Three Problems with Behavioural Economics
Behavioural Economics has become accepted as fact by some people in the market and social research world. I am not one of those people.
I have three problems with it - to be fair I should say 'problems with applied behavioural economics':
1. The home of Behavioural Economics is the laboratory.
Grand statements about the biases that sway people's thinking - like loss aversion - come from experiments in which people sitting on their own in some laboratory had to make choices based on one or two manipulated variables.
- Sometimes the experiments use so-called 'games' in these experiments. How people respond to laboratory experiments which are entirely context-free versus how people live and act in the real world are totally different things. Why? For one, in the real world people copy each other. They do what other people do. That is not a bias; it's efficiency.
- Actually, that's not the worst part. The worst part is that we don't know what people in laboratory setting are thinking. Just because the experimenter has reduced the experiment to two variables does not mean the experimental subject has done the same. They could be thinking anything.
2. It assumes that everyone is the same the world over.
We are researchers. We understand how people differ and how cultures differ. We should never assume that the results of experiments conducted with undergraduates in north American universities apply to every person and every culture. That kind of 'universalist' thinking is counter to everything we believe, surely? Otherwise, what is the point of what we do?
3. There is no evidence to demonstrate behavioral theory interventions are genuinely effective in real world settings.
Many of the 'interventions' based on Behavioural Economics insights have not worked, nicely summarised in this debate article on Bio Med Central.
What am I saying here?
I am saying that researchers should treat the 'insights' and findings from Behavioural Economics with scepticism. Many of them are probably right in certain contexts or situations. One of our roles as researchers, perhaps, is to figure out what these contexts and situations are.
At Susan Bell Research, we have taken a different track; we are interested in the active way that people make sense of the information available to them at the time. We call this 'sense-making'.
Some reading for anyone who wants to follow my thinking with thanks to @emmetatquiddity for alerting me to these