The idea worked: compared to the control group, twice as many people were willing to participate in the scheme and, of those who did, the average contributions after seven years were roughly double. This can be regarded as alchemy, because it has created a change in behaviour without requiring any material incentive – it simply offers a behaviour that is more congruent with how our brains really work.
No less significant was the success of the UK Government in creating pension-saving by default when they introduced auto-enrolment. As a result, over seven million people now have pensions who did not have them before.
We are a herd species in many ways: we feel comfortable in company and like to buy things in packs. This is not irrational – it is a useful heuristic that helps avoid catastrophe. Antelope might be able to find slightly better grass by escaping their herd and wandering off on their own, but a lone one would need to spend a large proportion of its time looking out for predators rather than grazing; even if the grass is slightly worse with the herd, they are able to safely spend most of their time grazing, because the burden of watching for threats is shared by many pairs of eyes rather than one. Consumers have a similar instinct – we would rather make a suboptimal decision in company than a perfect decision alone. This is also sensible, even if it isn’t conventionally ‘rational’ – a problem is much less worrying when shared.*
One of our ideas for making pensions more appealing was to exploit this herd mentality: if you sold pensions to groups of people who all knew each other – the members of a sports club, for instance – the likely levels of trust would be much higher.
Here are a few of our other suggestions:
Tell people how much the state is giving them. A tax rebate is a strange form of incentive, delivered in a way that renders it almost invisible: the increment is not paid to you, but added to your pension contributions, where it soon passes out of sight. What if you received a text every month from the government, saying, ‘We have contributed an extra £400 to your pension this month’?*
Restrict how much people can save. In the UK, you can pay a ridiculously high amount into a pension and still receive government tax relief. At first glance this seems logical – the more people save, the better – but it doesn’t create a sense that people are missing out if they fail to reach their allowance. It may seem crazy to say that, ‘If you want people to save more, allow them to save less’, but this is the sort of counterintuitive solution that often appears in psychological alchemy.*
Make pension contributions flexible. In the modern-day gig economy, where wages may not be constant, it would not be difficult for contributors to be sent a text every month asking if they wished to a) maintain their normal payment, b) increase it, or c) take a break from payments.
Slightly decrease with age the size of the tax rebate offered, in order to give a clear incentive for people to start saving sooner.
Enable people to draw money from their pension before they retire. It is ridiculous to be paying 25 per cent interest on a credit card while you have £100,000 sitting in a pension account. And if people want to take a year off work to travel, why shouldn’t a pension fund this?*
Even if you disagree with some of these suggestions, I think you would probably acknowledge that some combination of them would motivate saving more effectively than the present system does. What is really telling is that, if you assume that economics needs to be objectively ‘true’, none of them* would even be considered.
7.5: Alchemy Lesson Three: Find Different Expressions for the Same Thing
Imagine a set of four cards is placed on a table – each of them has a number on one side and a colour on the other. The visible faces on the cards are 5, 8, blue and green. Which card (or cards) must you turn over in order to test the proposition that if a card shows an even number on one face, then its opposite face is blue?*
Illustration by Greg Stevenson
Wason Cards – and how context matters. This test baffled most Princeton students.
A surprising number of bright people get the answer wrong – including, in one test, the majority of Princeton students. Overall, fewer than one in ten people gets this right first time, though no one has any difficulty understanding the problem once the correct answer is explained.
The most common mistake is to assume that you should turn over the blue card; in fact, because the rule says nothing about odd numbers at all, a blue patch accompanied by either an odd or even number would not invalidate the rule – hence there is no need to turn over the blue card. Instead you should turn over the green card, since if this were backed by an even number the rule would be broken.
As evolutionary psychologists Leda Cosmides and John Tooby observed, if the same problem is framed in the language of social relations rather than in the rarefied language of logic, the success rate is much higher. For instance, imagine instead that the rule is that you must be over 21 to drink alcohol – on one side of the cards is the age of a drinker, and on the other is the drink they have in their hand.
In this presentation of the problem, nearly everybody gets it right: they check the 19-year-old and the age of the person drinking the beer. The can of Coke doesn’t matter, and the person over 21 can drink whatever they like. No one has any problem coping with that logic, even though it’s the same problem as previously, just framed in a different way.*
Illustration by Greg Stevenson
Yet reframe the same problem in a different way, and any child can do it.
The job of the alchemist is to find out which framing works best. I persuaded my father to pay for TV at the age of 82, simply by reframing the cost. He begrudged paying £17 a month for a satellite television package – it seemed like a waste of money to him. However, when I pointed out that £17 each month worked out to around 50p a day and he already spent £2 each day on newspapers, everything changed. As 50p a day rather than £17 a month,* the same cost seemed perfectly reasonable.
