28 November 2013

Gender Pay Gap - Sharp Talks Episode 2

Sharp Talks is a Pikant & Naumof project which aims at bringing a behavioral science perspective to sensitive issues such as poverty, corruption, human rights, discrimination, crime etc.

Each episode is hosted by Nicolae NAUMOF and a guest specialized in a different field is invited. We discuss sensitive issues and bring two (scientific) perspectives on the topic in the hope that we will bring some light on it.

The Second Episode of Sharp Talks is focused on the topic of Gender Pay Gap particularly on the causes that underlie the difference in payment between women and men. The guest of the second edition is Lorraine Villageois who is specialized in Law & Human Rights.

Enjoy the show and let us know what you think of it.(Take into account that we are not professional film-makers or TV specialists and the show is done on a very low budget… so focus on the talk :) )

Note: This content is not addressed to people who are under the age of 18. 

Here are links and references to some of the materials we mentioned during the talk.

12 November 2013

Why We Want What We Want - Webinar Recording

Here's the recording of the Webinar on Constructed Preferences - Why We Want What We Want - I gave on November 12. 

Here is what Bjarke Schlechter, Msc in Psychology, said about the webinar:

Nicolae Naumof managed to give an inspirational and educational webinar, into the world of human choice. The presentation was very precise and Nicolae was able to make key points come alive, with great examples from the real world.

This is an introduction to Designing Decisions - Training in Choice Architecture.

Enjoy the video!

4 November 2013

It Makes (No) Sense

I ask of you to make an exercise of imagination and think that you are a medical doctor in the city of Vienna at one of the world’s best hospitals. You are a true gentleman, member of an elite profession with outstanding education and highly respected by the entire society. You have spent many years learning medicine and you exercise your profession in good faith, doing what you know is best for your patients. You strive to fulfill your duties to the best of your capabilities. Your goal is to make people healthy again and, if the case, save their lives. Despite of your best efforts, some of your patients die. You think that this is the way of nature and even God’s will. After all, not everyone can be saved even if you apply the best of your knowledge in medicine.

The year is 1849 and Vienna is the capital of one of the world’s most powerful empires. Naturally, the hospital in Vienna has the best physicians in (central) Europe. Many smart and highly educated people are practicing the noble science of medicine. However, there are some diseases that can’t be cured and one of them is childbed fever which kills many women very soon after they gave birth. Despite the fact that the women who gave birth in this world-class hospital benefited from the care of some of the best doctors of the time, many of them (up to one third) die soon after their children were born. This must be the will of God or just nature’s way, since even the best doctors in the empire can’t help the new mothers. Certainly this condition - childbed fever – is caused by something that is beyond human understanding. It must have some cosmic origins.

If you detect something that is not quite as it should be, do not forget that it is the year 1849.

One of your colleagues, a fellow doctor, who works in one of the maternity units of the hospital, has a wacky idea that childbed fever can be prevented. This is a bit awkward since the condition is known to be the way of nature, the price that nature sometimes asks for bringing a new life into the world. This weird doctor is Ignaz Philipp Semmelweis. He made the students and trainee doctors who are under his supervision to perform an unusual activity in the middle of their daily routine. Usually, doctors, students and trainee doctors would work on the cadavers in the basement of the hospital. (Cadavers were, and still are, used for teaching and research purposes). Afterwards they would perform their work with (living) patients. The wacky doctor Ignaz Philipp Semmelweis asked his students and trainee doctors to do something very unusual and that made absolutely no sense exactly after finishing the work with the cadavers and just before starting their patient duties. He asked them to wash their hands (with chlorinated lime solutions). The students and trainee doctors were surprised by the unusual request. They couldn’t understand why doctor Semmelweis would ask them to do this since it made absolutely no sense. (Remember, the year is 1849). Some of the trainee doctors complained to the hospital’s management and an investigation was launched since the wacky doctor has created a new protocol and established new rules without the express approval of the management.

Doctor Semmelweis told the hospital’s management board that he noticed that when he washed his hands before working with the women in the maternity, the number of women who got childbed fever decreased dramatically from about 30% to about 1%. He also said that he asked his students and trainee doctors to do the same and that this rule of washing hands before working with patients should be introduced to the entire hospital.

