This is the first part in a series discussing how public relations can leverage behavioral economics, the study of psychology in regard to the economic decision-making processes of individuals and institutions.
Trying to understand people and why they act in particular ways is a daunting task, not easily achieved. Trying to influence the awareness, opinions, and actions of others purposefully, as public relations professionals do, is also not easy. Trying to combine this first concept, known as behavioral economics, into pr campaigns compounds the difficulty of these individual disciplines.
However, unlike traditional economic theory, behavioral economics recognizes that biases, society, and emotions affect the way humans behave. By understanding how these biases, short cuts, and emotional influences work, we can better understand how to approach stakeholders to engender the desired outcomes. For public relations strategies and tactics, this means communicators are better positioned to cut through the noise of the news cycle and social media.
Actually, many public relations professionals use behavioral economics principles as part of their communications strategies without even knowing it.
For example, a campaign that has clear messaging, emotional language, and aligns with social norms is crafted to have the most effective response. A real-world example of these principles can be seen in Austria, where laws have made organ donation the default option at the time of death. The choice architecture here, forcing people to explicitly “opt out” of organ donation has resulted in more than 90% of people registering to donate their organs. Compared to “opt-in” countries, like the U.S. fewer than 15% of people register to donate their organs.
Using nothing but changing the choice default caused a 75% difference in organ donation. And the reason for this? Because people like to conform to the status quo and social norms. Additionally, most people tend to fall back on the default option due to the overwhelming number of decisions we make on any given day. If there is a pre-determined option, many people will choose to not decide.
Below are 8 key principles of behavioral economics broken down into behavioral influences and heuristics, or short cuts, that can cause bottlenecks and enhance the achievement of a particular outcome.
- Hyperbolic discounting. People put an overly high value on the here and now and an overly low value on the future.
- Loss aversion. People try to prevent losses more than they try to make gains.
- Confirmation bias. A predisposition to accepting information that confirms one’s opinions or conclusions rather than information that is contradictory.
- Information overload. The presence of too much information in the environment, preventing the individual from evaluating and making a good decision.
- Anchoring and adjustment. To make an estimate by applying adjustments to a particular reference value (i.e., the “anchor”); for example, the full price for an item is the anchor for the sale price.
- Social proof. When an individual looks to the behavior of their peers to inform their decision-making, and their tendency to conform to the same behavior their peers are engaged in.
- Availability bias. Information that readily comes to mind is used to make decisions rather than using a comprehensive set of facts that evaluates all options.
- Bounded rationality. People have limited cognitive ability, information and time, and do not always make the “correct” or rational choice, even if information is available that would point them toward a particular course of action.
This is achieved through ‘nudging.’ The concept of nudging involves changing how the choice architecture is framed, without financial incentive or repercussion. Nudges help people deal with the human brain’s limited attention capacity. This is a vast subset of behavioral economics that warrants its own blog, which we will explore more in the second part of this series.
Xenophon has over 2 decades of experience in strategic messaging, using strategies and tactics to reach the target audience and produce the intended outcomes. Visit our website to learn how to leverage behavioral economics in your public relations campaign: https://xenophonstrategies.com/services/strategic-messaging/