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Monthly Archives: December 2013

How Not To Use Behavioural Economics

Behavioural economics can provide you with powerful insight into how people make decisions and, by implication, how you can influence their decisions. You don’t need to be an economist to know this, it’s been done for centuries and it’s generally called politics or salesmanship. Knowing how humans make decisions can be incredibly powerful. Then again, […]

What are the Chances: Of a Swine Infestation? Part 1

“The time has come,” The Walrus said, “To speak of many things…” In particular, to talk about the probability that you or I may keel over tomorrow because of ‘the dreaded swine flu’. We, as a species, are absolutely appalling at estimating the probability of highly unlikely events (called ‘long-tailed events – because they occur […]

What are the Chances: Of a Swine Infestation? Part 2

The second reason the world reacted with extreme measures is that our sense of judgement was significantly altered by irrelevant and unrelated information that has absolutely no bearing on the decision at hand. A ‘context’ heuristic. If I was to ask you a question that you didn’t know, like “how many quokka’s live on Rottnest Island?”, then […]

What Are The Chances Of That Happening? Part 3

A great comment on how easily our judgements of risk are influenced: “No passion so effectually robs the mind of all its powers of acting and reasoning as fear … To make anything very terrible, obscurity seems in general to be necessary. When we know the full extent of any danger, when we can accustom […]

Everyone Is Voting YES

Because of the bandwagon effect (discussed in an upcoming blog) having the appearance of winning the debate is just as important as actually winning the debate in the public arena. Studies in the US have found that people who have not yet made up their mind in an election were up to twice as likely […]

The Irrationality of Mothers

With Mothers Day fast approaching, you may be interested in some highly counter-intuitive behavioural economics advice (courtesy of the Atlantic on what kind of gift to buy her.) If you’re planning to give your Mother a voucher then you should probably rethink the time frame of your gift. Research has found that a voucher with a highly […]

The Joys Of Specialisation – Part 1

When people complain about international trade stealing jobs from Australia it really frustrates me. Hands up, gentle readers, those of you who are subsistence farmers. I’d be surprised if anyone who survived purely by the work of their hands would ever have the spare capacity at the end of the day to read a blog […]

What Are The Chances Of That Happening? Part 1

We take insurance for granted, yet it is actually quite a modern concept. It is also one that is particularly influenced by our decision making heuristics. The French mathematician Blaise Pascal attributed the development of a key concept underpinning insurance to a monk at Port‑Royal who said, “fear of harm ought to be proportional not […]

What Are The Chances Of That Happening? Part 2

If the availability heuristic only impacted on insurance decisions then it would be annoying but no big deal. Alas, it has a serious impact on what people want governments to do and how they assess their performance. For instance, people see violent acts of terrorism that fundamentally shake up their perception of safety and expect […]

The Bliss of Ignorance – Part 2

Charles Darwin said in 1871 that “ignorance more frequently begets confidence than does knowledge.” The world has been treated to an extraordinary proof of that statement recently in the form of George W. Bush. Like a slow motion car crash that horrifies but ensnares you so you cannot look away, the presidency of George W. […]