Politicians Know Something You Should

I don’t know if I should be worried or thrilled.

I have spent the last couple of years studying behavioral economics and social psychology to augment my understanding of rewards and incentives to help companies get where they want to be.  Now I see an article that talks about politicians getting the idea that this is important for public policy.  I don’t know if I like the idea of politicians getting any better at influencing anyone’s behavior.

The article I saw was on the Situationist Blog linking to an article by Dan Finkelstein from The UK Times Online called “The social psychology revolution is reaching its tipping point.”

The main thrust of Mr. Finkelstein’s article is that the research and findings of evolutionary psychology and behavioral economics are finding their way into policy discussions and political issues. 

I think the points made in the article are easily translatable into how you can influence the behavior within your company and with those in your business web.

Some pithy quotes from the article:

"…For an intellectual revolution is under way that will change the way we think about public policy just as the free market economists did in the 1980s. I wonder whether one day soon a future party leader will turn round to his agent and say: ‘Finally, I’ve got it! Human behaviour.’ "

"…Instead of seeing humans as rational calculating machines, behavioural economists have been conducting experiments to assess how real choices are made. On paper, two alternatives may look economically identical. But the way that they are framed and the context will, in the real world, determine the choice. Human beings are, for instance, highly loss-averse. They will take risks to avoid a loss, while behaving conservatively when a possible gain is in the offing."

"…It suggests that there is such a thing as society and you can’t understand the impact of policy on individuals unless you realise that. We are not just individuals. We abide by social norms, reciprocate favours, stick by our commitments, are desperate to remain consistent and are tribal."

"…The most important step forward has come with David Cameron’s correct insistence that social change is as likely, or more likely, to come through influencing behaviour as it is through regulation.  …  For instance, in the past two weeks we have had discussion of obesity and of knife crime. Social norms have hardly figured. If everybody thinks that everybody else is getting fat, then more people will put on weight. The campaigns designed to reduce obesity may be spreading it. Similarly the very idea that every young person is carrying a knife increases knife crime. The obvious route of making such behaviour seem odd and isolated appears not to have occurred to any major politician."

Those four points…restated for the business mind…

• Business – I got it – it’s about human behavior.
• People won’t innovate if they feel they will lose – even if the gain is big
• What others do in the company impacts the individual
• Create appropriate company behaviors through influence not policies
• What gets talked about becomes the reality – if all we talk about at work is how busy we are – then we’re busy.  If the majority of our discussions surround our failures, then we must be failures.

The final quote in the article is this…

"It now seems hard to imagine political debate without rudimentary economic understanding. But we haven’t always had it. It’s quite a recent thing. The time will come when we feel the same about social psychology."

That too can be reworded for the business thinker…

It now seems hard to image business being conducted successfully without rudimentary economic understanding.  It wasn’t always this way – risk management is relatively new, buying futures on raw materials is somewhat new.  Businesses have adopted those economic practices in order to be more competitive.  The time will come when we feel the same about social psychology.