Behavioural Economics, Human Nature, Teenage Nature

“This theory-induced blindness now strikes nearly everyone who receives a PhD in economics. The economics training the students receive provides enormous insights into the behaviour of Econs, but at the expense of losing common-sense intuition about human nature and social interactions. Graduates no longer realise that they live in a world populated by Humans.”

Misbehaving: The Making of Behavioural Economics Richard H. Thaler

“With a lack of jobs and a great deal of uncertainty about participating in contemporary society, however, the adolescent period may in many ways be even further prolonged. Because modern cultural practices do not offer transitional relationships with non-parental adults to help acknowledge and facilitate the adolescent period, we have some major challenges as adolescents in our modern times.”

Brainstorm  Daniel J. Seigel

It may seem strange to begin a conversation about education by talking about behavioural economics, but there are some very obvious parallels in the way economists and educational theorists have approached their work.

Behavioural economics pointed out that part of the problem with much of the traditional economic thought assumed that people always behaved like economists, rather than being the irrational, inconsistent beasts that humans are. For example, if you were told that a toaster which you were about to buy for $80 was half price at a store ten kilometres away, would you travel the distance to save $40? Of course, most people would say yes. However, if a person were told that they could save $40 on the cost of  a new car by going to a dealer the same distance as in the toaster example, the number prepared to travel the distance would be significantly smaller. “It’s only $40,” they’d argue. “It’s hardly worth it!”

In terms of the toaster it represents a bargain, but, in comparison to the overall cost of the car, $40 hardly seems significant. Yet to an economist, $40 is $40 is $40. But the average person doesn’t think like that. While certain actions should lead people to behave in particular ways, economists – and governments taking their advice – often find that their action doesn’t have the desired result. For example, an austerity program designed to get a federal budget back on track may have the effect of causing people to tighten their own belts, leading to a recession and less government revenue, creating an even worse budget position.

Humans do not behave like economists. We are not always rational and don’t always do what’s best for us. More information won’t necessarily lead us to give up smoking, drinking or gambling, but apart from obvious vices like these, we often fool ourselves that we’re behaving rationally, when we’re simply justifying our decisions.

As Daniel Kahneman, author of “Thinking Fast And Slow” puts it:

“We think, each of us, that we’re much more rational than we are. And we think that we make our decisions because we have good reasons to make them. Even when it’s the other way around. We believe in the reasons, because we’ve already made the decision.”

Work on delaying rewards

Kahneman and Tversky’s work on behavioural economics should encourage us all to challenge some of our assumptions, and, in particular, we should consider some of the implications for education.

Secondary school students are just like human beings only more so. As well as having all the irrationality of the average adult, they are also going through the enormous changes that adolescence brings. Very few of them are long term thinkers, and even short term planning is a challenge at times. Yet, we often expect that they’ll be motivated by the idea of how this will help their final result at the end of secondary school. Even more ridiculously, schools expect that students have an image of who they’ll be in ten years time and should be using their opportunities to work toward the achievement of that image.

Of course, the reality for many secondary students is that – even at the start of their final year – they still have no firm idea of a career path. They are being told that their decisions are extremely important and will affect the rest of their lives, while also being told that, unlike the twentieth century where people performed one job for much of their lives, in the future people will hold many different jobs and have to re-train many times in their lives. Many students will have picked subjects for their final years, not because of an interest or aptitude, but because somebody assured them it was a good idea or that it gave them more options.

Like the economists trying to predict economic outcomes while ignoring human behaviour, most schools are structured as though all their students are future oriented beings, but for many, their main motivation for school work will be the short term reward and punishment strategies on which many teachers rely rather than having any concept of how their learning fits into the bigger picture. Many of them won’t even be concerned about the bigger picture, being more present oriented and concerned with the immediate difficulties of their lives. Adolescence is a time when it’s natural to test boundaries and to embark on voyages of self-discovery. For many the immediate pay-off is always going to trump the long term. In other words, binge drinking tonight is so much fun that we can ignore the possible hangover tomorrow. And yes, it would have been a good idea to have studied for Tuesday’s test but it’s Monday and watching “Games of Thrones” has more going for it than revising some Shakespeare play. Tomorrow’s consequences exist in some fictional netherworld that isn’t real.

