Economic Rockstar

Connecting Brilliant Minds in Economics and Finance

067: Leigh Caldwell on Cognitive Economics and the Mathematics of Behavioral Economics

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067: Leigh Caldwell on Cognitive Economics and the Mathematics of Behavioral Economics

leigh caldwellLeigh Caldwell is a behavioural economist based in London.

Leigh, together with Elina Halonen, runs the Irrational Agency, which takes the latest scientific discoveries in psychology and behavioural economics, blends it with their hands-on experience of marketing and business, and turns them into powerful, incisive market research techniques.

In 2012, Leigh condensed his experience in pricing and the marketing of several of his businesses into a new book The Psychology of Price: How to use price to increase demand, profit and customer satisfaction.

Leigh is co-founder of the London Behavioural Economics Network, writes for the Pricing Revolution and the Knowing and Making blogs, and regularly features as an economics commentator on BBC News, Radio 4, Research Magazine and other media.

My own background is all about intellectual challenge. I went to university early as a teenager. I studied maths and physics. I was always into pushing myself intellectually and finding the next challenge to take on – Leigh Caldwell

Economists: 

In this interview, Leigh mentions: Elina Halonen, Dan Ariely and George Lowenstein.

Economics:

In this interview, Leigh mentions: Behavioral economics, experimental economics, lab experiments, demand curve, equilibrium, utility, mathematics, rationality, nudge, choice architecture, cognitive economics, reference pricing model, anchoring, hyperbolic discounting, heuristics, neuroeconomics, Nudge Unit, organ donation, tax collection, productivity, GDP and unemployment.

In this episode you will learn:

  • why Leigh help co-found the London Behavioural Economics Network (LBEN).
  • the importance of academics and practitioners working together to further the discipline of economics.
  • why finding the sweet-spot between controlled experiments and realism is difficult yet important.
  • what cognitive economics is and how different it is the behavioral economics.
  • whether big data could influence an individuals consumption behaviors.
  • about the need to use the mathematics of computer science in behavioral economics.
  • why we shouldn’t use the current maths of economics to explain human behavior.
  • why a lack of mathematics is holding back the discipline of behavioral economics.
  • why mathematics is essential for theorising and modelling economics, especially behavioural economics.
  • about the paradox of self-awareness in cognitive economics when faced with choices.
  • how a consumers relationship with a material object is a unique experience and how putting a price on the good can ruin this experience.
  • why charging a higher price for your product or service would generate higher profits in a perceived perfectly competitive market.
  • whether the 99p or 99 cent pricing strategy works.
  • about the reference pricing model and why charging $39 for a product is better than charging $34 for the same product.
  • about the importance of setting prices when considering how numbers are spoken, i.e. numbers with more syllables are received to be more expensive than those with fewer syllables. 
  • how Leigh uses the findings in academic papers to make money for his business.
  • how Leigh uses economic conferences to network, to find out about the latest research and to discover the new academic societies that have been established.
  • about Leigh’s goal for 2016 to start a Cognitive Economics Society.
  • about the advice Leigh would give the UK government to apply cognitive and behavioral economics to deal with some aspects of social life.
  • how the UK government changed people’s behaviour about paying their taxes on time.
  • about the productivity challenge the UK government is facing today and what can be done about it.
  • about the current research Leigh is undertaking regarding where our preferences come from.

Conferences:

Books:

  • The Psychology of Price: How to use price to increase demand, profit and customer satisfaction by Leigh Caldwell.
  • Predictably Irrational by Dan Ariely.
  • Basic Instinct by Pete Luhn
  • Nudge by Richard Thaler
  • Thinking, Fast and Slow by Kahneman and Tversky

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031: Matt Rousu on Experimental Auctions and the Need for Peer-Reviewed Economic Impact Studies.

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031: Matt Rousu on Experimental Auctions and the Need for Peer-Reviewed Economic Impact Studies.

