HRW Presents on Behavioural Economics at EphMRA27.07.2016
At the European Pharmaceutical Market Research Association (EphMRA) conference in Frankfurt, July 22nd, HRW presented a well-attended paper on applied behavioural economics in pharmaceutical market research, titled ‘Let’s get it out of our system’. In the main-stage paper, Andrew Bajorek and Katy Irving presented the science-driven case for how behavioural economics should be applied in market research. They emphasised that its use across sectors as well as our own experience applying in pharmaceutical market research has demonstrated that behavioural economics has enormous power to better understand customers as they really are, in the ‘messy’ real world.
However, when it comes to application, they argued, many fixate on one of the foundational theoretical tenets of behavioural economics; the idea that the brain is divided in to two systems: system 1 and system 2. Although this theory is important to set the scene for why we often don’t behave rationally or why we employ shortcuts, Andrew and Katy explained that this type of thinking leads to an undue emphasis on trying to ‘measure’ when our brains are using their ‘systems’ and an emphasis methods claiming to ‘measure’ system 1, such as the implicit associations test.
They explained that this can be dangerous, because although an important foundation for behavioural theory, in isolation system 1 & 2 are:
- Theoretical (just a foundational description to set the scene for subsequent developments, not physical systems)
- Not predictive (the two systems work together with the rational sometimes dominating the emotional and vice versa)
- Not consistent (system 1 in particular is very context-dependent and it is very difficult to control the environment). HRW self-funded research in the consumer sphere has shown wildly different results for different methods of IAT, and the initial Harvard IAT application was conducted in a ‘neutral’ experimental environment, not replicable in the commercial environment
- Not actionable (simply knowing which system is dominating doesn’t always guide real behaviour). Andrew used the example of a self-funded implicit association study which revealed that a board director believes women should be in the home, and yet their actual behaviour (being a senior woman with a young family) was very different.
Instead, Andrew and Katy urged the audience that behavioural economics actually has the power to change behaviours for better outcomes if applied properly. They illustrated that through using the wealth of research and development from across sectors, behavioural economics can be applied at each stage in the project process to inform methodology, analysis, and recommendation.
They took the audience through four stages of the project process, giving an example of the science, some key action points, and a pharmaceutical case study for each, including:
- Research set up: knowing that mind-set and priming have an influence on decisions, so capturing respondents in context
- Research execution: taking the lesson from behavioural economics that direct questions can result in post rationalising responses, so using techniques to capture unspoken responses.
- Analysis: knowing that humans use a predictable and categorised set of shortcuts in decision making (called biases and heuristics) means that we can use expertise and apply this library as an analytical framework to identify the biases used and guide targeted recommendations on interventions most likely to work in that context
- Recommendations/implementation: Behavioural economics has equipped us with a series of validated ‘nudges’ that can be applied to steer behaviour, so we can select the right nudges based on the observed behaviours.
They wrapped up their session by encouraging attendees to move away from reductive approaches, to ‘Get it out of their system’ and harness the full power of behavioural economics to really take pharmaceutical market research forward.