Behavioural economics: What's it got to do with L&D Pt2

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Written by Mark Gilroy on 10 December 2018 in Opinion

Mark Gilroy concludes his piece linking behavioural economics to learning.

Reading time: 3 minutes.

Information avoidance

Standard economics suggests that humans are rational and will revise their beliefs/decisions based on any new information they receive. Behavioural economics however, has found that often, individuals will avoid information if it threatens their beliefs or provides an obligation to act differently (Golman et al, 2017).

Car buyers, for instance, have been shown to avoid information that challenges the quality of their choice, and are more likely to remember reading advertisements that promote their car than those that promote other models.

We are, of course in an information age - is this effect still valid? A study by Sicherman et al (2016) found that online investors were less likely to check their investment portfolio online when the stock market was down vs when it was up. 

Short-term thinking

In his book 'Predictably Irrational: the hidden forces that shape our decisions', Dan Ariely talks about climate change as a perfect example of behavioural economics at play. “If you had to create a perfect problem that people won't care about, you'd create climate change.” 


  • It's a long-term issue, and people tend to focus on the immediate (that's why we can't resist dessert, and most think about pension planning far later in life than they should)
  • The progression of climate change is all-but-invisible
  • The impact of our individual actions to counteract it are very difficult to measure, and require continuous action
  • It will be felt by other people (those in the less-wealthy Southern Hemisphere) first

All of these forces effect our empathy and capacity to truly care about changing our behaviour. 

Five big implications for L&D professionals

  1. Remember that experiment about mental accounting? Behavioural economics tells us that giving something up is far more painful than the pleasure derived from acquiring it. This has huge ramifications for those managing/leading change - messages about the needs for change would do well to acknowledge the losses involved, rather than simply frame the potential gains, before and after change has taken place. 
  2. Additionally - when managing change within organisations, we should consider the climate change scenario. Can we make something that seems to be moving slowly appear visible, present and real, where the impact of anyone who engages with the change is positively acknowledged and felt?
  3. The Ikea Effect and sunk-cost fallacy can be directly applied to idea generation and project development in the workplace. If we have already invested time, money and resources in an effort - behavioural economics reminds us that it is that much harder to stop, pause and consider whether we should carry on or focus on something else (even if the costs outweigh the benefits). This effect is amplified if we have had a hand in building/constructing that project/product/initiative ourselves.
  4. Information avoidance can lead to poor judgement when we try to ignore challenges to our beliefs and ideas. Actively searching for contrary information/beliefs/viewpoints is a helpful way to 'de-bias' and challenge our tendency to avoid certain information. 
  5. Nudge theory can help remind us that when we are faced with a decision to make, the framing of the choices is as important as the choice itself. If you are the 'nudged', be mindful of how decisions are being presented to you - are you being subtly guided to make a particular choice or genuinely offered an objective set of options? If you are the 'nudger'; consider your responsibilities towards those you are attempting to influence. 

Read part one of this feature here.


About the author

Mark Gilroy is managing director of TMS Development International Ltd



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