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Most of us have been taught the principles of classical economic theory, according to which man is a perfectly reasonable being who tries in any case to maximize his benefit.

 

Although this may sound “logical,” the truth is that it has never been proven (something like Kotler’s marketing theories). It takes just a quick look at the reality around us, to realise that such a view does not make much sense.

Imagine operating in accordance with the principles of classical economic theory. First of all we would all had perfect bodies, since we would follow a healthy diet and practice on a daily basis. We would have a lot of money, as we would save regularly and avoid unnecessary spendings. According to the logical model of classical economic theory, the main reason that people sometimes may not work towards maximization of their personal interest, is the lack of information. If we just knew how many calories that ice cream had, we would not eat it!

If that was the case, then we would just have to educate people to eat healthy, exercise regularly and save (Does this strategy remind you of anything?). But the problem is that in most cases this strategy does not work. Don’t tell me that you don’t know if it’s better to eat a salad vs. a burger? It is obvious that knowledge and education can change our attitude to a very limited extent.

And this does not apply only to low-risk options or to impulse-based categories. In a recent survey that analyzed over 200 financial programs that based their promotion on educating people, the greatest variation reached only 0.1% (Fernades, Dixon & Elbel, 2014).

Behavioural Economics have a totally different view of human behaviour. They understand the limitations and weaknesses of human nature and try to leverage them to change our behaviour for good. Most importantly though, this new science is based on experiments vs theories and has created practical rules / guides with immediate and easy application to reality. So if you want to learn more about these rules and influence the behaviour of your children, your clients and the people around you for good, stay tuned.

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