The board wasn’t very happy with this outrageous suggestion and asked doctor Semmelweis to give an explanation. The doctor could only say that cadaveric particles on the doctors’ hands would cause blood poisoning to the women in the maternity. This made no sense to the doctors in the hospital management, since doctors by their very nature could not have dirty hands as factory workers and farmers had. They were true gentlemen. How could they be the cause of a disease which is due to cosmic influences? Clearly doctor Semmelweis is not in his right mind anymore.

Let’s leave the mid-nineteenth century Vienna and come back to today.

For you it makes no sense that for the doctors in the board of the hospital it made no sense to wash their hands before working with (live) patients. This is because you know that bacteria exist. You have the notion of bacteria and of micro-biology. The doctors in those days didn’t have these notions. For them such things simply didn’t exist and naturally since they didn’t exist they can’t cause childbed fever or any other disease.   

This was true also for doctor Ignaz Philipp Semmelweis. He had no notion of bacteria or micro-biology; he used the term of cadaveric particles. 1849 was twenty years before the recognition of Louis Pasteur’s work on micro-biology and its applications in medicine.   

The doctors in the board of the Vienna Hospital were acting to the best of their knowledge. Can you blame them for not knowing something that wasn’t known by anyone? For them, it actually made no sense to wash their hands since they did not know that bacteria (on their hands) existed. The (only) reasonable explanation was that Ignaz Philipp Semmelweis has gone crazy.

In fact, Ignaz Philipp Semmelweis was fired from the hospital in Vienna and soon after was committed into a mental asylum where, fourteen days later he was beaten to death by the guards. Ignaz Philipp Semmelweis died being considered mad, with shame instead of glory. Only twenty years after his death his work received the proper merit.

Earlier I said that the doctors on the board of the Vienna Hospital can’t be blamed for not knowing something that was not known by anyone. What they can be blamed for is: not knowing that there are things they don’t know. They can be blamed for holding too firmly to their existing beliefs and giving too much credit to the mystic explanation. They can be blamed for not accepting that they are not omniscient, that they didn’t accept that they can make mistakes or simply hold invalid opinions. They can be blamed for Ignaz Philipp Semmelweis dyeing in disgrace, but most importantly they are to be blamed for all the women who died from childbed fever in between the time that they rejected Semmelweis’s proposition and the time it was finally accepted that washing hands before working with patients makes sense.

The story of Ignaz Philipp Semmelweis is a sad and bitter one. His story tells us that we should know that there are many things we don’t know. His story tells us that it may very well be the case that what we think makes no sense, in fact, makes all the sense in the world once you add a bit of (missing) knowledge. 

Watch a movie on Ignaz Philipp Semmelweis ...

1 November 2013

Self-Enforced Poverty - Sharp Talks Episode 1

Sharp Talks is a Pikant & Naumof project which aims at bringing a behavioral science perspective to sensitive issues such as poverty, corruption, human rights, discrimination, crime etc.

Each episode is hosted by Nicolae NAUMOF and a guest specialized in a different field is invited.
We discuss sensitive issues and bring two (scientific) perspectives on the topic in the hope that we will bring some light on it.

The First Episode of Sharp Talks is focused on the topic of Poverty, particularly on Self-Enforced Poverty. The guest of the first edition is Fred Sepp who is specialized in sociology and political science.

Enjoy the show and let us know what you think of it. (Take into account that we are not professional film-makers or TV specialists and the show is done on a very low budget… so focus on the talk :) )

Note: This content is not addressed to people who are under the age of 18.

Here are links and references to some of the materials we mentioned during the talk.

On Giving money to poor people:

On Fast & Slow Life History Theory:

On Poverty leading to suboptimal decisions:

On Poverty Nutrition Trap:

31 October 2013

Choice Architecture Workshop by Pikant & Naumof at MediaLAB Amsterdam

On October 9th I, Nicolae Naumof, gave a half a day workshop on the topic of choice architecture at MediaLAB Amsterdam, part of Hogeschool Amsterdam (University of Applied Sciences Amsterdam).

