Death, Taxes, And Behavioral Economics

Basing your business on a platform is a calculated risk (this 7m video explains why: https://vimeo.com/634811741/909a519f49).

I’m normally quite bullish on the idea of having some sort of powerful idea at the center of your brand colosseum.

But what if the idea you place at the center of your brand colosseum — at the center of your business — starts showing up in headlines, looking considerably worse for wear? Like this:

Just as we can build a business on a platform we don’t own and experience both a tailwind and head risk as a result, we can do so with the “platform” of an idea like behavioral economics.

This business with Dan Ariely points out the risk with that; what if the idea suddenly declines in status or is found to be fundamentally flawed?

Over a long enough timeframe, this will probably happen to many ideas, even ones that seem unquestionable right now.

This creates an interesting risk-kinship between pure platforms and the world of “big ideas”.

BTW, please do not overrate this risk. It’s a particular edge risk, not one of the primary risks to consider with specialization or brand design.

We can be 100% certain about death and taxes. Almost everything else — including the future status of the borrowed idea at the center of our brand colosseum — involves uncertainty.

When I think about those with semi-borrowed ideas that might be more immune from this risk, I think of these two situations:

  • They have elaborated on the basic idea, giving them more ownership over it.
  • The idea is in service of something even more fundamental, so if the idea declines in status, the more fundamental part of things can be maintained and the idea tweaked. Ex: I help you do X so you can run a more profitable, enjoyable business. (The latter 2 are ideas that are less likely to decline in status than the X part, which might be a method or framework that is more likely to decline in status.)

Also…

  • It’s not so much that the idea would decline in status. Many popular ideas will. It’s the sudden deline that’s worrisome.
  • This kind of “foundations of the idea have been shaken” situation is rare in my experience. Most ideas have a more gradual rise and fall, but it’s fascinating that data — a pole on the POVSpace map that more folks want to gravitate towards — has this kind of fragility more than Experience!

And yes, the Dan Ariely thing is just one study, which ordinarily wouldn’t be fatal, but it’s a study co-written by a big name in the field, and there’s a “straw, camel, back” quality to it, as the founder of Walmart’s behavioral science group says:

I’ve got some bad news.
Behavioral economics is dead.
Yes, it’s still being taught.
Yes, it’s still being researched by academics around the world.
Yes, it’s still being used by practitioners and government officials across the globe.
It sure does look alive… but it’s a zombie—inside and out.
Why do I say this?
Two primary reasons:

  1. Core behavioral economics findings have been failing to replicate for several years, and the core finding of behavioral economics, loss aversion, is on ever more shaky ground.
  2. Its interventions are surprisingly weak in practice.

Because of these two things, I don’t think that behavioral economics will be a respected and widely used field 10-15 years from now.
If you’re interested in making applied behavioral science your career, I would strongly encourage you to stay clear of behavioral economics.

Source: The death of behavioral economics – Jason Hreha

There’s always a silver lining, though. Maybe with a decline in the status of the loss aversion concept, we can look forward to less shitty microcopy on the No buttons on annoying popup forms? :->

-P

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