Congratulations to Professor Richard H. Thaler for winning the 2017 Nobel Memorial Prize in Economic Science!
Last week, Richard Thaler won the Nobel Memorial Prize in Economic Science for his contributions to the behavioral economics field. Our approach to putting behavioral science into action is largely built on Thaler’s contributions in economics, and we couldn’t be more excited to see him celebrated. Lirio relies heavily on behavioral economics to drive positive actions and better outcomes through effective communication.
Thaler’s efforts, along with research from other brilliant minds such as Daniel Kahneman and Amos Tversky, have guided how Lirio analyzes each individual’s preferences, determines their unique persona, and tailors communication to address their specific biases. Without the substantial body of behavioral research from Thaler and his peers, our highly personalized and relevant communication might not be possible.
Thaler’s contributions to behavioral economics include the famous coffee mug experiment to test a phenomenon he named the “endowment effect.” He also showed that humans tend to consider fairness (and penalize “unfair” behavior) when evaluating economic decisions, illuminating the mechanics of economic recessions.
The Nobel committee recognized Thaler’s theories of mental accounting, loss aversion, his planner-doer self-control model, and “nudging,” to name a few. Another large accomplishment referenced was Thaler’s unusual success in directly influencing public policy, such as automatic enrollment for retirement plans.
Thaler is extremely well known for behavioral finance, but his work has broad implications across all industries, including utilities, healthcare, and beyond. He has proven that people do not all behave the same or as we might expect. To understand people and drive them toward real action, we must focus on the individual and what truly motivates them to behave in certain ways. Understanding what drives behavior helps Lirio develop effective messaging to nudge each person toward beneficial behavior.
For example, utilities trying to build relationships with customers and/or influence them to participate in certain programs can’t just look at account profiles or meter data. They must also look at the person beyond the meter. Sending blanket communications to all customers is not an effective way to motivate them to act or build stronger relationships. To drive individuals to act, businesses must shape communication around the factors that influence people personally, such as their fundamental values, political affiliations, perceptions, fears, and more.
To truly personalize engagement and encourage action, organizations can leverage behavioral factors like those outlined by Richard Thaler. At Lirio, we help companies get to know their audience through personas based on behavioral factors, sending messages to truly motivate and nudge each recipient to act. Behavioral science helps us deliver the right message to the right person at the right time.
Thaler and his studies are known for challenging the “rational” decision-maker assumption prevalent in traditional economics. According to New York Times, when asked how he would spend the prize money, Thaler replied: “This is quite a funny question … I will try to spend it as irrationally as possible.”
For more information on some of the factors that drive Lirio’s approach to communication, check out our Insights page.