Sixteen students attended the workshop and they have been acquainted with some basic elements of choice architecture and with some real-life examples of how choice architecture is used. In the second part of the workshop, the students solved two case studies on analyzing and respectively constructing a choice set.

Here’s what Marco van Hout - Program and research coordinator MediaLAB Amsterdam said about the workshop:

Pikant & Naumof recently facilitated the workshop 'Choice Architecture' for the MediaLAB Amsterdam students. These students follow a high-paced design program and work for 20 weeks in multicultural and interdisciplinary teams on challenges from industry. Nicolae's workshop proved vital for their knowledge of human behavior, and in particular in how to design for and optimize choice architectures.

Besides being very informative, the workshop was full of fun facts and engaging examples/ exercises. I highly recommend this workshop to anyone interested in optimizing their product, interface or business model through clear guidelines in how to persuade, convince and nudge people's decisions.

For me, giving this workshop was a pleasure. For some time I had not worked with young people and it was a great pleasure to see the energy, enthusiasm and willingness to learn the students at MediaLAB Amsterdam.

30 October 2013

Changing the Feeling Changes Your Mind – Emotional Framing

Earlier I’ve written this post: Changing the Point of View Changes Your Mind on how the framing of a message changes our minds (influences decisions).

The main idea behind the framing of outcomes effect is that we perceive outcomes as gains or losses and what represents a gain or a loss depends on a reference that can be manipulated. The change in decision and in behavior is due to loss aversion – losses loom larger than gains.

There is, however, a different type of framing – Emotional Framing – which doesn't rely only on loss aversion. The main psychological mechanism that powers emotional framing is the affect heuristic.

The very nature of negative emotions is to keep us from harm. Obvious examples are fear and disgust which are negative basic emotions and play an important role in keeping us safe from things that might kill us. Of course this was more the case with our very distant ancestors, but even nowadays it is wise to not stay too close to something that smells disgusting.

Naturally we tend to avoid things that have a negative emotion attached to it.

For example, in the recent wars in Iraq and Afghanistan, the expression of friendly fire was used extensively in reports about soldiers who died. The term friendly fire sounds benign and has a low load of negative emotion. Unfortunately the reality is that his very smartly chosen expression stands for we killed our own which you have to admit has a much larger negative emotions baggage.

In the year 2013 another term became very popular at least in the US and Europe: Monetary easing also known as Quantitative easing. This sounds really nice and at first glance I think we could all use some ease on our monetary affairs. Despite its benign sound, this expression stands for Printing Money. Of course, these days’ central banks are not actually printing extra money, but the outcome is exactly the same (e.g. inflation)…

Another area where emotional framing is present is in supermarket promotions, at least the ones in Albert Heijn (the main supermarket chain in The Netherlands). It is quite common to have promotions such as: 2 + 1 (Free) or the second identical item is half price.

If shoppers would actually give some thought to what the underlying message is, they would probably buy fewer items.

2 + 1 (Free) actually means that you get 33.33% discount if and only if you buy three items.

The second one is half price actually means that you get 25% discount if and only if you buy two identical items.

If we would actually think like computers it should make no difference how the message is framed, but we are not reasoning machines.

23 October 2013

Challenging a Fundamental Assumption of Marketing

The essence of marketing is that a company should best adapt its offering (product / service, pricing, distribution etc.) to the target group’s needs and preferences.

This is based on the assumption that (all) preferences are pre-existent and stable. The classical example for this is: if you prefer apples over oranges and you prefer oranges over peaches then for sure you will NOT prefer peaches over apples.

Is this assumption solid?

Both real life and academic research say that it is not. We do not always have clear pre-existing preferences. Think about buying a washing machine… do you really know which one you want before starting to look for one?

Quite often, our preferences are constructed while choosing and what we prefer is significantly influenced by the choice environment. The constructive nature of (some of) our preferences leads to the instability of preferences. In simpler words, our preferences can change depending on which choice environment we are in while making the decision.

During the Why We Want What We Want - Webinar we will challenge the assumption of stable pre-existing preferences and take a look at how they are constructed.

You will be introduced to the concept of constructed preferences and you will be acquainted with examples of how factors other than individual preferences influence choice.