Dr. Matthew Rousu is a Professor and Warehime Chair in the Department of Economics atMatthew Rousu Susquehanna University. His main teaching interests include microeconomics, political economic thought, and game theory.

Matt is an expert on experimental auction design and implementation. He uses his expertise on experimental auctions to study problems in agricultural economics, environmental economics, and public health.  He has published over 40 scholarly articles, as well as book chapters, non-technical articles and Op-eds.

Matt has been quoted widely on many issues by The Chicago Tribune, Forbes, The NY Daily News, The Philadelphia Inquirer, US News and World Report, The Washington Post, Wikipedia, and Yahoo.com.

He has also been a guest for local radio stations mainly to discuss the local, state, and national economy.

Matt runs his own blog known as paeconomist.blogspot and is founder of the Economic Impact Review. He is the author of Political Trivia.

Matt earned a Bachelor’s degree from the University of South Dakota and a Ph.D. in Economics from Iowa State University.

Find Out:

  • the benefits of lecturing at a liberal arts college – switch up your research interests.
  • about experimental auctions and their design.
  • what is consumer demand for Genetically Modified Products.
  • how demand for GMOs change due to differences in packaging.
  • how print advertisement for e-cigarettes increases their demand.
  • whether e-cigarettes are a ‘healthy’ alternative to traditional cigarettes.
  • about the impact of plain package cigarettes on consumer demand.
  • if the Irish government correct in enforcing plain packaged cigarettes.
  • how much less buyers were willing to pay for plain packaged cigarettes.
  • how a picture of smoking-related diseases on cigarette packaging decreases demand for cigarettes.
  • why Matt set up The Economic Impact Review.
  • why economic impact studies should go through a peer-review process.
  • about the lack of transparency in economic impact studies.
  • about Matt’s libertarian stance and why he’s for fracking.
  • what you get when a libertarian and socialist collaborate on an economics fracking paper.
  • about the beautiful campus of Susquehanna University.
  • why small class sizes are beneficial to both student and teacher.
  • about Matt’s exploits in the World Series of Poker.
  • how an understanding of statistics and behavioral economics can benefit a poker player.
  • how Chris Moneymaker influenced Matt’s love of poker.
  • the economics of what makes a winning poker player.
  • if poker is a game of chance or a game of skill.
  • how poker is akin to economic game theory.
  • about people’s willingness to pay for GM foods versus non-GM foods.
  • if there is a need for an independent 3rd party to disseminate information on GM foods.
  • what annoys Matt the most.
  • why Matt switched to a flipped classroom style of teaching.
  • about deceptions in economic research and why journals will not publish such research.
  • why research in psychology accepts deception of the subjects but economics does not.
  • why a lot of economics journals will not publish your work.

Economists:

In this interview, Matt mentions: Milton Friedman, Wally Huffman (Iowa State), Jason Shogren (Wyoming) and Dan Ariely.

Economics:

In this interview, Matt mentions and discusses: Consumer demand, experimental auctions, bias, incentives, pricing, demand curve, sample size, economic impact of fracking, socialism, libertarianism, microeconomics, macroeconomics, game theory, political economic thought, forensics economics, positive analysis and normative analysis.

You can disagree without being disagreeable Matt Rousu.

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Are you Willing to Pay More for Genetically-Modified Foods?

The goal of experimental auction is to assess consumers demand for some particular product.

If consumers receive information from a group, such as Green Peace, who were against GM foods, then those consumers were willing to pay up to 50% less for foods that were genetically modified compared to a plain-labelled product.

If consumers got information from an agri-business company, such as Monsanto, about the benefits of GM foods, then they would pay just as much for these foods as conventional food products.

What would the impact be on consumer’s willingness to pay if there were scientific information or, what Professor Rousu called ‘Objective Verifiable Information’ available in the decision-making process? The objective information ‘dampened’ the effects on either side.

Where to find Matt:

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