(In 2022, book reviews will be a regular monthly feature here in B2B Marketing Trends. In some cases, you really need a book to cover a topic in a meaningful way, and that’s certainly true when it comes to behavioral economics, which is the book topic I’m reviewing in this post.)
For decades, economists have assumed that humans make economic decisions rationally. Standard economic theory held that people weigh the economic costs and benefits of their decisions and typically act to maximize their economic self-interest.
In the late 1970s, psychologists Daniel Kahneman (who would later win the Nobel Prize in Economics) and Amos Tversky published several papers that challenged the rationalistic view of human decision-making employed by mainstream economists.
Kahneman and Tversky’s work pioneered a new field that later became called behavioral economics. In 2008, two books – Predictably irrational by Dan Ariely and to push By Richard Thaler and Cass Sunstein – Raising popular awareness of behavioral economics and putting it on the radar screens of business and marketing professionals.
A useful introduction to behavioral economics
The truth is, marketers have been using some principles of behavioral economics for years, albeit largely unintentionally. But many marketers still don’t have a good working knowledge of the discipline, which makes Melina Palmer’s new book an important and valuable resource.
What your customer wants and can’t tell you (Mango Publishing Group, 2021) Provides a much-needed introduction to the basics of behavioral economics for marketers and other business professionals responsible for increasing revenue.
Melina Palmer is the founder and CEO of The Brainy Business, a behavioral economics consulting firm, and host smart business Audio notation. She holds a master’s degree in Behavioral Economics from the Chicago School of Occupational Psychology, and teaches Applied Behavioral Economics through the Texas A&M Human Behavior Laboratory.
What your customer wants and can’t tell you It is divided into four parts. In Part One, Palmer briefly describes the two “systems” that determine how the human brain works, and discusses the importance of brand “memories”. Palmer also explains the roles that brain chemicals and cognitive biases play in influencing the way people think and act.
The true heart of What your customer wants and can’t tell you In Part Two of the book, Palmer discusses sixteen basic concepts of behavioral economics including framing, framing, fixation, loss aversion, scarcity, social proof, choice engineering, and push pain.
She dedicates a short chapter to each concept, and concludes each chapter with an exercise designed to help readers apply the concept. Each chapter also includes references to related episodes of smart business A podcast where readers can access a more in-depth discussion of each concept.
In Part Three of the book, Palmer shows how principles and concepts of behavioral economics can be combined to address a variety of business issues. For example, she has included a chapter that now explains behavioral economics can be used to improve pricing.
Palmer concludes her book with advice on how marketers and other business leaders can combat the “mind tricks” that can cause them to “stumble” when trying to implement behavioral economics.
What your customer wants and can’t tell you Provides a powerful introduction to the use of behavioral economics in business and marketing. Melina Palmer’s writing is informal and engaging, making it easy for readers who aren’t formally trained in the behavioral sciences to understand the material you’re discussing. Therefore, marketers and other business professionals with customer-facing jobs will find this book particularly useful.
This book is clearly written for practitioners – it is not an academic treatment of behavioral economics. But Palmer provides substantial supporting evidence for its material in the form of extensive concluding remarks. Many of these notes cite academic publications, so readers who would like a further academic discussion of behavioral economics can easily find relevant resources.
Palmer includes several examples in the book to illustrate how different concepts of behavioral economics can be used, but most of these examples are very brief. I hope the book includes a few more detailed “case studies”, but readers who want to delve deeper into a particular topic can get more information via smart business Audio notation.
To learn more. . .
Behavioral economics is a topic that is impossible to cover comprehensively in one book. If you want to learn more about the idiosyncrasies and biases in human thinking that underlie behavioral economics, I highly recommend reading Fast and slow thinking Written by Daniel Kahneman.
I can also recommend the two books I mentioned earlier – Predictably irrational by Dan Ariely and to push Written by Richard Thaler and Cass Sunstein. remake of to push It was published in August of last year. I haven’t read it yet, but I think it’s as good as the original.
Finally, BehavioralEconomics.com is a good – albeit somewhat more technical – source of information and research on behavioral economics.
Image source: The Brainy Business (www.thebrainybusiness.com).