You will be acquainted with the preconditions for construction of preferences and

You’ll see how we get to like what we have chosen through post-rationalization.

Join me on November 12 for the Why We Want What We Want – Webinar from Pikant & Naumof

15:00 Central European Time (Amsterdam, Brussels, Berlin, Paris, Rome, Madrid, Budapest, Bern, Prague Stockholm, Copenhagen etc.)
14:00 GMT (British Time)
16:00 Eastern European Time

Duration: 50 minutes

Registration for Why We Want What We Want webinar
There are 80 Fully Subsidized seats.
Registration beyond this quota will be charged, the price being 19Euros / attendee (VAT applicable for clients in The Netherlands)  

Sign up early and get an unpaid seat for the Pikant & Naumof webinar on the November 12.

22 October 2013

Why We Want What We Want - Webinar 12 Nov

Each and every day we make choices.

Many professionals in areas such as marketing, human resources, sales etc. want to influence other people’s choices. For example, marketers want people to choose the product of the company they work for and not the competition’s product. Moreover marketers want to influence people’s choice so that clients pick up the product / service that has the highest profit margin.

The general view is that a company should best adapt its offering to the target group’s preferences and this will lead to higher market success. However, this view is based on the assumption that (all) preferences are pre-existent and stable.

Is this assumption solid? Can it be challenged?

During the Why We Want What We Want - Webinar we will challenge this assumption and take a look at how preferences are constructed.

You will be introduced to the concept of constructed preferences and you will be acquainted with examples of how factors other than individual preferences influence choice. 

You will be acquainted with the preconditions for construction of preferences and you’ll see how we get to like what we have chosen through post-rationalization.


The Pikant & Naumof webinar Why We Want What We Want will take place on
November 12 (Tuesday) 2013 at
15:00 Central European Time (Amsterdam, Brussels, Berlin, Paris, Rome, Madrid, Budapest, Bern, Prague Stockholm, Copenhagen etc.)
14:00 GMT (British Time)
16:00 Eastern European Time

Duration: 50 minutes

Registration for Why We Want What We Want webinar

We offer 80 Fully Subsidized seats.
Registration beyond this quota will be charged, the price being 19Euros / attendee (VAT applicable for clients in The Netherlands)  

Thus, sign in early and you do not pay for attending this Pikant & Naumof webinar on the November 12.   

17 October 2013

First Edition of Designing Decisions – Training on Choice Architecture – Review

October 3 & 4 marked the first (open session) training by Pikant & Naumof - Designing Decisions – training on choice architecture

The session was hosted by  Design Thinkers Academy. I, Nicolae NAUMOF, gave this training to five very curios, hardworking and nice participants.

The first day was dedicated to the presentation of the main tools of choice architecture (established psychological effects on choice). During the first day everyone felt intrigued (according to feedback forms).

The second day of the workshop was dedicated entirely to participants solving case studies on choice architecture.

First, they analyzed a choice set

Then I was asking questions that didn’t have an obvious answer…

The next three case studies solved by participants were a bit more demanding since now they had to (re)Design Choice sets and apply tools from choice architecture …

And after some hard work they went on to present their propositions:

And here are some of the results… 

Throughout the second day of the workshop all participants felt happy (according to feedback forms).

Here's what Zuzana Vagnerova (from UN development program) said about the training:

The training was very inspirational, energizing  bringing lots of ideas, with both substantial and in-depth knowledge together with case studies, learning from experience and being fully practice-oriented. The composition of participants contributed to interesting and focused discussions and exchanges. I will hopefully be able to put some of it into practice.
The trainer was excellent instructor who maintained the desire to learn through his enthusiasm and very relevant knowledge. He responded to questions well and is very approachable and competent instructor. Thank you

An analysis on the indicators from the feedback forms concluded that overall the participants were happy with the training’s content, delivery and organization.

For me, personally, giving this training was a real pleasure. The atmosphere was wonderful and I had the feeling that everyone learned new things and had an enjoyable two days session.

Finally you can enjoy this movie. 

One of the case studies solved was "The Museum" which asked participants to restructure and redesign a choice set - namely the offer of a museum (tours). Here's what was proposed by the two teams ... 

