Sunday, September 30, 2007

Men are stupid, women are miserable - let's call it a draw, shall we?

What would newspaper editors and academic researchers do without the 'battle of the sexes' as an endless source of interest and study? Two new studies have added to the column inches and research archives on this perennial subject in recent weeks.

The first, a study by Edinburgh University shows that intelligence in men is more widely distributed around the average - in other words, there are more stupid AND more smart men relative to the average. Women, on the other hand, are more likely to be 'bunched' around the average - there are very few that are stupid, but there are also comparatively few that are at the other extreme either.

Interestingly, the study explains why every year girls do better than boys in school exams. If females are more 'average' than males, and exams are designed to evaluate the education of average students, then girls will ALWAYS out-perform boys in relation to exam results. But in the long run it doesn't actually matter, as most of the jobs requiring above average intelligence will be filled by males. But I doubt that will stop some newspaper columnist gloating (and others fretting) every time the Leaving Cert results are published and show girls (yet again) doing better than boys.

So we've agreed that men are more likely to be stupid than women: what about happiness? It appears, again according to academic research, that despite all their gains in economic freedom and status in recent decades, women are significantly less happy than men by comparison with the past. Of course, much of this research simply rehashes findings replicated in earlier studies. For an excellent summary of gender research see the ironically entitled 'Is There Anything Good About Men' - the answer by the way, for those of us with XY chromosomes, is 'yes': whew!

So there you have it: men are stupid, and women are miserable - in the battle of the sexes that sounds like a draw to me.

Wednesday, September 26, 2007

It's the way that you say it

I've been reading a lot lately about 'the science of subtle signals'. Admittedly not a subject to fire your imagination, but one that I think is going to be big - really big.

Imagine if you could predict within 10 seconds of the start of a sales conversation whether you were going to get a sale or not? Or if you could predict within 45 seconds of a conversation between a hospital consultant and a patient whether that patient would end up suing the consultant? And imagine it has nothing to do with the words you use and everything to do with your body language and voice tone.

That's why 'subtle signals' matter.

For me, 'subtle signals' represents a fascinating interface between social psychology, behavioural economics and customer service. For a great guide to the present state of the art see this. Marketers should be better trained in reading subtle signals than any other business discipline. It might even help you the next time you go into a meeting with the financial director to suggest a budget increase ...

Tuesday, September 25, 2007

The Economics of Narcissism

"Because you're worth it". You'll no doubt recognise the advertising slogan.

But my inner economist inevitably asks: 'worth how much exactly'? And what about men? Economists, never shy of quantifying the unquantifiable, have given us an answer: 6%. (And that's just for the men folk).

A recent study has found that men who spend an extra 10 minutes a day grooming - shaving, showering, brushing their hair - get 6% higher weekly wages, all other things being equal (a standard economist caveat). The study is reported in Chris Dillow's blog alongside references to other studies on the 'economics of narcissism'.

Nor are the 'economic' benefits of appearances confined to grooming. New research cited in Psychology Today shows that when competing in amateur sport, dressing like a 'professional' can psyche out your shabbily dressed competitors. Further evidence that appearances count.

So here we have a solution to the problem facing all marketers in the cosmetics industry: how to get men to spend more on their personal care? The answer it would seem is simple: if that new aftershave costs less than 6% of your weekly wages then go ahead, "it's worth it".

Monday, September 24, 2007

Enough already with the trends please ...

Are you an 'Ardent Amazon' or a '30-Winker'? A 'Shy Millionaire' or an 'Uptown Tatooed'? Or are you like me, tired of glib, alliterative slogans that have all the insight of last week's horoscope?

We used to have 'Mega-Trends'. Well now we have 'Microtrends' courtesy of Mark Penn who gives us 75 trends (including the Ardent Amazons) that are shaping our world etc etc. (He's also shaping Hillary Clinton's presidential election campaign so maybe I should be more respectful?!).

Our own David McWilliams has created a home-grown cast of alliterative characters in his latest analysis: The Generation Game (meet 'Botox Betty') - though backed up by a lot more depth and insight than Penn appears to have mustered.

