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Research and Resources

Behavioral Economics in the News

Videos

Test Yourself

Books to Read

Applied Behavioral Research

Policy Proposals

Links

Behavioral Economics in the News

• Obama Adopts Behavioral Economics. Nudging, not commanding, companies and consumers to do thrifty and healthy things is a White House priority. Businessweek, 2010.
• Behave Yourself. The Obama Administration is weighing rules that rely on this idea: By giving consumers more information (or simplifying their choices), they can be led in directions the government favors. Businessweek, 2010.
• Why Behavioral Economics Belongs in the Lunchroom. In addressing America's obesity epidemic, there is a role for smaller-scale innovation that plays on individual eaters' psychology. The Atlantic, 2010.
• What's cooler than a child-care tax credit? Obama’s opt-out IRA. President Obama and Vice President Biden laid out a package of middle class incentives and proposals Wednesday, including a child-care tax credit increase. Christian Science Monitor, 2010.
• Sunstein and Thaler are named 7th on Foreign Policy Magazine's top 100 global thinkers for taking "behavioralism from niche to necessary". Foreign Policy Magazine, 2009.
• Text Messages: Bad 4 Grmr, Good for Savings. A new study conducted by a group of economists found that simply texting people and reminding them to save money increased their savings-account balances by 6%. Wall Street Journal, 2009.
• Why Your Brain Can't Always Make Good Decisions. We all make bad decisions sometimes. In some contexts, to a certain extent, psychologists know why. CNN.com, 2009.
• How Behavioral Economics Can Help Change the Fight Against Poverty. All of us face difficulties in making the right choices; the poor are just asked to do it more often and in tougher circumstances. SEED MAGAZINE, 2009.
• A One-Size-Fits-All Solution. While the causes of the mortgage crisis are myriad, a central problem was that many borrowers took out loans that they did not understand and could not afford. New York Times, 2009.
• Consumer-Goods Makers Heed 'Paycheck Cycle'. Makers of household goods and food are paying more attention to the "paycheck cycle" as cash-strapped consumers are showing a tendency to make their largest purchases when their salaries first come in and to cut back as that money runs out. Wall Street Journal, 2009.
• The Death of 'Rational Man'. What allowed some people to see the financial crash coming while so many others missed its gathering force? Washington Post, 2009.
• Study Sees an Obama Effect as Lifting Black Test-Takers. This article gives a real life example of how “identity priming” plays a role in academic achievement. A performance gap between African-Americans and whites on a 20-question test administered before Mr. Obama’s nomination all but disappeared when the exam was administered after his acceptance speech and again after the presidential election. New York Times, 2009.
• How Did Economists Get It So Wrong? Paul Krugman argues that most economists turned a blind eye to the limitations of human rationality that often lead to bubbles and busts; to the problems of institutions that run amok; to the imperfections of markets — especially financial markets — that can cause the economy’s operating system to undergo sudden, unpredictable crashes; and to the dangers created when regulators don’t believe in regulation. New York Times Magazine, 2009.
• Is Alfred Marshall Passe? How a young Harvard economist is challenging the traditionalists in his field. Forbes Magazine, 2005.

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Videos

A Short Course in Behavioral Economics
The Edge provides a series of short courses in Behavioral Economics. Speakers include Daniel Kahneman, Sendhil Mullainathan, Richard Thaler, Nathan Myhrvold, Paul Romer and many others.
Edge Master Class 2008 Richard Thaler, Sendhil Mullainathan, Daniel Kahneman discuss the irony of poverty Sonoma, CA, July 25-27, 2008

Inattentional Blindness (and the Gorilla)

While we may think that we're capable of taking in and analyzing all of the information around us, reality is often different. This video is a great example of our limited capacity to take in every aspect of our environment- especially when our attention is claimed by another task. The limits of our attention is not the real problem, however. The danger is that we often fail to recognize our attentional limits so that when something escapes us--even something as big and strange as a gorilla-- our first instinct may be to deny it, reject it, or come up with some other explanation. In this video, note the subjects initial response to the gorilla-- a wave of "no way!" "that didn't happen!" and "they must have switched the tapes!"

Asch Conformity Experiments

This classic conformity experiment first published by Solomon Asch in the 1950's documents the impact of group pressure on judgement and decision making. A few interesting notes to point out- viewers who conformed to the group often blamed their wrong answers on "poor eye sight" or some other factor that clouded their independent judgement. They did not mention peer pressure or the impact of others' answers.  I also think it's interesting how little it takes to negate the instinct to conform. The addition of just one person who gives a different answer (not even the right one) significantly increases the chances that the subject will go against the group and answer correctly.

