Because you will be dealing with Homer more often than you might realise.
Availability bias and saliency
Availability bias is a phenomenon that explains a lot of human behaviour, particularly aspects that are obviously irrational. It reflects how our worldview is determined largely by the information available to us. As Daniel Kahneman puts it: in psychological terms, ‘What You See Is All There Is’ (WYSIATI). As a result we often overestimate the likelihood of events because they are more mentally available – that is, easier to bring to mind because they are easily remembered or particularly relevant to us.
The most obvious manifestation of this is phobias. What are you afraid of? Snakes or spiders perhaps? Arachnophobes like myself will explain our fear in all sorts of ways. Snakes are slimy (they’re not), spiders are big and hairy and menacing (many are, but not the sort you meet in Uttoxeter).
The wealth of information now at our fingertips through the proliferation of news channels, the growth of the internet and so on has enhanced some of these biases. Unfortunately, humans tend to give more credence to information that confirms their existing views (as a result of confirmation bias, see page 143), and our demand for that information dictates the information available, in a vicious cycle of fear-mongering.
Have a look at the data overleaf. There is a huge difference between what actually is likely to kill us and what we think will kill us (and therefore worry about). The chart at the bottom shows what the media actually tells us to worry about. ‘If it bleeds, it leads’ as the old journalistic mantra has it – even in reputable news sources like the New York Times and Guardian. And so, our perceived risk of death by terrorism (for example) is unrealistically high as a result.
Source: Aaron Penne
Saliency is an important, related concept – things that are more relevant, noticeable and recent are more emotionally striking, and therefore more mentally available. “If you have personally experienced a serious earthquake, you’re more likely to believe that an earthquake is likely than if you read about it in a weekly magazine,” say Thaler and Sunstein in Nudge.
For businesses, mental availability is hugely important. If your products and services are easy to bring to mind, and you build the right associations with them, then you can more easily influence how people behave in relation to them. As we shall see in part six, this goes a long way to explaining how marketing and advertising actually works.
How behavioural science changes how we think about business decision-making
When Kahneman was in the Israeli Air Force during the turbulent 1960s (when Israel was in frequent, bloody armed conflict with its neighbours), he was working in a role commonly taken by psychologists in business today.14 He was designing training and assessment to achieve the best possible performance from their staff – in this case, fighter pilots.
Instructors told him they believed criticism worked better than praise as a strategy to influence their students’ behaviour. As Michael Lewis writes, “The pilot who was praised always performed worse the next time out, and the pilot who was criticised always performed better. Danny [Kahneman] watched for a bit and then explained to them what was actually going on: the pilot who was praised because he had flown exceptionally well, like the pilot who was chastised after he had flown exceptionally badly, simply were regressing to the mean. They’d have tended to perform better (or worse) even if the teacher had said nothing at all.”15
That critical insight led Kahneman and Tversky to one of the key theories behind their model of how humans make decisions, specifically the representativeness heuristic.16 Their psychologically informed way of looking at behaviour shows us how behavioural science can change the way businesses approach problems, and the value of psychology in solving them.
Firstly, it tells us a lot about data. The data seemed to confirm that the actions of the teacher were working. They criticise, then the student performs better. But, as any statistician can tell you: correlation does not equal causation. In business, we too frequently use data to support an existing viewpoint of what works, and not to challenge it.
Secondly, the teachers were so convinced they were right, they had not sought to independently verify if they were correct.17 There was no incentive for them to challenge this received wisdom. Most of us would probably have done the same, and believed that praise and criticism work in this way.
It was only by independently verifying this through experimentation that they found it was a false assumption. If a business does not value the scientific method, then its understanding of what really influences behaviour will always be limited – because why challenge what you intuitively think works?
Kahneman later wrote: “it is part of the human condition that we are statistically punished for rewarding others and rewarded for punishing them.”18 It is only if you accept that it is also part of the human condition that we make these systemic, system-1-led errors, and are frequently flawed decision-makers as a result, that you arrive at the often counter-intuitive insights and solutions that deliver business success.
Thirdly, what the teachers reported was happening was not what was actually happening. Because a greater proportion of our actions than we realise are subject to the unconscious heuristics and biases studied by behavioural scientists (i.e. we are Homer more often than we think), simply taking at face value what people say about their behaviour only gives you part of the answer. Or, as in this case, a completely wrong one – because they were focusing on one isolated data point, which was not representative. They were concerned with the output of this process (the next flight), not the overall desired outcome (delivering a consistently successful pilot).
The Israeli Air Force subsequently changed its approach to assessing and feeding back on performance as a result of this research – no longer reviewing based on isolated incidents and biased perceptions, and providing feedback accordingly.
If, as a business, you want to get to the truth about behaviour, you need to look at the data based on observed, actual (and not claimed) behaviour over time. And focusing on accurate measures of actual behaviour – rather than other metrics that focus on attitudes, awareness, or opinion – is the only way to truly become a behavioural business.
In the remainder of this part, we will look at what we can learn from this approach to build a behavioural business – and how the correct use of observable data on actual (not claimed) behaviour, via the scientific method, can give a competitive advantage. But first, we shall look at what we can learn from how governments have been applying science to change behaviour.
3 If you are interested in that story, and the people behind it, then I’d strongly recommend reading Michael Lewis’s account of the work and friendship of those two pioneers: The Undoing Project.
4 If you have read Thinking Fast and Slow, Nudge or other books, or have an academic background in behavioural science, then much of the following paragraphs will be familiar.
5 Largely based on the work of Swiss mathematician