Penn's 75 trends on the other hand (not 64 or 83 mind you), like so many 'cool-hunting' type commentaries, mostly seem gleaned from a close reading of your favourite weekend newspaper supplement. In other words, they are sometimes familiar, occasionally entertaining, but less than likely to rock your world.

That said, I do like his Microtrend no. 18: Left-Handers. Apparently we ciotogs are increasing rapidly in numbers and are set to take over in business, politics and the arts. Okay, so maybe there's something to these Microtrends after all ...

Sunday, September 23, 2007

What is the Irish for 'e pluribus unum'?

I was part of a discussion on Karen Coleman's Wide Angle show on Newstalk 106 this morning. One of the topics we explored was that of integrating immigrants into Irish communities. I referred to the recent work Robert Putnam (of 'Bowling Alone' fame) has done on the impact of immigration on host societies (in the United States, Canada, Holland and other countries). His conclusions are challenging:

"It would be unfortunate if a politically correct progressivism were to deny the reality of the challenge to social solidarity posed by diversity. It would be equally unfortunate if an ahistorical and ethnocentric conservatism were to deny that addressing that challenge is both feasible and desirable. Max Weber instructed would-be political leaders nearly a century ago that ‘Politics is a slow boring of hard boards.’ The task of becoming comfortable with diversity will not be easy or quick, but it will be speeded by our collective efforts and in the end well worth the effort."

Putnam's paper is entitled 'E Pluribus Unum' - 'one out of many'. The motto has historically been that of the United States Government, referring initially to the unity of the different states that came together after the war of independence (we had one of those) and subsequently for some to the 'melting pot' ethnic mix of America after the civil war (we had one of those too).

The bottom line for Putnam is that immigration tends to undermine the 'social glue' that binds communities together (people are less trusting, watch more TV by themselves etc when they experience rapid immigration). He acknowledges the point made by others that the benefits of immigration are evident at a national level (productivity, economic growth, labour supply etc) but the costs are experienced by local communities (pressures on housing, education, health etc). By the way, for interesting attempts to quantify the economic impact of recent immigration from Eastern Europe on the UK economy see here. I wonder what a similar analysis for Ireland would reveal?

How then to avoid the loss of social capital through immigration at a local level? Putnam points to the importance of local sources of community bonding and integration. In Ireland there are at least two:
  1. The Catholic Church (not very palatable to many in the media, but the reality for the majority of citizens in Ireland).
  2. The GAA: possibly even stronger than the Catholic Church these days in rallying local energies and commitment.
But that's probably not enough given the waning incidence of church going and the lack of familiarity with hurling and gaelic football among immigrants. Putnam points to one other source of social cohesion between immigrants and host communities in the USA besides religion and sport, namely: the army.

Should we therefore have conscription into Ireland's defence forces to create our own 'melting pot', especially among second generation immigrants? Personally I would be very much against such a move (civil liberties and all that). But what about a wider concept of 'National Service'? What if, instead of transition year, all secondary level students went straight through to Leaving Cert and then were required to spend a year (away from home) doing their 'National Service' in voluntary groups, charities, sports organisations or indeed the defence forces? It would break down social class barriers (probably more pervasive and damaging than ethnic differences right now), as well as integrating young people from all backgrounds into a shared experience.

Even this, of course, is not a palliative for the 'costs' of immigration. In Britain, the debate on this issue is well under way, and it would seem that the ideology of multi-culturalism (which essentially denies that there are any adverse consequences from immigration other than those caused by the actions of the host population) appears effectively to be dead. As always, we have the opportunity to learn from Britain's mistakes and to avoid them. I suspect that, as always, we will fail to do so and blunder on with making the same mistakes. But you never know: our Taoiseach is a big fan of Robert Putnam (who was over speaking to the Cabinet recently) and it might do no harm to get him back to kick start a national debate before it becomes a national row ...

Friday, September 21, 2007

A Generation Out of Control?