Schools don’t need to be always involved in the journey of their students, but it’s worth keeping in mind that for much of the time the dramas and internal conflicts are going to seem more important than how to calculate the inverse of a three by three matrix.

Of course, the future oriented kids exist. They’re the success stories, but trying to change the behaviours of present oriented hedonists by convincing them that they should be more concerned with tomorrow will have about as much effect as telling a politician that rather than being concerned with re-election, he or she should be thinking about the long term future of decisions.

Implications for the Classroom.

Of course, it’s easy to be critical of what it is happening. But what should be happening and how can a classroom teacher implement changes that actually improve the system? Particularly when there’s an increasing focus on testing which emphasises the short term results of students performing at school. By contrast there’s very little interest in what happens to a teacher’s students once they leave the school.

Now there’s nothing wrong with testing to see what students have learned, but one must be very careful with how the results of any tests are used. Once doing well in the test itself becomes the aim, then you risk substituting genuine learning for the capacity to excel in tests. As Martin Thomas says in Loose:

“It is said that it takes a mere 18 months before the people in any organization work out the best way to manipulate or “game” a target-based system, whether it governs the allocation of healthcare funding, a ranking in a government-backed league table or decisions about bankers’ bonuses.  After this time the system starts subverting itself, delivering a set of outcomes completely different to those that were intended, and, all too often, the numbers that are being counted become more important the behavioral change that the organization is trying to deliver…

“A single-minded focus on numbers and targets also shifts the source of expertise and investment, particularly in our public institutions, form the front-line practitioner – the teacher, or the surgeon – to the measurer of their performance – the auditors accountants and managers: hence the growth of the back-office or managerial function in most public bodies.”

As a classroom teacher, many things are outside one’s control. While one has limited control on the shape of the room, the times that classes run or the number of students in a classroom, there are many, many aspects of organising learning that are only limited by one’s knowledge and imagination.

Behavioural economics has some interesting implications for the classroom. Let’s look at some of the ideas and how they could change your classes.

1.Risk Aversion

‘I remember one of them saying how important it was to Oklahoma’s future for the state to develop a culture of innovation. “But I’m just not sure,” he said, “where all these great ideas are going to come from.” I told him they would come from all over the state. People everywhere have ideas they would like to develop, but they need permission to try them out and see if they work. If they fear failure or humiliation or disapproval, they will usually hold back. If they’re encouraged to try their hand, they usually will. Culture is about permission. It has to do with what’s acceptable and what is not, and who says so. Sometimes changes in permission happen slowly, and it’s only when we look back over time that we can see the true scale of them.’

Creative Schools  Ken Robinson 

While we’ve acknowledged teenagers’ preparedness to take risks, as one grows older, this diminishes. People become more risk averse.

Of course, when we talk about risk, we’re often talking about different levels of risk. If you decided to devote a lesson to studying the lyrics of a contemporary pop group, you may consider that you’ve taken a risk, but there’s hardly likely to be much of a downside beyond your students being bored and the lesson being a fizzer. On the other had, drinking a bottle of vodka and playing “chicken” with cars on a freeway is liable to result in long-term consequences. So when we refer to “risks”, it’s probably important to ask yourself exactly how serious the risk is. Trying something slightly unconventional may not work, but if it has no lasting consequences, it’s hardly a risk. However, with the growing emphasis on external testing, schools and teachers are more inclined to “play safe”. As John Maynard Keynes said: “Worldly wisdom teaches that it is better for reputation to fail conventionally than to succeed unconventionally.”

