Honoring a New Nobel Laureate: Thank You, Richard Thaler. You Changed the Way I Think Forever

Posted by A.J. Drexler on 10/10/17 5:42 PM, Last updated 10/16/2017
A.J. Drexler

In the spring of 2008, I had a client who was working with the CDC. Together, they posed this question to me: "How can we get a significant mass of people to complete a diabetes risk assessment online?" Believe it or not, this had not yet been done. While there was significant online activity around diabetes education, there was no site where someone who wondered could actually complete a risk assessment and get an immediate result.

Building the actual site to take the assessment was NOT the problem at hand. Getting a significant enough number of people motivated to WANT to take the risk assessment was the issue. Particularly getting people who either didn’t care, were going to bullied by their loved ones into doing it, or who were simply blissfully unaware that they had this risk.

One morning, just as we were puzzling out how to motivate these folks—studying all we could find about the various theories of why and how people with diabetes do or do not engage in self-management, etc.—I was stopped dead in my tracks by a TODAY show segment with Richard Thaler and Cass Sunstein, authors of a brand-new book called Nudge. I put down my coffee, pulled up a bar stool at my kitchen counter, and hung on every word.

behavioral economics optimism bias

The authors were explaining how virtually all economic theory was based on the “rational man,” but that humans, left to their own devices, did not always behave rationally. Further, not only could we predict the ways that they might be irrational, we can “nudge” them into making a different/better choice. Everything they were saying about this new world of behavioral economics and decision science directly applied to the problem we were trying to help our client solve! And on the TODAY show of all places?

But, as a strategist, it just made so much sense to me. So, I dug in–deep–consuming Nudge in a matter of hours, followed by every other shred of published work I could find. Man, was I hooked! While behavioral economics may not have a role in every problem I seek to solve as a market researcher and business strategist, it’s pretty darn close!

Eventually, I would dive into the early work of Dr. Daniel Kahneman (2002 Nobel Prize winner for the same category of work), who would later publish Thinking, Fast and Slow, and Dan Airly’s Predictably Irrational, and, over the years, I have built the framework for my strategy thinking from their collective point of view.

How was I so sure they were right? This was easy. Right out of the gate, with that first project in 2008, I saw the results unfold right in front of me. We were able to actively demonstrate the outcome if the principles of behavioral economics were closely followed.

That campaign to get people to go online and take a diabetes risk assessment? Without ever actually mentioning the word "diabetes" (to overcome the optimism bias), the client got 3X the number of completed risk assessments than they had ever imagined—and in just two months–with over 70% of them scoring at high risk. The result was so successful, in fact, that they had to shutter the program until they could figure out how to connect this volume of potential patients to their internal resources. And I was sold.

For me, Richard Thaler’s work is now the baseline–the benchmark–for how we all should be puzzling through any problem that involves human interaction with a product or service–from healthcare, to banking, to, well, baby products, or tooth whitener!

DOWNLOAD OUR BRIEF: 5 Reasons   to be Aware of   OPTIMISM BIAS  in Your Business   and Your LifeYesterday afternoon, I walked into a client’s very cool innovation space, threw up my hands and announced, “Big news! Your personal hero has just won the Nobel Prize!” My (fairly-new) client looked at me, puzzled (and maybe more than a little worried about my sanity). “Remember,” I said, “all that conversation we’ve been having about the 'optimism bias,' and how it must re-direct the way we approach your customer? Directly out of now-Nobel-laureate Richard Thaler’s work!”

He smiled a knowing smile…and we got down to work.

 

 

 

 

 

 

 

 

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Topics: Behavioral Economics, Understanding Your Customer

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