You could nearly write the script:

- the number of deaths in their age group from overdoses of illicit drugs is up 550 percent per capita since 1975

- they are 30 percent more likely to be at risk from fatal accidents and suicides than any other age group

- the numbers in their age group in prison are up 600% since 1977

- they are twice as likely to binge drink (consuming five or more drinks on one occasion in the previous month) than any other age group

- there has been a 200 percent leap in drugs and drinking-related offenses per capita in their age group since 1975

- more than half of all new H.I.V./AIDS diagnoses in 2005 were in this age group, up from less than one-third a decade ago

Who are they? Junior cert celebrants on a bender? Coke snorting students? Cider heads binging in a nearby field? Actually, none of the above: the statistics relate to 35-54 year olds in the United States. That's my generation (and possibly yours - or your parents - too). What an example to set the children.

And possibly a lesson for all those finger-waving journalists, commentators and world improvers ready to indulge in a moral panic everytime a YouTube video shows an Irish youth doing something they disapprove off. Glass houses and all that.

Wednesday, September 19, 2007

Resistance is Futile

Someone once said that 'advertising is what you do when you can't go talk to someone'.

Though advertising gets a bad press from time-to-time (in the marketing literature, not just in the mainstream media), it nevertheless serves a useful purpose, at least from an economics perspective. Advertising provides information to consumers (and businesses) about choices available to them - whether comparing one product with another, or simply letting them know that a product or service exists.

But advertising is an inexact affair - not only is 'half the money wasted', as the old adage goes, but sometimes we can't even be sure how effective the other half was.

Still, advertising isn't alchemy - you might be interested to know that there are apparently only twelve kinds of ads in the world as follows:

  1. The Demo - just show your product in action and let it sell itself (iPhone anyone?)
  2. Show the Problem - what's missing in your customers' lives, and why your product fills the gap
  3. Show an Analogy - if the problem in 2 is a 'sensitive one'
  4. Comparison - why your product is better than the competition
  5. The Story - spin a compelling yarn with your product 'placed' at the heart of it
  6. Show the Benefits - and then reveal your product is the reason
  7. Testimonial - real stories from real people about your product
  8. Create a Character - someone (or thing: Energiser Bunny?) that personifies your product
  9. Symbolise the Benefit - RedBull gives you ...
  10. Celebrate the User - putting the consumers of the product at the heart of the message
  11. Proud Origins - whether the country or the inventor of the product
  12. Parody - subtle (or not) references to films, TV programmes, genres to showcase your product
For a delightful visual guide to all 12 types (including some amazing YouTube videos of actual ads) just check this. So there, if you really can't go talk to someone, then you (or your agency) can at least try something different.

Apologies, by the way, to my ad agency colleagues for spilling the beans on all their trade secrets ...

Something Wicked This Way Comes

As an economist I am always looking for the one true measure of the 'turning point' - that sign or indicator that says 'this is it: the only way is down' (or up, depending on the stage of the business cycle we have reached of course).

So there I was sitting in another traffic jam in south county Dublin when I saw the ONE. Forget about confidence indicators and stock market indices, this is a sure sign that our property market has tanked:

Honestly, I'm not making it up: no digital touch ups here!

I don't know who lives there (nor do I need to, they're entitled to their privacy). Though my first guess was George Lee (only joking, I like George a lot - you can get a sense of his economic forecasting style here - oops, sorry I meant here).

What's your favourite indicator?

Ireland's 'N-Word'

One word guaranteed to cause offence in polite company in Ireland is the n-word: nuclear.

This is a pity as the 'nuclear option' may be the only option we have to protect our standard of living over the next 10-20 years. With oil prices now breaking through $82 a barrel for the first time ever, the prognosis for our carbon fuel based economy is not good. A conference this week in Cork hosted by ASPO - the Association for the Study of Peak Oil - highlighted our extreme vulnerability (my own company Amárach was one of the sponsors by the way).

One of the more interesting debates was about Ireland's stance on nuclear power (summarised here in The Examiner). We tend to respond emotionally rather than rationally to the nuclear issue in public discussion - possibly due to the 'Jane Fonda Effect' explored by the authors of the always excellent Freakonomics blog.

Nevertheless, with the prospect of a wrenching change to the energy basis of our economy in the next few short years then the time for debate and action is here. And it is certainly time we grew less sensitive to the n-word.

