Behavioural Economics isn’t a one way street

We have become accustomed to positive stories about how the application of decision science has helped companies, government departments and other organisations influence behaviour in a beneficial way.

There was a news story this morning that reminded me that it doesn’t always work like that.

No, it wasn’t the one about Ken Livingstone comparing Boris Johnson to Hitler (and bizarrely himself to Churchill). Nor the coverage of Sally Bercow, wife of the Commons Speaker) entering the ‘Celebrity’ Big Brother House. Neither Mr Livingstone nor Ms Bercow can have expended much energy on their decision making, and it doesn’t take a Geiger Counter to calculate that both decisions were poor. They must have failed to spend any meaningful time on a reward/risk analysis, so it is not worth our making even a cursory comment.

The story that fascinated me was about a study that paediatricians have conducted on the increasing levels of Vitamin D deficiency in babies born in Britain. On Radio 4 this morning, one of the authors of the report agreed that sunshine is a significant source of the Vitamin for mothers and their new-born children. Obviously by world standards the UK has a disappointing lack of sunshine, but that situation has not changed. So how to explain the increasing level of deficiency?

The report thinks that one of the factors could be mothers using substantially more effective sun-screen products.

If true, this makes sun cream, which we have been told to use to prevent skin cancer, a potential ‘culprit’ in putting babies at risk of rickets and infections. This is the Behavioural Economics of well-meant medical advice giving with one hand and taking with the other.

Another example might be the widespread practice of parents taking their children to school by car. The motivation is clearly the peace of mind that comes from making sure the children are safe. But I can think of at least five actual or potential negative consequences:

  • Children who are less active and fit (less walking, cycling etc)
  • Children who are less self-reliant
  • Congested roads
  • Less use of public transport
  • Carbon-negativity on a grand scale

Then again the building of out of town shopping centres was encouraged by planners to increase amenity and prevent bottlenecks and crowding in city and town centres. What has happened?

  • High streets have suffered
  • Many village and small town shops have closed down
  • We have sharply increased imports (particularly of food) as these centres have stimulated consumer spending (convenient car parks / filling car boots instead of baskets and bags)
  • Britain’s farmers and manufacturers have suffered from higher levels of imports

Simply predicting consumer benefit from a change or injunction is not enough. Just like good decision making, we need to look at all valid options and conduct multi-level reward/risk calculations. The upside we are looking for may be outweighed by one or more slightly less predictable downsides.