The Behaviour Business. Richard Chataway

demonstrates that to get the best out of social proof we need to consider who the most important influences are (in social psychology terms, defining the in-group).

      Source: Nature (www.nature.com/articles/489212a)

Care needs to be taken that highlighting bad behaviour doesn’t have an unintended consequence of making it seem normal – known as negative social proof. For example, highlighting the amount of alcohol drunk by students on a university campus had the effect of increasing the perceived norm amongst students, leading to the average student drinking more.11 It’s not hard to see examples of this misapplication – a GP surgery putting up a sign saying that 200 people missed their appointments last month will likely increase the number of missed appointments next month, not decrease.

      The solution is to use positive framing (e.g. 99% of our patients attend their appointments) or highlight the ‘injunctive’ norm (what people should do), rather than the ‘descriptive’ norm (what they actually do). Road signs say that the speed limit is 30mph – they don’t tell you that most people actually drive at 35.

      So next time you go to a quiet restaurant and are encouraged by a waiter to sit in the window (so others can see you) – you have experienced social proof in action.

Two systems of thinking – designing for Homer

      These heuristics and biases are important because we use them to help us make the thousands of decisions required every day.

“Many people are overconfident, prone to put too much faith in their intuitions,” wrote Kahneman. “They apparently find cognitive effort at least mildly unpleasant and avoid it as much as possible.”12

      In short: we think less than we think we think. As Thaler and Sunstein put it, we are often less like Spock, and more like Homer Simpson.

      Kahneman popularised the term ‘system 1’, or ‘fast’ thinking, to explain these instinctive, emotionally driven, less-conscious decision-making processes. Our more rational, ‘slow’ decision-making – which adheres more closely to the Spock view of behaviour – he called ‘system 2’. Subsequently, behavioural scientists have identified the circumstances when we are in system-1 mode when making decisions, and (to date) over 200 different heuristics and biases that come into play.

      The importance of this is twofold: one, we have chronically under-estimated just how much of our decision-making is of this instinctive type, with some estimates indicating that it accounts for between 90–95% of our daily behaviour; two, that only by understanding these heuristics and biases can we effectively explain, influence and change behaviour.

      We are more like Homer Simpson than we care to realise or admit. These behavioural biases are hugely important in determining how we behave, and perform an important function – not least because of our increasingly complicated lives, where we are often over-burdened with information and stimuli. Over the course of this book, we will see examples of how understanding biases can help us successfully address behavioural challenges.

This melding of psychological and economic thinking about behaviour, which became known as the discipline of behavioural economics, is the closest thing we have to a unifying theory of decision-making. In 2002, it earned Kahneman, a psychologist, the Nobel prize for economics.13

      This work has shown that when considering influencing behaviour in business it is important to think about whether you are dealing with Homer or Spock. 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,