Thinking Money - Preview

Here's a brief preview of Thinking Money - workshop on the psychology of money I will give on the 29th of October.

11 October 2013

What You Don’t See Can’t Hurt You - How Visibility of Payment Influences the Pain of Paying

Use your imagination and picture a market in the mid XV-th century in Europe. Farmers and tradesmen sell their products in the square of the city. Others want to buy and search for the best offer. At one point the buyer chooses one seller and buys, say wool. In exchange for the wool the buyer will give the seller a number of coins – money.

If we think about this transaction – wool for coins – we notice that it is a very visible one. The buyer takes the coins out of his bag (pocket) and gives them to the seller in exchange for the product. Putting things a bit differently, for the buyer it is impossible to not see the coins (money) going out of his pocket and going into the seller’s hand and pocket.

Nowadays things are a bit different than in the mid XV-th century. Now we can pay without seeing the money going out of our pockets and into the seller’s hand. We can use checks, bank cards, vouchers, bank transfers etc.   

The visibility of a payment – of money going out of one pocket and into a hand – influences the amount of pain of paying associated with a payment. Think of the following scenario: Linda goes out on a weekend day and wonders the streets of the city center. At one point her eyes are drawn to a shop window and she sees a wonderful pair of shoes. They look absolutely gorgeous and she goes into the shop and tries them on. Miraculously they do not only look great, they also fit close to perfect. Linda looks at the price tag and feels a bit of chill; the shoes cost 129 Euros. Linda is perfectly aware that she doesn’t really need this pair of shoes since she has already more than 15(0) pairs. However she felt in love with them. In her wallet she has three 50 Euros bills and her bank card on which she has more than 129 Euros.

Do you think that Linda will pay in cash or using her bank card?

Most likely Linda will use her bank card because by doing so she will not see the (quite large) amount of money going out of her purse and into the hands of the cashier. The bank card transaction represents the same thing as paying in cash… Linda will still have 129 Euros less and a wonderful pair of new shoes. However, Linda will not see the payment. She will experience less pain of paying by using her bank card.

Linda goes out of the shop happy because she got a wonderful new pair of shoes and feeling quite good that she still has 150 Euros in her wallet. She didn’t see the 129 Euros (price of the shoes) going out of her purse and this contributed to her experiencing a low level of pain of paying. She goes into the street and walks around with a bright face (due to happiness). After about two minutes Linda’s phone rings. She received an SMS which says:

“Your Bank Inc. informs you that a payment of 129 Euros was made out of your account to Fantastic Shoes Ltd. If you do not recognize this transaction contact Your Bank immediately”

How do you think Linda feels now? She paid with her bank card so that the payment would be less visible and decrease her discomfort of paying a large price for a pair of shoes. Now the bank informs her that this payment was made, thus making it more visible. In terms of pain of paying reduction, almost the entire benefit of using a bank card is gone. Linda’s face is no longer bright and a feeling of pain mixed with guilt (for paying 129 Euros for a pair of shoes she didn’t really need) go through her mind…

The bank introduced this SMS service to prevent fraud and if people would be perfect reasoning machines without feelings it would be a very useful tool for increasing the safety of using bank cards. However, people have feelings and it is no wonder that when Linda got home she unsubscribed from this service.

The learning from the story of Linda buying shoes is that the more visible (salient) a payment is, the higher the level of pain of paying is experienced. So if you want to increase the pain of paying you should make the payment as visible as possible. Similarly, if you want to decrease the pain of paying you should make the payment as less visible as possible.

Just as a note… the difference between levels of pain of paying experienced when making a visible and respectively a less visible payment will be smaller for purchases that are frequent (e.g. groceries) and planned (e.g. buying a new laptop). This is not to say that there is no difference, rather it is to say that the difference is smaller than in the case of impulse, unplanned (even unnecessary) purchases. 

23 September 2013

How Free is Free Choice?