Of course, when we’re dealing with a school where the conservative approach of “teaching to the test” has failed to yield the sort of results that will save it from whatever negative consequences poor test results bring with them, then the bigger risk may be to try nothing new. “Failing conventionally” may be the inevitable consequence of “doing to the same thing over and over again and expecting a different result” which Benjamin Franklin said was the the definition of insanity. (Often attributed to Einstein, but he was quoting Franklin)

In “Misbehaving: The Making of Behavioral Economics”, Richard H. Thaler’s describes a meeting where a group of executives were asked if they’d take a risk where they had a fifty percent chance of either making $2,000,000 from an investment or losing $1,000,000 from the same investment. (To understand this in basic terms, someone is offering you two to one on the flip of a coin. Assuming the coin isn’t suspect, you’ll almost certainly win if you bet over a long enough time period and don’t risk too much of your money on an individual toss.) In the example given, only three out of twenty three said that they’d take the risk. The others declined for fear of losing their reputation or their chance at promotion, or even their jobs. On the other hand, when the head honcho was asked would he want any of his executives to take a gamble like the one described, his position was that he’d rather that they all took the risk, as they’d only need a handful of them to be successful for the company to be better off financially.  However, most firms produce managers who are reluctant to gamble because the consequences of failure are too severe for them, personally.

Similarly, schools often produce environments where it’s safer to stick with the status quo. Preparing your students for a test or exam, and simply doing what your own teachers did when you were in school will attract generally attract less criticism when it fails than if you attempt to implement something new – even if that initiative is based on the best research or the suggestions from some of the brightest minds in education. Recently, in Victoria, the government was suggesting that teachers would be judged on the goals they’d set, and anything less than a high percentage of achievement would be looked upon as failure. While there would be discussion with the reviewer, and not reaching your target wouldn’t necessarily lead to disciplinary action, the overall effect of the strategy was likely to encourage teachers to set the bar as low as possible for their professional goals.

Of course, there are many things that schools do that work well, and there’s no reason for a complete overall of everything, every fortnight, but how can you help to encourage an environment where at least some innovation is tried, and where practices are improved? Nothing is risk-free, even standing still. so how do you build a safety net so that people are encouraged to think about the best ways to encouraging learning, and don’t simply “fail conventionally” because it attracts less attention.

Remember, for many teenagers it may be the “new” that drives them. While they often seem listless and uninterested, they still have a desire to discover and learn, to test out what’s true, what’s possible, what’s there. It’s just that school doesn’t always offer the opportunities to do this.

Not everything has to be done at once, but when was the last time, you or your school chose to take on anything that might be a great success or a spectacular failure. What were the possible consequences?

Some of you will be familiar with Google and Atlassian and the idea of allowing allowing employees free time once a week to work on their own projects, and from these both companies have managed to develop some of the most profitable income streams. In a similar vein, many schools are doing a great deal with “Inquiry learning”, while others will be suspicious of anything that doesn’t involve a teacher standing and delivering.

Is there any scope for something similar to “Google Time” could be given to the staff or students, or is it just too risky? Or is doing what rarely ever works, the biggest risk of all?


Do you ever “risk assess” what you do? Do you ask what are the possible consequences of changing something? Of changing nothing? How serious are the negative consequences? Loss of job? Potential lowering of student numbers? School closure? What are the potential positives that could occur, and would they be worth it?

How do you “risk assess”?

  • As a teacher
  • As a faculty
  • As a school

2. Inside view/Outside View

Ask a person if everyone can make money gambling. Well, the answer is obvious, isn’t it? For someone to win, someone else has to lose. Ask a gambler if they’re going to win, and they’ll tell you that they might. Sometimes they’ll even assure that it’s a certainty. Why will they win when statistically most people lose? Well, because they’re smarter than the average punter. They know more. If they tell you that, ask them why they still have a day job.

We have an inside view and an outside view. The inside view refers to the way we see things that we’re involved in, while the outside view is how we view the same project or activity when we’re not involved. A teenager falling in love for the first time will have an inside view, while those around him or her will have an outside view. “You don’t understand how I feel, this is going to last forever!” While occasionally the teenager will be right and the relationship will last, if not forever, at least for long enough for them to say, “I told you so”, generally the outside view is more reliable.

But it’s not just teenagers and gamblers who have unrealistic inside views. When was the last time a  major project came in on time, and under budget? I’m not just talking about governments here, consider how often private industry gets it wrong.

Our inside view is often the subject of unrealistic optimism.  Think about how this applies to students, teachers and schools.

If you ask a student what they think will happen if a student leaves things till the last minute, or rocks up to a test having done no study. Most will give you a pretty accurate assessment. However, when they talk about themselves they’re more likely to tell you not to stress because they’ll “get it done”.

