- Idea Lounge
- A Huge Win for Behavioral Economics
At Fresh Squeezed Ideas, we were thrilled to hear that US Academic Richard Thaler has won the Nobel prize in economics for his pioneering work in Behavioral Economics.
Behavioral economics incorporates the study of psychology into the analysis of the decision-making behind an economic outcome, such as the factors leading up to a consumer buying one product instead of another. Richard Thaler is particularly well known for his work on “nudge theory”, a term he coined to help explain how small interventions can encourage individuals to make different decisions.
There is an abundance of emerging evidence that Marketing best practices have been built upon a number of beliefs about human behavior that are not necessarily true or reliable:
• That a customer’s stated preferences are stable over time (they are not)
• That their choices are made based on personal taste (much less than you think)
• That people can accurately predict what they need in the future (they can’t)
Increasingly, marketers are beginning to understand why stated intention and behavior often don’t align. Behavioral Economics shines a spotlight on the sources of misalignment, and informs improved go-to-market strategies.