Monday, September 17, 2007

Panic at the Bank

There's a first time for everything, and today was the first time I saw a run on an Irish bank branch. No prizes for guessing which one: it's Northern Rock's Irish office. There were several hundred people in the queue - and just before I took the photo there had been a shower of hailstones to add to their misery.
I took this photo at about 4.15pm this afternoon - staff from Northern Rock were at the head of the queue patiently answering questions and handing out forms. I'm guessing they were for withdrawals rather than lodgements ...
Could it happen to a main street bank? Hopefully not. I do hope all the good folk in the queue get their money: it is theirs after all. What about the future of Northern Rock in Ireland (assuming they survive)? Not good I reckon: a 'flight to quality' seems all but guaranteed.

(Don't) Ask the Experts

When I lived in London there was a famous radio pundit - Bob Beckman - who regularly shared his views on the outlook for the stock market, economy etc. Though I don't remember any of his forecasts I do remember his advice (when he - often - got it wrong) that 'those who live by the crystal ball must learn to eat glass'. An unpleasant analogy, but you got his point.

Fast forward twenty years and the number of pundits and prognosticators on the radio (and TV and web) has mushroomed. Has the quality of forecasting improved in the meantime? Hardly. In fact, new research suggests that business decision makers might be better off asking naive undergraduates for their views on the likely outcome of takeovers and labour disputes than asking the experts. Worrying news for those of us who earn a living as said 'experts'. The research is part of a growing body of work pointing to the harsh reality that all of us are biased one way or another. Indeed, the ever helpful Wikipedia lists over eighty cognitive biases we humans are subject to.

All the recent uncertainty over stock markets, the sub-prime market, the dollar, oil prices etc has unleashed a flurry of forecasts and projections. Consider that the Irish stock market as off today is over 20% down on its peak a few months ago - how many of our regular pundits saw that one coming? Remember Bob's advice - be careful what you forecast or you may end up with more than your foot in your mouth ...

Friday, September 14, 2007

Northern Rocked

The recent difficulties of Northern Rock have raised interesting questions about the future of the financial sector in Ireland. The sector has seen a number of new entrants in recent years - most competing on the basis of lower loan rates, higher savings rates or convenient online-only services. Though some of these entrants have made some inroads into the market in particular niches (e.g.: credit cards, mortgages, deposit accounts) the main incumbents have not seen their market shares decline in terms of mainstream current account banking.

The question arising from Northern Rock is: 'will we see a flight to quality'? Will (usually conservative) Irish banking customers decide to re-direct their savings and investments towards the traditional players? After all, at some stage some Central Bank somewhere is going to make an example of a financial institution 'pour encourager les autres'. Indeed, one influential economist has called on Bank of England to do just that with Northern Rock:
"... it is hard to argue that the survival of Northern Rock is necessary to avoid a genuine threat to the stability of the UK financial system, or to avoid a serious disturbance to the economy. The bank is not ‘too large to fail’. As the fifth largest mortgage lender in the UK, it is not systemically significant."

Though the Bank has clearly decided to ignore his advice for now, time will tell if similarly benign treatment will be extended to other financial institutions that suffer 'liquidity problems'. Indeed some of the customers of such institutions (in Ireland, the UK or USA) might just decide to act before their Central Banks and avoid their own liquidity crunch. Good news for banking's bigger boys it would seem.

Wednesday, September 12, 2007

Anita Roddick - Marketing Revolutionary

I met Anita Roddick back in the early 1990s at a conference she was speaking at. I was really struck by the passion with which she talked about her brand - the Body Shop - and her products. It wasn't just the usual marketing speak - most marketers are passionate about their brands: just as they were about those of their previous employer, and no doubt will be about those of their next employer (marketers move about a lot you'll gather).

She really felt that capitalism could be a force for good - ethical as well as profitable. Her ideas in relation to fair trade and employee engagement were far ahead of her time - and much that we take for granted now would not have been possible without her energy, vision and passion.

Anita truly was a marketing revolutionary - one who saw the potential of engaging consumers' beliefs and values in their purchasing decisions, not just their purses and wallets. We owe her much, we will never see the likes of her again. Requiescat in pace.

