We like to think that we are complex and intelligent creatures that make our decisions in a rational manner based on logic and the analysis of evidence available. If someone asks you why you bought your most recent car, for example, you will likely list functional features such as fuel consumption, safety features etc. However, on Tuesday 29^th March, I attended an IPA course on the study of Behavioural Economics, at which I learnt that this does not reflect the reality of choice.

Behavioural Economics, developed by two psychologists Daniel Kahneman and Amos Tversky in the 1970’s, is the study of how humans make decisions and (importantly for us) spend their money. Specifically, the field looks to understand why we do not make rational decisions. Their work in this field has won critical acclaim, encouraged more scholars to take up the field and even won Nobel prizes.

A biology lesson…

The human brain helps us understand this. Our brain has two different ways and methods of making decisions…

System 1: the quick, intuitive, emotional, automatic, gut instinct and subconscious decisions – the type we use every day to get dressed, get ourselves to work, to choose lunch.

System 2: the logical, rational, scientific, conscious and slow decisions – the type you may call on the weigh up on a big decisions for example buying a new car. This type of thinking requires a lot of effort and time.

We take on 64 GB of data every day – equivalent to the storage capacity of your average iPhone! Therefore, our brains have developed mechanisms to ensure all of this data doesn’t stop us functioning. System 1, the quick and intuitive part of our brain is our coping mechanism. System 1 is much more influential in rational decisions than people think.

But why is this?

Research has proven that our System 2 brain can only store 7 (+/-2) pieces of information at any one time, so it isn’t advanced enough to make decisions on its own and certainly can`t cope with the iPhone sized chunk of data we take on board each day. In reality, what happens during even big decisions is that emotional System 1 thinking will infiltrate the logical System 2 process, helping process and filter the data and allowing quicker decision making. System 1 works so quickly because it makes short-cuts (heuristics), creates biases and uses previous examples. The result, even when we think we are at our most logical, emotion has a huge impact. Our emotional System 1 brain may not always make the best most rational decision, but it operates so speedily that it wins the race. In fact, our System 2 brain doesn’t even know System 1 is influencing it.

So what does this mean for us?

You may be thinking that winning a Nobel prize is not relevant for us in the world of media, advertising and communications, but as we are in the business in getting consumers to make decisions, choose us and part with their hard-earned cash there is much for us to learn…

Firstly, we need to focus on the emotional drivers that help people make decisions. If we are advertising a holiday – we need to understand what makes people choose a holiday company. What is the emotional driver we should push, and what will make a difference? That extra cm of legroom on the plane or the whiteness of the sand on the beach. We as marketers may think the new piece of technology in something is game-changing but will consumers think this. Will they even care?

Secondly – we need to plan our communications to ensure we keep messages simple and focused on the consumer, we need to ensure our communications fit with how they make decisions. We need to make it easy for people to choose our brand. Remembering that iPhone amount of data our brains are expected to process each day!

Thirdly, and perhaps most importantly when we embark on communications planning, we need to consider how we undertake consumer research. When we ask consumers to post rationalize decisions, we ask them to use their System 2 brain. The more we get them to do this, the more they will focus on, and cite, the rational and functional. You are asking them to over-think a decision. When asked people will never admit they purchased our shiny new VW Beetle due to its in built vase, they’ll say they bought it because of its superior safety rating and fuel consumption. Honestly they did. We need to be aware of this, and take this into account when designing our research and analyzing the results.

Behavioural Economics as a study is vast and relatively new and this article covers only a minutia of the research, and even the experts admit to not knowing all the answers yet, however, it does have real and tangible lessons for brands and marketers. To create and design the best campaigns the consumer (and their brain’s) need to be at the heart of our planning