Implicit Association and Race

What immediate yet unconscious associations do we hold about race and color? In this video Malcom Gladwell and Oprah discuss the Implicit Association Test developed by social scientist Novak, Banaji and Greenwald that measures our unconscious associations. (Gladwell, who is half white and half Jamaican takes the test and is unsettled when he discovers he has a "slight preference for whites".) Often when we see something- an object, a person, even a name, we make instantaneous basic and critical associations and judgments. At times, this is be helpful- a green piece of chicken should trigger the response: "unappetizing". But we may also make instantaneous judgements about people based on skin color. Like the gorilla video, above, part of the danger in this is that it's almost always beyond our conscious attention so we fail to recognize our faulty assumptions. Note in the video how shocked and embarrassed many of the subjects are by their test results. It's interesting to note, as Greenwald mentions toward the end of the video, that showing subjects images of African-American role models (like Oprah herself) right before they take the test actually increases people's positive association with African-Americans on the test. Wondering how you might do on test? Test yourself here.

Rory Sutherland: Life Lessons

I'm sometimes asked what behavioral economics is learning from marketing research. This excellent and entertaining Ted talk lays out some key lessons.

 

Race and Stereotype Threat

In 1968, Jane Elliot, a teacher in an all-white town in Iowa divided her class into brown-eyed and blue-eyed children to offer them a lesson in discrimination.  This excellent video documents how the children handled the segregation. While the entire series is fascinating, the part that interests me most, in terms of applying behavioral science, is minute 2:44 to minute 4:00 where you can see the "bad" blue-eyed children under preform on their reading exercises and the "good" brown-eyed children excel. This comports to the stereotype threat and positive affirmation literature. It is fascinating to see the psychological phenomena unfold before your eyes.

Interview with comedian Louis CK

Comedian Louis CK talks about the recent incredible advancements in technology. Although he doesn't use the term, it's an amusing take on the idea of reference points. Regardless of how fast and complex technology becomes, we adjust our expectations to the new norm-- often taking its speed for granted. "Is the speed of light fast enough for ya?" jokes CK. Actually, the speed of light is fine. Anything less? Painfully slow.

The Fun Theory: Piano Stairs

This interesting video looks at changing behavior by decreasing or changing tension systems. The people behind this project tried to change behavior not by force or fine but by rethinking the problem creatively and wondering, "Why aren't people taking the stairs? How could we make that action more palatable?"

More Fun Theory videos can be found here

 

Big Think Interview with Dan Ariely

Dan Ariely is the author of Predictably Irrational: The Hidden Forces that Shape Our Decisions and is the James B. Duke Professor of Behavioral Economics at Duke University.  In addition, Dan is a visiting professor in MIT’s Program in Media Arts and Sciences. He is currently working on a new book titled Dining Without Crumbs: The Art of Eating Over the Sink

Mental Bandwidth and Scarcity
Glenn Loury, left, of Brown University and Sendhil Mullainathan of Harvard University discuss new social science thinking about poverty.

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Test Yourself

Think you know how you would react in a given situation? Click the links below to test yourself!

• If we were truly rational actors we wouldn't have so much trouble closing off options when the maximizing thing to do is just shut the door and move on. You can test yourself here: 
  read: http://www.nytimes.com/2008/02/26/science/26tier.html
  test http://www.predictablyirrational.com/?page_id=117
• Our attention is limited. The things we may miss can be surprising. Test yourself here.

• What unconscious associations do you hold about race? You can test yourself here.
• Want to try out other visual tests? Click Here.

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Books to Read

Choices, Values and Frames by Daniel Kahneman and Amos Tversky.

Influence: Science and Practice by Robert Cialdini.

Influence: The Psychology of Persuasion by Robert B. Cialdini.

Judgment in Managerial Decision Making by Max Bazerman and Don Moore.

Nudge: Improving Decisions About Health, Wealth, and Happiness by Richard H. Thaler and Cass R. Sunstein.

Predictably Irrational: The Hidden Forces That Shape Our Decisions by Dan Ariely.

The Person and the Situation: Perspectives of Social Psychology by Lee Ross and Richard E. Nisbett.

