Behavioural Economics vs Behavioural Science: A Comparison
Market research is becoming a very complex and innovative industry, drawing on influences from many external disciplines to add new layers of rich understanding to the insights we generate. However, some of these disciplines can be very similar to each other, even if their focus is different.
Behavioural Science and Behavioural Economics are two disciplines that often get mixed up and misunderstood, and it’s not just the names that are similar...
Behavioural Science vs. Behavioural Economics:
As we learnt from another of our articles, ‘Behavioural Science’ is a term that umbrellas all social and biological studies into human behaviour, including sociology, cultural anthropology, psychology, neuroscience, etc. This large field is closer to the academic side of scientific research, gathering data on human behaviour purely for the sake of knowing, with some paths frequently trodden into applied science.
Behavioural Economics, however, is a narrower study that researches and describes economic decision-making. These studies show that we are much less rational, stable, and selfish than normative theory suggests. It is commonly regarded that behavioural economics is a sub-science underneath the umbrella of behavioural science, as it uses methodologies typically derived and influenced by behavioural science studies like social psychology. Behavioural economics is a refinement that focuses on consumers and businesses specifically, taking behavioural science techniques and exploring the science behind human decision-making in real, commercial and industrial environments.
Behavioural science methodologies take psychological techniques used to understand the various aspects of human behaviour, such as:
Forming and cementing various types of relationships
The life and death of societal institutions
The differences in group vs. individual behaviour, and the corresponding influences to each
The evolution of language and communication in different countries and eras
The impact that this has provides a basic understanding of human behaviour and past, present, and future influences. But this isn’t specifically for business or market research. Behavioural science insights and methodologies have to be adapted before we can use them to gain a better contextual understanding of our consumer-participants. But, everyone from all industries are able to use the insights and methodological techniques and adapt their own field to better serve the demands of consumers, from marketing to technology and the creation of various entertainments.
To find out more about behavioural science in market research, check out our other blog What Researchers Need to Know about Behavioural Science here.
Where behavioural science and economics overlap, is the study into human biases and heuristics in behaviour. As outlined by Koen Smets, “Behavioral and cognitive science has a wider scope, but much of it is concerned with how we make choices and decisions. That is both where the overlap with economics occurs and where its visible relevance to everyday life materializes.”
Behavioural Economics Methodologies and Insights
Behavioural economics is a softer science, studying what motivates people to do certain things, and finding answers to why we do the things we do in a much more actionable way. In theory, as long as we know the values of an individual consumer, and respective variables of the situation they’re in, various behavioural economics models can be used to predict the actions that individual consumer will take.
For example, models such as Tversky and Daniel Kahneman’s ‘Prospect Theory' (which earned them a Nobel prize) describes how people decide between options that involve risk and uncertainty. This model is based on the biased weighting of probabilities and a developed through framing risky choices in a different way. This is a fancy way of saying that we will always try to maximise our gains and minimise our losses, sometimes compromising on our own goals to get what we want, that is a common assumption that we can make.
But let’s put this into an example that we’ll understand - in a podcast, Guthrie uses game theory to posit a series of scenarios to Dr Susan Weinschenk: would she take a sure win a £30 or an 80% chance of winning £45? A sure win of £80 or an 80% chance to win £100? A sure win of £50, or an 80% chance of winning £100? In the first two scenarios, most people chose the sure win, because the risk of losing for such a small margin of benefit wasn’t good enough encouragement to take that risk. However, in that last scenario, mathematically, most people recognise that the 8 in 10 chance is worth taking for double to prize.
So, there is a threshold for what people are willing to risk in terms of how much they stand to gain. But this all depends on the person and their tolerance for risk, and is all framed in a positive way, encouraging people to take the risk in the end. Human behaviour changes when we reframe the question into a negative, highlighting the risk: would you rather lose £100 or £50, well the majority will answer that they’d rather lose less money.
That is a very simple example of how behavioural economics works. In real life, there are a series of factors influencing each decision, and for each factor there are a series of variables influencing that factor. These models that provide a general ‘if this then that’, but ‘if that then this’ programmatical understanding to human behaviour. For a more in-depth understanding of behavioural economics, I really suggest you start by reading Danial Kahneman’s Thinking Fast and Slow, which goes a lot more in depth into the concept of framing decisions in the psychology of choice, the theory of utility, and the principles of behavioural economics.
Applying Behavioural Science and Economics Insights in MRX
Most of the techniques in behavioural science and economics involves testing the boundaries of participants, influencing them in order to understand their motivations and behaviours. While there will be a few techniques that are undoubtedly useful to the advancement of market research, most of the techniques would be detrimental to the generation of unbiased data and accurate insights.
The Framing Effect as explored by Kahneman and Tversky is immensely useful to consider when devising questions in market research projects. However, when framing questions, we must think about the ethics attached to our motivations and actions. Are we framing this in a way that is objective rather than subjective? Will this prompt a certain type of answer? Are we unintentionally influencing the outcome of our research by framing our questions in the right way, or simply opening the minds of participants to consider another side to the argument in their answer?
Priming and confirmation biases are behavioural psychology techniques; the former engages participants in a pre-task or exposes them to certain stimuli before the main event in order to influence the performance, while the latter occurs a lot in focus groups where participants seek validation from others that their insight into the world is right, and will re-evaluate based on the majority consensus.
While the two subjects may seem a little complex at first, understanding how behavioural science and economics overlap, and how this fits (or not) into the day-to-day workings of market research is essential as it becomes a bigger influence in the industry.
As a graduate of Creative Writing, Emily has a passion for content creation. She brings our global vision to life through her excellent writing and editorial skills across a broad selection of our content, and manages communication through social media channels. You can follow her on Twitter and connect with her on LinkedIn.