7.6: Alchemy Lesson Four: Create Gratuitous Choices
Provided it is mentally painless, we tend to like choice for its own sake. In the early 1990s, I was working with the recently privatised British Telecom (BT), one of the agency’s largest accounts. They had recently modernised the telephone exchanges throughout Britain, and were as a result able to offer customers radical enhancements to their service. For a few pounds a month you could divert calls to another number or subscribe to ‘Call Waiting’, which let you know if someone else was trying to reach you when you were on the line.
To explain the new services, we sent letters to customers and invited them to subscribe. They were able to opt-in in two ways: either by calling a freephone number, or by ticking a box on a pre-personalised form and returning it in a prepaid envelope – so far, so boring. However, BT had an aversion to allowing people to request the products by post: their argument was that because they were a phone company, we should drive people to use their telephone rather than giving money to the Post Office – they wanted to send out the letters and simply list a phone number as the only mode of response.
To test this, we divided customers into three randomised groups. The first group was offered the choice of responding by phone and post, while the second was only allowed to respond by phone and the third was only able to reply by post. We sent 50,000 letters to each group, and when the responses began to come in, it was soon clear that something strange was going on. The people who had only been offered the chance of responding by phone had a response rate of about 2.9 per cent, and those who only had postal coupons had a response rate of about 5 per cent. But the group who had the choice of responding either by coupon or by phone had a response rate of 7.8 per cent – similar to the sum total of the other two. In economic terms, this was bizarre.
People seem to like choice for its own sake.
This is one reason why public services and monopolies, even when they do a good job objectively, are often under-appreciated – it is harder to like something when you haven’t chosen it.<
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It completely mystifies me why most online retailers do not offer you a choice of couriers to deliver your goods. People would vastly prefer this and it would have the additional benefit that they would not wholly blame the retailer if the goods were late or failed to arrive.
7.7: Alchemy Lesson Five: Be Unpredictable
Control Tower: ‘Maybe we ought to turn on the search lights now?’
Kramer: ‘No . . . that’s just what they’ll be expecting us to do.’
Most of business is run according to conventional logic. Finance, operations and logistics all operate through established best practice – there are rules, and you need to have a good reason to break them. But there are other parts of a business that don’t work this way, and marketing is one of them: in truth, it’s a part of business where there’s never best practice, because if you follow a standard orthodoxy your brand will become more like your competitors’, thus eroding your advantage. The above joke from Airplane! (1980) appears when the air traffic controller is trying to follow protocol, by turning on the lights on the runway for the approaching plane; Kramer, a war veteran, is frightened of being too predictable.* It underlines a serious point.
The marketer’s life can be difficult and lonely. Typically, most of a company’s management will have the mentality of the air traffic controller, with a love of the obvious, whereas the marketer needs to be more like Kramer, with a fear of the obvious. The two mindsets don’t always make for easy bedfellows, and departing from accepted logic can be risky – remember that it is easier to get fired for being illogical than for being unimaginative. Though in many social or complex settings being entirely predictable is hopeless, we tend to fetishise logic.
As Bill Bernbach observed, conventional logic is hopeless in marketing – as you end up in the same place as your competitors.
7.8: Alchemy Lesson Six: Dare to Be Trivial
The combination of 28 words and a button in the below picture has been called ‘the $300m button’, and is frequently cited in articles about web design and user experience. It first appeared on an unnamed retail website, which many experts believe to be Best Buy.
‘The $300m button’. In fact, monumental effects of this kind are surprisingly common in web design. Perhaps one of the first rules of interface design is ‘don‘t try to be logical’.
Jared Spool, the creator of the button, describes the form that customers from the website previously encountered when they came to complete a purchase:
‘The form was simple. The fields were Email Address and Password. The buttons were Login and Register. The link was ‘Forgot Password’. It was the login form for the site. It’s a standard form users encounter all the time. How could they have problems with it? [But] we were wrong about the first-time shoppers. They did mind registering. They resented having to register when they encountered the page. As one shopper told us, “I’m not here to enter into a relationship. I just want to buy something.” Some first-time shoppers couldn’t remember if it was their first time, becoming frustrated as each common email and password combination failed. We were surprised how much they resisted registering. Without even knowing what was involved in registration, all the users that clicked on the button did so with a sense of despair. Many vocalised how the retailer only wanted their information to pester them with marketing messages they didn’t want. Some imagined other nefarious purposes of the obvious attempt to invade privacy.’*
Acting on Spool’s advice, the site’s designers fixed the problem simply – they replaced the ‘Register’ button with a ‘Continue’ button and a single sentence: ‘You do not need to create an account to make purchases on our site. Simply click Continue to proceed to checkout. To make your future purchases even faster, you can create an account during checkout.’
