Practice Issues
Dear Social Service Practitioners,
It is clear that people’ s emotions and thoughts can affect how they make decisions about how to allocate their resources. Behavioural economics is the study of how psychology broadens the scope of traditional economic theory.
Psychologists have put forward the idea that the brain has two operating systems, namely the reflective and automatic system. The reflective system is the mind that offers a more systematic and deliberate analysis while the automatic system is the rapid, instinctive mind that does not usually involve“ thinking”( Sunstein & Thaler, 2008). We use the reflective system when we perform activities such as learning a new language or planning an unfamiliar journey while we use the automatic system when we perform activities such as speaking in our mother tongue or taking our daily commute.
The former is assumed in the traditional economic theory where human beings are considered rational decision makers who make use of all available information and make the best decisions in order to get the greatest benefit. However, with insights from the field of psychology into the automatic operating system of the brain, economists are challenged to reconsider their traditional assumptions and thereby, the way policies are designed and implemented.
Cognitive Biases
The Institute for Government and the Cabinet Office( UK)( Dolan, Hallsworth, Halpern, King, & Vlaev, 2009) spells out 9 influences on human behaviour that operate largely on the automatic system, namely:
a) Messenger: We are heavily influenced by who communicates information to us. b) Incentives: Our responses to incentives are shaped by predictable mental shortcuts. c) Norms: We are strongly influenced by what others do. d) Defaults: We“ go with the flow” of pre-set options. e) Salience: Our attention is drawn to what is novel and seems relevant to us. f) Priming: Our acts are often influenced by sub-conscious cues. g) Affect: Our emotional associations can powerfully shape our actions. h) Commitments: We seek to be consistent with our public promises, and reciprocate acts. i) Ego: We act in ways that make us feel better about ourselves.
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