Free choice is one of the foundation stones of capitalism and democracy, two philosophies that dominate life in today’s world. The freedom to choose is supposed to do two major things. First it is supposed to ensure the maximization of benefit (or utility as economists call it) for the individual. By being free to choose whatever the individual wishes and assuming that the individual knows best what he wants and what is best for him, a person will maximize their benefit and overall well-being.
Second, free choice is supposed to power the free market mechanism. Because the individuals are free to choose whatever they want, the suppliers who provide the products and services best suited to clients’ needs are going to be favored, while the suppliers who provide unsuitable products and services will be eliminated from the market.
In theory, free choice sounds like the best possible thing that can exist in the world. It helps people maximize their well-being and at the same time rewards the companies which sell the best products while at the same time punishing the companies which sell the worst ones. Isn’t it great?
As you may know already, free markets and maximization of well-being are more theoretical concepts than real life. This is not to say that somehow-free markets and increasing well-being do not exist in real life, but rather it is to say that there are no absolutely free markets and no real maximization of well-being.
In the eyes of economics science the human is a near perfect reasoning machine, with established and stable preferences, who has full information (knows everything), who continuously makes cost-benefit analyses, who has absolute self-control and who lives with only one goal in mind, namely maximization of utility or self-benefit. In a nutshell, economics views man as homo economicus.
This view on human nature is not restricted to the field of economics. It is widespread in most aspects of social life, especially in the western world. Democracy functions on pretty much the same principles, but despite its shortcomings, up to now there is no better way to organize society.
The homo economicus view of human nature has spread even in areas of social life that until recently were more paternalistic.  Take for example medicine and health-care. Most of us are used to go to the doctor and say that we feel bad, then the doctor would do some tests, think a bit and come up with a diagnose. After this the doctor would tell us what to do. This is paternalism. In some parts of the world, now, doctors give patients the choice between two or more treatments. In other words, there is a shift from paternalism (the doctor telling you what to do) to libertarianism where the patient is free to choose between treatments. Is this the way it should be? It is up to each and every one of us to give the answer.
Apart from the more philosophical question in the paragraph above, I believe there are more significant questions to be answered. First, we should see if man is actually homo economicus. Are we really those rational agents that we are believed by economists to be? The answer is quite simple and it is “No”. This is not to say that humans are perfectly irrational, but rather to say that the assumptions of all the characteristics of homo economicus are not fully met.
For example, it is impossible for someone to hold complete information. This may be due to the abundance of information and to the fact that our minds have limited capacity; or it can be due to the fact that in many cases we do not make the extra effort to search for all the information on a certain topic. Imagine that you want to buy shoe polish. Would you go to all shops in the city to search for shoe polish, collect all the information on quality, price and quantity, then make a thorough cost-benefit analysis, choose one option and then go back to the shop and buy it?
Unlimited self-control is another thing that people do not have. We can exhibit self-control, but by far we do not have an unlimited supply of it. We, quite often, yield to temptation and to impulse when our self-control resources are low.
Homo economicus is assumed to have one goal in mind namely maximization of self-benefit. But, does this really happen? Sometimes it does sometimes it doesn’t, but this is not to say that people do not want to have as much self-benefit as possible. Rather it is to say that we quite often settle for good enough solutions and not go for the best solution. It is a difference between maximizing and sufficing and most of the time we are happy with sufficing.  
The second question we should answer is how free is free choice? Are we actually free to choose anything? The answer to this question is both “yes” and “no”. Freedom of choice in itself is usually not restricted in many countries, so in principle we are free to choose anything. At the same time what we choose is very much influenced by factors other than our own free will.
Let me give you a simple example. If you go out for dinner at an Italian restaurant, you will end up eating some kind of Italian food and for sure you will not have Chinese food. The mere existence of a choice set, in this case the restaurant menu, limits one’s free choice.
If you believe that the idea of not having Chinese food in an Italian restaurant is silly, consider the following example. In school cafeterias in the UK fried potatoes are not any longer on display, but are available if someone asks for them. To put things simply, the option of eating chips is available but not salient. The result of this change was the decrease of consumption of chips.

In the aforementioned examples, free choice is not so free because some options are not in the choice set one is presented with. At the same time, (free) choice is influenced by the composition of the choice set beyond not choosing what is not in the choice set; it is influenced by how the choices are presented.