Tuesday, September 11, 2007

A Really, Really Important Forecast

I am very interested in forecasts, and I came across one recently that got my undivided attention: a forecast of what age I will be when I die. Yes, that's a forecast we all have a personal interest in. The internet, as ever, provides us with a (partial) answer. An American insurance company has created The Longevity Game to enable you to come up with the answer (some of the questions are a bit US-centric, but bear with it). In my case the answer is 82: and I'm cool with that - that's over three decades away and they're bound to come up with all sorts of pills and technology to keep me going further by then! Sadly, the forecast does not provide the exact time and location for said demise, a pity as I could arrange to be somewhere else ...

Of course, I might be happy enough to take off the gloves at 82, as someone once said: everyone wants to live for ever, but nobody wants to grow old. Mind you, by then 80 might be the new 50.

On a more optimistic note, though I'm still on the right side of 50 it seems I have yet to reach my peak in terms of financial sophistication (and, presumably, financial success). New research says the peak age in financial sophistication is 53 - now there's something to look forward to.

Monday, September 10, 2007

"When did you stop beating your wife?"

The question is an example of how it is possible to label someone (as a 'wife-beater' in this case) without any evidence that the person actually behaves in the manner implied. It shows how powerful words are at shaping our view of people and situations - often without us being aware of it. Indeed, sometimes people form views or 'myths' about situations that are extremely difficult to change.

This poses a real problem for marketers and for policy makers. Sometimes the (negative) myths attached to a product, for example, cannot be budged no matter much data is available to illustrate how wrong the myths are. A recent article in the Washington Post reported on a study for the US Centre for Disease Control (CDC). The CDC issued a handy 'true or false' guide about the flu vaccine. The problem was that research among elderly people targeted by the guide showed afterwards that they recalled 40% of the 'false' statements as actually being 'true'!

There is a lesson here for those involved in public campaigns to change people's behaviour (for example to wash your hands before preparing food; stop smoking to save your life; avoid alcohol when you are pregnant etc). It seems it is really difficult to change people's minds once they have formed a view about something. But one thing the research does tell us - you can't afford to 'do nothing' and simply let the myths go unchallenged. All that does is convince the 'believer' that they were right after all as no one has told them they are wrong ...

Who needs bluetooth?

One example of how (Masai) African's have adopted rapidly to mobile phones. Should Irish Aid focus on 'mobilising Africa'? Photo from the delightful and quirky BoingBoing.

Mobilising Africa

The annual report for Irish Aid - the government's overseas aid programme - tells us that the Department of Foreign Affairs spent a total of €814 million, or over 0.5% of GNP, last year. This went on projects in over 90 countries, with the focus remaining on eight programme countries in sub-Saharan Africa and Asia. The target is to increase the share of GNP to 0.7% by 2012 - amounting to well over €1 billion a year by then.

The question for the Irish tax payer is: what do we get for our money? The aims of Irish Aid are undoubtedly laudable, but is it effective in the context of a) the problems facing Africa and b) the amounts being spent on solving the same problems by other organisations? Our contribution is miniscule relative to the billions spent every year by aid organisations. The fact that we then spread the money over multiple projects across multiple countries surely reduces any impact even further? Paul Collier's book 'The Bottom Billion' illustrates just how difficult it is for aid alone to make any kind of sustainable impact on Africa's problems.

Would it not, therefore, be more effective to focus our money on just one thing that could really benefit Africa? You may already have heard about the campaign to introduce cheap laptops for Africa - well what about cheap mobile phones? 'A mobile phone for every African' is something we could readily achieve with our Irish Aid contributions. A deal with Nokia or Motorola would no doubt help drive the price down to manageable levels.

Mobile phones have transformed social and commercial behaviour already in Africa - why not drive it even further and help solve all the other problems pre-occupying aid workers?

Should we pay our civil servants less and just say 'thank you' instead?

I saw an advertisement recently for the UK's Inland Revenue looking to hire a 'Head of Shared Understanding'. This was a new one on me - but it seems that Britain's public sector are ahead of many private sector employers in looking at new disciplines such as behavioural economics to design more effective policies. And they need to hire the people with those - still rare - skills.