The number of customers completing purchases increased by 45 per cent almost immediately, which resulted in an extra $15 million in the first month; in the first year, the site saw an additional $300 million attributable simply to this change.
So, people hate registering, and you can increase sales spectacularly by allowing them to bypass registration? Well, it’s not quite that straightforward – there’s a stranger aspect to this story, which is that most of the site’s customers (90 per cent or so) who chose to ‘continue as guest’ were subsequently happy to register as customers once they had made their purchase – the very people who had baulked at registering before completing the purchase were only too happy to leave their details and create an account at the end of the process. This shows that what mattered was not the actions we asked them to perform, but the order in which they were asked to make them.
Typing your address in order to confirm where your new washing machine should be delivered feels like a good use of your time; performing the same task when all you seem to be doing is adding your details to a customer database feels like a waste of your time.
The same thing in a different context can be pleasant or annoying. It’s that airport bus all over again.
7.9: Alchemy Lesson Seven: In Defence of Trivia
The great copywriter Drayton Bird was once chastised by a friend, who said, ‘You advertising people, you go very deeply into the surface of things, don’t you?’ However, although it was intended as a criticism, I think it should be taken as a compliment.
As any devotee of Sherlock Holmes will tell you, paying attention to trivial things is not necessarily a waste of time, because the most important clues may often seem irrelevant and a lot of life is best understood by observing trivial details. No one complained that Darwin was being trivial in comparing the beaks of finches from one island to another, because his ultimate inferences were so interesting.
The mentality of the physicist or the economist assumes that large effects are only obtained by large inputs. The mind of the alchemist understands that the smallest change in context or meaning can have immense effects on behaviour.
Conclusion: On Being a Little Less Logical
No one would doubt that it is possible to have too much randomness, inefficiency and irrationality in life. But the corresponding question, which is never asked, is can you have too little? Is logic overrated? I didn’t set out in this book to attack economic thinking because it is wrong – I think we should absolutely consider what economic models might reveal. However, it’s clear to me that we need to acknowledge that such models can be hopelessly creatively limiting. To put it another way, the problem with logic is that it kills off magic. Or, as Niels Bohr* apparently once told Einstein, ‘You are not thinking; you are merely being logical.’
A strictly logical approach to problem-solving gives the reassuring impression that you are solving a problem, even when no such process is possible; consequently the only potential solutions considered are those which have been reached through ‘approved’ conventional reasoning – often at the expense of better (and cheaper) solutions that involve a greater amount of instinct, imagination or luck.
Remember, if you never do anything differently, you’ll reduce your chances of enjoying lucky accidents.
This pseudo-rational approach, with its obsession with following an approved process, excludes counter-intuitive possible solutions and restricts solution-seeking to a small and homogeneous group of people. After all, not even accountants or economists use logic to solve everyday domestic dilemmas, so why do they instinctively reach for calculators and spreadsheets the moment they enter an office? The conventional answer is that we deploy more rigour and structure to our decision-making in business because so much is at stake; but another, less optimistic, explanation is that the limitations of this approach are in fact what makes it appealing – the last thing people want when faced with a problem is a range of creative solutions, with no means of choosing between them other than their subjective judgement. It seems safer to create an artificial model that allows one logical solution and to claim that the decision was driven by ‘facts’ rather than opinion: remember that what often matters most to th
ose making a decision in business or government is not a successful outcome, but their ability to defend their decision, whatever the outcome may be.
Solving Problems Using Rationality Is Like Playing Golf With Only One Club
You will improve your thinking a great deal if you try to abandon artificial certainty and learn to think ambiguously about the peculiarities of human psychology. However, as I warned at the beginning of this book, this will not necessarily make life easier – it is much easier to be fired for being illogical than for being unimaginative.* The chart below describes the consequences of different modes of decision-making, whether things go right or wrong.
Why we need to spend more time and energy hunting for butterfly effects.
Large organisations are not set up to reward creative thinking. As the chart shows, the greatest risks result from an imaginative approach, so it seems safer to act logically. However, it is the job of the alchemist to explore the upper half of this chart occasionally – and managers should give their staff permission and unwavering support when they do so.
Finding the Real Why: We Need to Talk about Unconscious Motivations
Our brains present us with a view that is the best-calibrated to improve our evolutionary fitness rather than the most accurate. Being ignorant about your own motivations may pay off in evolutionary terms: it is an inarguable truth that evolution cares about fitness rather than objectivity, and if the ability to present oneself in a good light has certain reproductive advantages, then it will be prioritised. I suspect that we can’t overcome these tendencies, and I am not sure that we would even want to, since life would be unrecognisable – and possibly intolerable – without them.
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