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Applied Behavioral Research

Financial Behavior

• A Behavioral Economics View of Poverty.  Marianne Bertrand, Sendhil Mullainathan, and Eldar Shafir, 2004.
• Demand for rent-to-own contracts: a behavioral economic explanation. Brian J. Zikmund-Fisher and Andrew M. Parker, 1999.
• Diagnosing Consumer Confusion and Sub-Optimal Shopping Effort: Theory and Mortgage-market Evidence. Susan E. Woodward and Robert E. Hall, May 2010.
• Economic Research Using Laboratory Experiments to Investigate Behavioural Aspects of Savings Decisions. William G. Morrison and Robert J. Oxoby, February 2011.
• Getting to the Top of Mind: How Reminders Increase Saving. Dean Karlan, Margaret McConnell, Sendhil Mullainathan and Jonathan Zinman, April 2010.
• Human Capital and the Lifetime Costs of Impatience. Brian Cadena and Benjamin Keys, August 2010.
• Information Disclosure, Cognitive Biases and Payday Borrowing. Marianne Bertrand and Adair Morse, October 2009.
• Mental Accounting Matters by Richard H. Thaler.  Journal of Behavioral Decision Making, 1999.
• Myopic risk-seeking: The impact of narrow decision bracketing on lottery play. Emily Haisley, Romel Mostafa, and George Loewenstein, 2008.
• Policy Making Insights from Behavioral Economics Chapter 3: Household Savings Behavior in the United States provides information on the role of Literacy, information and financial education programs in changing the household savings behavior. Christopher Foote, Lorenz Goette, and Stephan Meier. Federal Reserve Bank of Boston conference volune, 2009.
• Save More Tomorrow: Using Behavioral Economics to Increase Employee Saving.   Richard H. Thaler and Shlomo Benartzi, 2004.
• Tying Odysseus to the Mast: Evidence from a Commitment Savings product in the Philippines. Nava Ashraf, Dean Karlan, and Wesley Yin, May 2006.
• What's Psychology Worth? A Field Experiment in the Consumer Credit Market. Marianne Bertrand, Dean Karlan, Sendhil Mullainathan, Eldar Shafir, and Jonathan Zinman, 2005.
• Yes We Can: Inclusive Saving at Tax Time. The D2D Fund, 2009.

Behaviorally Informed Communication

• A Shot in the Arm for Medicare Part D: Four Ways for the Government to Boost its Customer Communications. Marian V. Wrobel, Jeffrey R. Kling, Sendhil Mullainathan, Eldar Shafir and Lee Vermeulen, 2008.
• Behavioral Economics and Marketing in Aid of Decision Making among the Poor. Marianne Bertrand, Sendhil Mullainathan, and Eldar Shafir, 2006.
• Eating by Numbers provides a good synthesis of the different calorie-consumption impact studies on New York City's recent regulation of calorie listings at fast food restaurants. New York Times, 2009
• "Mad Libs" Style Forms increases in usage.The audio-sharing website, Huffduffer, found that if it asks the same questions in a typical sign-up forms in a "Mad Libs" Style conversion increased 25-40%. Mad Lib style presents input fields to people as blanks. Read Luke Wroblewski's post for more information.
• The Role of Simplification and Information in College Decisions.  Eric P. Bettinger, Bridget Terry Long, Philip Oreopoulos, Lisa Sanbonmatsu, 2009.  A short description of the paper and its findings can be found here.
• Self-Reports: How the Questions Shape the Answers. by Norbert Schwarz. American Psychologist

Identity and Perception

• Are Emily and Greg More Employable than Lakisha and Jamal? A Field Experiment on Labor Market Discrimination.  Marianne Bertrand and Sendhil Mullainathan, 2004.
• Identity-Based Motivation: Implications for Intervention. Daphna Oyserman and Mesmin Destin, 2010.
• "Math is Hard!" The Effect of Gender Priming on Women's Attitudes. Jennifer Steele, and Nalini Ambady, 2005
• Motivating Voter Turnout by Invoking the Self. Christopher J. Bryan, Gregory M. Walton, Todd Rogers and Carol S. Dweck, 2011.
• The "Obama Effect": How a salient role model reduces race-based performance differences. David M. Marx, Sei Jin Ko, and Ray A. Friedman, January 2009.
• Political partisanship influences perception of biracial candidates’ skin tone. Eugene M. Caruso, Nicole L. Mead, and Emily Balcetis, May 2009.
• Stereotype Susceptibility: Identity Salience and Shifts in Quantitative Performance. Margaret Shih, Todd L. Pittinsky, and Nalini Ambady, January 1999.

Social Judgment

• Do Defaults Save Lives? Eric J. Johnson and Daniel Goldstein, November 2003.
• In Support of the Supporters? Do Social Forces Shape Decisions of the Impartial? Thomas J. Dohmen, April 2003.
• Increasing response rates to postal questionnaires: systematic review. Phil Edwards, Ian Roberts, Mike Clarke, Carolyn DiGuiseppi, Sarah Pratap, Reinhard Wentz, and Irene Kwan, May 2002.

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Policy Proposals

AutoSave: A Proposal to Reverse America's Savings Decline and Make Savings Automatic, Flexible and Inclusive. Reid Cramer, 2006.

Behavioral Economics and Tax Policy. William Congdon, Jeffrey R. Kling, and Sendhil Mullainathan, 2009.

Behaviorally Informed Financial Services Regulation. Michael S. Barr, Sendhil Mullainathan, and Eldar Shafir, 2008.

Savings Policy and Decision Making in Low-Income Households. Sendhil Mullainathan and Eldar Shafir. Insufficient Funds: Savings, Assets, Credit, and Banking Among Low-Income Households, 2009.

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Links

Design with intent
Economix
Freakonomics
ideas42
Nudge Blog
Russell Sage Foundation Behavioral Economics site
RAND BeFi Web Seminars
Tierney Lab
The Situationist

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