Why Behavioural Economics?

Written by Martin Lucas

Being grounded in the present helps you to understand what caused us to get this moment in time based on past human activity and equally what that will mean for tomorrow’s world. The fundamental aim of behavioural economics is to predict the future using past behaviours as a guide.

If, for example, there is a vast reduction in traditional TV viewing figures and a dramatic year-on-year increase in streaming services, then you can safely predict that in the next decade we will see a shift from TV channels to more new viewing technologies such as Virtual Reality (plus more dominance from Netflix and Amazon et al). The future of advertising is going to continue to vastly shift, as is the experience of the consumer. What should you do to prepare for this?

You could also look at the rise of obesity in the world and see that it’s become the #1 health problem for humans, replacing starvation. There is no end in sight and the rise of palm oil and other fake human-made ingredients is going to bring even further destruction to human health. The future of food consumption is going to be purer organic diets vs manmade unhealthy diets. 

This is also where the idea of nudges comes from. It is how we architect choice and make positive change and experiences easier to navigate and influence. A celebrate example: Guys often pee on the ground below urinals, so if you put in a fake fly in the urinal, it acts as a target and guys will aim for the fly and thus - tada! - no more pee on the ground. Little nudges to existing behaviour create effective change. Nudge theory is awesome. It’s taking an understanding of common behaviours - generally unconscious behaviours like the peeing example - and then giving a solution to change the masses to a better way of doing things.

Our focus is to create choice architecture that improves buyers journeys. It is often the simplest change in a process to then see engagement and metrics take off.