in uncovering the irrational psychological factors that systematically influence Humans – whether acting as citizens, colleagues or consumers. The practical result is the new applied scientific discipline of ‘nudging’ that delivers a more detailed understanding of human choices, routines and habits; a discipline that allows us to go beyond marketing as we know it and sell the serious stuff with much greater success.
- By: Pelle Guldborg Hansen
- Published: 02-06-2015
You probably remember buying something you later came to regret. Perhaps a candid sales person or add put you in a hot state making you think that you could dance like Elvis, or get longer legs by buying that dishwasher.
Duh! – How stupid was that?
Likewise you probably regret something you didn’t do or haven’t done, but you know you should have done a long time ago. But whether it is loosing that barrel of fat tied around your stomach, or calling your Grandma more often, you just can’t seem to get into that same hot state, at least not for long enough, to get up from the couch and do those little trivial things that would make your life better.
Duh! How stupid is that?
It seems there’s a bit of Homer Simpson in all of us.
Uncovering Homer Simpson
During the past 40 years a scientific movement known as Behavioral Economics has uncovered the mechanics of the Homer Simpson that lives in all of us. With the help of cognitive and social psychology, and using micro-economic decision theory as a null-hypothesis, it has not only put structure to effects well known by marketers, e.g. hot-state-cold-state buying as studied in terms of self-regulation, or charm-prices ($9.95) as studied systematically in terms of the ‘left-digit-right-digit effect’. It has also uncovered the more complex features of human psychology, such as decoy effects, hyperbolic discounting, and mental accounting – effects that has hitherto remained vague in the mist of marketing… although few marketers like to admit (… anything). (To learn more about behavioral economics I suggest reading, Psychologist and Nobel Laureate in Economics, Daniel Kahneman’s brilliant Thinking, FastandSlow and behavioral economist Richard Thaler’s Misbehaving.)
Nudging is the science of working with these systematic deviations from the path of rationality – psychological effects that should not matter in principle, but does in praxis – to influence human behavior. More technically, a nudge is a function of any attempt at influencing people’s judgment, choice or behavior in a predictable way, that is (1) made possible because of cognitive boundaries, biases, routines, and habits in individual and social decision-making posing barriers for people to perform rationally in their own self-declared interests, and which (2) works by making use of those boundaries, biases, routines, and habits as integral parts of such attempts. This means that nudging is everything that goes beyond fiddling with options and prices in the attempt to influence human behavior under the assumption that humans are perfectly optimizing consumers – and psychological association e.g. by brand or picture is considered the more trivial and least interesting within this perspective.
(To learn more about nudging I suggest reading Richard Thaler and Cass Sunstein’s book Nudge: Improving Decisions About Health, Wealth, and Happiness that gave the discipline its popular name. The notion of nudging is often misunderstood by laypersons who have even read this. To get it right, I suggest reading my ‘Nudging er ikke kærlige puf’ (in Danish), or my ‘Nudge and Libertarian Paternalism: Does the Hand fit the Glove?’ Forthcoming in The European Journal of Risk Regulation)
Take the decoy effect
Pit yourself in a café with a beautiful date being presented the choice between burger and chicken. You and your date both choose burger. The waiter then leaves with your order, but a few seconds later he returns excusing that he forgot to tell you that you could also have chosen salmon. Now, imagine your date says, “Well, then I would like to change my order… I’ll have chicken.” That would not only be weird. It would also be irrational in the sense that it would violate Sen’s Alpha property for the axiomatization of rational choice: an irrelevant item you would never choose reverts your preferences over two items of consideration.
Duh! How stupid is that?
But people do actually bend to the decoy effect – and in recurring situations we seem to have an intuitive grasp of this. At least, the frequent partygoers that always seem to bring an ugly version of themselves to parties suggest this. It might be a moment of disappointment when the host opens the door, but as studies has shown, it does make one look much more attractive when accompanied by an ugly version of yourself. (So if you’re single you should perhaps consider bringing your mother or farther to the next party.)
However, a situation that might be frequent to one person – say, the salesman in an electronic store – might be infrequent to another – say, the consumer. Thus, the decoy effect has found its way to arrangements of DVD players, television sets and laptops in electronic stores, where a suboptimal version – a decoy – is placed next to the item that the seller really wants to sell as well as to the arrangements of subscription packages on the Internet, where certain mediocre packages exists merely to create it. Marketers have intuitively grasped that nudging may be a powerful instrument to nudge the Homer Simpson inside consumers into buying stuff.
So what’s new about nudge?
This is where the routine marketer always interrupts me and says: “Well, interesting. So I’ve been ‘nudging’ for 50 years, and now I have a word for it.”
But though these ideas are already floating around in marketing, it doesn’t show that marketers already know everything there is to know in their domain. Ideas may flow and spread without knowledge; knowledge of how they work, what makes them work, and who came up with them. Always believing that you know best is also a feature of Homer Simpson – a feature that prevents learning anything new, but makes you feel great.
Duh! How stupid is that?
So what’s new about nudging? Well, first of all nudging puts the Homer Simpson of consumer behavior at the center of the universe, rather than people’s rationalized self-portrayed perceptions as studied by questionnaires, in-store interviews, and focus groups. It provides a concept to study effects that consumers themselves find hard to grasp and uneasy to admit.
Second, it does this with newfound scientific rigor that only take intuitions as the starting point from which to approach data collection through experimentation. As a result the applied scientific discipline of ‘nudging’ – or Applied Behavioral Science as it is properly called – is currently in the process of developing a more detailed understanding of human choices, routines and habits than we have ever had available before. For instance, it turns out that not only is the decoy effect merely one out of several hundreds so-called ‘cognitive biases’. It also comes in at least as many varieties as Snow-white has dwarfs.
Third, and perhaps most importantly, the science has evolved to the point where it now allows the marketer to better understand the “why” of failure; especially when it comes to selling the serious stuff – the stuff that makes a better world.
Login to read the rest of the article...
Pelle Guldborg Hansen
Pelle is the behavioral researcher and Chief Executive at iNudgeyou. Pelle holds a PhD in Game Theory from Roskilde University, and his primary research is on social processes, norms, and coordination from a game-theoretic perspective. Since 2009 he has applied this knowledge to the making of various forms of choice- and behavioral architecture in public policy with a special emphasis on how to use Nudge as a means to behavioral change.