If a teacher or counsellor wants to change the unrealistic optimism of the average student, it may help to start with encouraging the student to consider the outside view:

“What do you think will happen to a student who does little work in class, and does no work at home and fails to meet deadlines?”

“They’ll fail.”

“So are you expecting to fail?”


“Why not?”

“Well, I’ll get it done.”

“What makes you believe that you’re different?”

At this point, the student will either come up with a more realistic assessment, or tell you about past experiences where they did manage to cobble together enough work to gain a satisfactory assessment, which means that their optimism may not be altogether misplaced. And this is a good point to move onto teachers’ misplaced optimism.

What are students learning from what you do? For example, is a student learning that there is no need to have work done on time, because it was too easy to get an extension when they didn’t hand it in? Are students learning that substandard work is all that’s needed because what they’re doing is really just “busy work” and nobody, not even the teacher, really cares.Not really what I’m trying to say.

Develop your own “outside view”. List your some of your behaviours as an educator.

Here’s a list of some of the things I’ve heard people say over the years (Loosely quoted). It’s by no means exhaustive so get into the habit of compiling your own on a regular basis. (More on habits later!)

  • “I spend hours reading students’ work and write detailed comments which the students don’t read and just ask me for the mark”
  • “In spite of asking for the survey to be returned by Friday, I only received them back from a third of the staff.”
  • “There’s a student in my class who does very little work. I’ve tried keeping them back and reporting them to the coordinators, but nothing seems to work.”
  • “I’ve been overlooked for a job I applied for again, and I feel that the school doesn’t really value me.”
  • “Numbers in this school are declining and I’m worried that we may face closure in the next few years.”
  • “Jason was given an extension and he still hasn’t done the work. I don’t have time to follow him up.”
  • “I don’t want to waste so much class time preparing my kids for that external test, but I’m worried that if I don’t, it may reflect badly on me if they don’t do well.”
  • “My students don’t do the reading I give them for homework.”

What would you think if it were a teacher from a different school doing the same thing? What advice would you have for them? Now, ask yourself if that’s what you’ve done in the past when confronted by a similar problem.

3. Loss Aversion

“Dangerous Minds” is a film based on the autobiography, “My Possie Don’t Do Homework” by ex-marine, LouAnne Johnson’s. At one point in the film, Michelle Pfeiffer’s character tells her students that they’ve all got “A”s but they need to work to keep them. Johnson actually did this, and while she hadn’t studied the behavioural economics theories, she was on solid ground because research tells us that people value what they have and don’t want to lose it.

In an experiment by behavioural economists, some students were given a mug worth about $5 at the start of a session, while others were given nothing. The students were also given a questionnaire where they nominated a price at which they’d sell it if they were the holders of the mug, or a price at which they’d buy it if they were in the group who missed out on the mug. The median price of the “owners” was significantly higher than the actual value, while those who didn’t have a mug nominated a median price lower than actual value.

Should we start with the idea that students own the pass/A grade/positive outcome and give them feedback on how what they’ve just done is taking away from that, rather than having the final result as what’s an unrealistic goal for many. Once they “own” the mark, they’re a lot more reluctant to lose it.

So you could have a marking scheme that tells the student:

“At the moment you have been awarded thirty marks for this assignment. You will lose five for handing it in after the due date. You will lose five for not reaching the word limit. You will lose one mark for each of the following you do not mention. a, b, c, etc. You will lose one if you did do not explain each of these…” 

And so on, till they’re on a potential zero if they manage to lose everything.

Can you think of other ways that loss aversion could be structured into your class?

Summing Up

  • Economists think that people think like economists. Once you acknowledge that people don’t always pursue the rational path, you can start looking at ways to motivate them which actually work.
  • Teenagers are even less likely to be rational and forward looking than adults.
  • Once one acknowledges these two ideas, many of the behavioural economics findings may help in education.

Leave a Reply

Fill in your details below or click an icon to log in: Logo

You are commenting using your account. Log Out /  Change )

Google photo

You are commenting using your Google account. Log Out /  Change )

Twitter picture

You are commenting using your Twitter account. Log Out /  Change )

Facebook photo

You are commenting using your Facebook account. Log Out /  Change )

Connecting to %s