SINCE THE GLOBAL financial crisis 10 years ago, governments around the world have been increasingly rejecting economists in favour of behavioural economics, with so called “nudge units” springing up in more than 50 countries, including in Ireland.
Better understanding our social instincts – how they can be used for good – is the current frontier in the application of behavioural science.
The new frontier for us is in using existing social capital and social networks as a force for good. This is easier than we might think, as most of us can already think of a time that our social network has stepped up for us.
For me, I wasn’t rescued from a snow-laden Indianapolis street in Indianapolis by a car, a bus or a train, but my friend Aisling Ni Chonaire talking me through a solution to get out of town so that I could officiate a wedding 200 miles away – and in turn help stop my friend Pete from being deported.
The question isn’t whether our social networks can be a good thing – but how we can make sure that they are.
In an early study that we carried out a few years ago, we tried to get investment bankers to donate a day’s salary – quite a bit of money for them – to charity. The bank they worked for had been running a campaign, and could get some of them to donate, but couldn’t get it much higher. We changed the campaign just a bit – so that instead of emailing everyone, we just emailed a collection of managers in the bank who had donated previously, and asked them to act as ambassadors.
By using a prominent and influential node in the bankers’ networks, we managed to get donations up from 5% to 24% – raising hundreds of thousands more for charity.
Not just out for our own ends
One of the most powerful departures of behavioural economics from “standard” economics is that where standard economics tends to assume that people are individualistic, and out only for their own ends, behavioural economics embraces altruism, reciprocity, conformity, and identity. These are all aspects of our being which influence our behaviour and are inherently social.
One of the big puzzles for economists was that they failed to foresee the financial crisis, and that even once it was well underway, it took them time to get their heads fully around it.
In part, this was because the recession didn’t make any sense. In the UK, the start of the crisis really came with the “run” on Northern Rock – people queueing for hours to get their money out of their bank accounts, bringing about the collapse of the bank. This doesn’t make sense, as almost nobody had enough money deposited to actually risk losing anything – the government’s financial protections would have prevented it.
But despite this the queues formed, and the longer they got, the faster people rushed to join them. This instinct to conform to the behaviour of others – to follow the herd – isn’t something economics could handle.
It’s a theme captured in a study by Bruce Sacerdote, who exploited the random assignment of students to their college roommates to see how much you’re influenced by your roommate.
The answer, as it turns out, is quite a lot – roommates tended to join the same sorts of societies, have the same hobbies, and even get about the same grades.
Your real friends can influence you
If this is striking, it’s worth noting that it’s probably an underestimate of the true effect our friends have on us. Your real friends, after years of knowing each-other, are able to exert far more influence than a mere change in GPA or a decision to sign up to the creative writing society.
What else could get you up at 5am to make it to breakfast, or keep you up until 2am putting the world to rights? How many of us have changed jobs – or stayed longer than we should – because of the influence of our friends?
If economists have been slow to work this out, a new breed of political operative, empowered by social influence and by technology, has latched onto it with enthusiasm.
From fake news to micro-targeted ads based on our preferences and the content of our networks, there’s growing evidence that our social instincts have been hijacked and manipulated by people who haven’t taken Richard Thaler’s exhortation to “nudge for good” to heart.
We can also use the tools of social influence to tackle big problems, like social mobility. Research shows that differences in education contribute are a leading cause of inequality, and that if we could narrow the attainment gap, we could make a big impact.
One study we ran got students who were struggling with their English and Maths to name a “study supporter” – someone who cared about them and their learning.
Over the school year, we sent the supporters a range of messages keeping them informed about what the student was studying, together with prompts to try and start conversations – something that they wanted to do, but were struggling with (and who hasn’t struggled to talk to a 17-year-old).
At the end of the year, we found that the students whose supporter we messaged were 20% more likely to pass their exams.
The most exciting days of these social nudges are ahead of us, as we see how a more realistic model of groups and of our social instincts can help boost social cohesion, build better, stronger communities, and improve social mobility.
Social Butterflies, by Michael Sanders and Susannah Hume, is out now.
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