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The Last Mile: Creating Social and Economic Value from Behavioural Insights

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Dilip Soman

Transcript of the video:

We need a theory of how we can get people to click on that site links. We need a theory of how do get people to pick things up in a store. We need theories of how we get people to open envelopes. How do we get them to try products? How do we get them to buy products? And that’s what The Last Mile is all about.

The Last Mile is challenging because it’s not a problem of operations, it’s not a problem of reach, it’s not a problem of marketing, it’s a problem of psychology, right. And if human psychology as we’ve all read and heard several times is one of the most difficult things to model, right. People are erratic, they do things that we wish they didn’t do; they change their mind; they fall in love; they sometimes make stupid decisions; they’re impulsive; they don’t think. I mean can you imagine trying to model a system like that. I mean I talk to my friends in physics and they tell me well if atoms did all of these things there’d be no classical physics left, all right.

And so, the idea behind The Last Mile is to think about are there simple behavioural interventions that we can think of in a broader framework that would help organizations do well at The Last Mile?

Now, the bad news is that human behaviour is incredibly complex, right. The good news is that I think all of psychology, everything I know right, can be explained by three simple ideas that’s it, right. So Psych 101, this is my one minute version of everything you need to know in psychology.

Principle number one is that context is everything. We change the context, people’s positions change. This is massive implications for lots of things including how we do market research. We’ve been trained to come up with standardized market research techniques where we ask questions that are independent of context and that just misses the whole point, right. That explains why we do research that show that people are delighted yet they don’t come back because you’re measuring it in the wrong context. I’ll get to that in a minute.

Principle number two is the idea of procrastination. So human beings, you know, we’re all sensible people, we all know we should save more money and eat healthy food and spend more time with our children and work harder, but we’ll do that tomorrow, not today, right. And that’s a very pervasive human behaviour.

I mean I suspect all of you have done something along the lines of yeah, I’ll commit to doing it, but when that day shows up you go damn, why did I say yes. That’s a hallmark of human behaviour, right. So all of us intend to do good stuff in the future, but we never get around to doing it in the present.


And a third principle, a relative principle Sir Isaac Newton and his laws of motion, the principle of inertia. Unless people really need to change something, unless they really need to make a decision they don’t. So case in point, if you look at data from the United States, from the 401K retirement plans, these are plans for retirement where you sign up for the first time as a 22 year old, fresh out of college, first job and you look at those data at 20, 30 years down the line, it turns out a lot of people, about 40-45 per cent never change their allocations over a 20 year window.

Your life has changed, your circumstances have changed, but you do not change your allocations because there is no active decision point, nobody forces you to go in and change, so you don’t right, so inertia plays a big role.

[4.17 minutes]

This video was filmed as part of the Behavioural Science Experts Speaker Series on Sept. 24, 2015.


The Last Mile: Creating Social and Economic Value from Behavioral Insights

By Dilip Soman

Dilip Soman is a Canada research chair in behavioural science and economics, and serves as a director of the Behavioural Economics in Action Research Centre at Rotman [BEAR]. His research is in the area of behavioural science and its applications to consumer wellbeing, marketing and policy. He is the author of The Last Mile [University of Toronto Press] and teaches a massive open online course [MOOC] BE101X: Behavioural Economics in Action on EdX.