Before designing any intervention to influence them it is worth asking: What Are People Like? Derek Ireland in The Behaviorally Informed Organization presents what he calls a Boundedly Rational Complex Consumer Continuum, the shorthand being the BRCCC. (I am unsure why he thinks that is a pleasant and memorable acronym. I feel that I may have seen better acronyms.)
Knowing Who You Are Seeking To Influence
Still, the basic idea Ireland has is a good one. It is vital to understand the people you are seeking to influence. This is an idea I share with my students each year. I’m not sure I always get the idea across but it doesn’t stop me from trying. (I get the irony that maybe this shows that I don’t understand the students well enough to communicate with them).
The challenge is that in various literatures we get pretty one-dimensional views of humans. The traditional economics literature often seems to visualize an amoral, perfectly informed, super-computer. That doesn’t describe anyone I know. The opposite idea, that the public are largely clueless, also seems extreme and problematic.
So What Are People Like?
Derek Ireland outlines eight ‘ideal’ types. The use of ideal should make you think an ideal as an archetype rather than ideal as perfection. (Plato not Wilde). It is worth noting straight off that people can change over time and also between situations. For example, consumers may be more sophisticated in their thinking in some domains rather than others.
They are a few types that are especially interesting. There are roles for more sophisticated consumers who are innovative in creating value. Other relatively sophisticated consumers use their purchases to advance their ethical goals.
Perhaps the most challenging group is the 4th segment. These basically see themselves as econs (group 1) but they really aren’t. They are happy to take advantage of other people’s mistakes and so have a bit of a survival of the fittest attitude. They, however, fail to recognize their own biases and errors. That they aren’t the fittest. This means they are less likely to be receptive to interventions designed to help them. What happens when these badly-informed people who think they are geniuses get themselves in trouble? (I know the answer: the 2007/8 financial crisis happens when governments bailed out the big banks).
The presence of a segment of vulnerable consumers but with coping strategies (group 7) has important implications. These aren’t the totally helpless consumers that might be envisaged in some policy. Such people know their limitations and have taken at least some action to address these limitations. When designing policy it is important not to mess with whatever these consumers are doing well when you are attempting to help them.
In Public Policy Know Who You Are Helping
Ireland ends with good advice for any policy-maker. You need to understand who you are dealing with before you can know how best to help, or sometimes not help, them.
“…government and their policy-makers and regulatory authorities should clearly identify and articulate the attributes of the consumer ideal type or types to be targeted by their proposed policies, laws, regulation, rules and regulatory functions and messages.Ireland, 2021, page 126
For more on public policy and behavioral thinking see here.
Read: Derek Ireland, Boundedly Rational Complex Consumer Continuum, Chapter 7, in Dilip Soman and Catherine Yeung (Editors) (2021) The Behaviourally Informed Organization, Rotman, University Of Toronto Press.