One of the delightful aspects of behavioural economics is how 'contrarian' it can be. Economist Bruno Frey presented a thought-provoking paper to a recent Australian government forum. He points out that sometimes monetary incentives 'crowd out' desired behaviour by replacing 'intrinsic motivations' (to do the right thing, to be well thought of etc) with a desire for financial rewards. The problem then is that if people don't think they are being properly rewarded they then cut back on the desired behaviour. Hence the 'crowding out'.

Frey suggests that there are important implications for the public sector - including employment and payment practices. It does make you wonder, as we enter the next round of 'benchmarking' payments for, er, productivity gains from public sector employees, whether we (and they) would be better off just regularly telling our public servants what a great job they are doing (on behalf of us taxpayers), rather than yet more double-digit pay rises?

Tuesday, September 4, 2007

Money Makes You Happy (shock, horror!)

Though it has become fashionable to lament how miserable economic success has made the Irish (see the latest RTE television contribution to the daily dirge), economists tell us otherwise.

New research by Angus Deaton (the Princeton academic, not the British comedian) has examined the link between affluence (GDP per capita) and happiness (as reported in a global survey by Gallup in 2006). They have measured a strong, positive link between the two factors - one that continues even above quite high standards of living. So money does make you happy after all.

Deaton and his colleagues do find that a high economic growth rate is negatively correlated with happiness, suggesting that the social and cultural turbulence (cf. RTE above) associated with rapid change is unsettling for citizens. But all that suggests that as growth settles down to a more modest rate in Ireland then our currently high level of life satisfaction will be consolidated. But then what will all those newspaper columnists write about ...

Monday, September 3, 2007

Irish Ethnic: Carrigart, Donegal, August 2007

Will the Irish language be a surprise beneficiary of immigration?

Ethnic Marketing: tá siad ag teacht

The ESRI have once again done marketers a service (unintentionally) by publishing a study on the income status of immigrants to Ireland. Though most of what the ESRI focuses on relates to issues of income inequality and relative poverty (their regular beat), the findings have relevance to Irish marketers looking to reach the rapidly expanding foreign national market.

Table 3 in the study reveals something very interesting: it turns out that fewer than 1 in 5 or 18.4% of native Irish members of the labour force have a third level degree or above, but this rises to over 2 in 5 or 43.5% of immigrant members of the labour force. The level of educational attainment among immigrants is actually more than twice the average for Irish nationals.

Worth thinking about: maybe all those efforts to diligently translate advertising copy into Polish, Chinese, Lithuanian etc are in vain. With that level of educational attainment it wouldn't be surprising if our foreign national workers eventually become more conversant as gaeilge than the host population before too long ...

Marketing to the 'Inner Reptile'

We have three brains apparently - the 'human brain' (the neo-cortex that makes us different from other animals); the 'mammalian brain' (which we share with our fellow apes and other breast feeders); and the 'reptile brain' (which brings in most every other creature). Successful marketers may not know it, but most of the time they are selling to the third brain - our 'inner reptile' - as that has the most influence on our buying decisions.

New insights from behavioural economics and neuro-marketing suggest that we have much to learn from our cold blooded ancestors. And here are the 7 Secrets to marketing to your customer's inner reptile.

GDP, Schmi-DP: does the economic outlook matter for your sales forecast?

Barely a week passes without a new economic forecast from a stockbroker economist, government body, or international organisation. But do their forecasts matter if you are trying to project your sales for next year or the year after?

I am regularly asked for my views on the economy by clients and I am usually happy to oblige - often with an average of all the forecasts made in the previous few months. But still I wonder - 'so what if GDP will rise by 4%, 3% or 5.25% next year, how has it influenced your sales up til now?' Below is Ireland's nominal GDP growth rate going back to 1997. Plot the value of your own sales each year against the GDP trend and draw your own conclusions (or if you are using Excel run a correlation).

Ireland's nominal GDP annual growth rate at current market prices (from the ever helpful CSO website):

1997 15.7
1998 15.6
1999 15.2
2000 15.4
2001 11.8
2002 11.4
2003 7.1
2004 6.5
2005 8.8
2006 8.2

And if you have gone to the bother of working out whether your sales really are correlated with GDP then you can test the significance of the correlation using this simple online tool here

That way you'll know whether to skip the article on the latest economic forecast and go straight to the sports (or lifestyle) pages instead!
Related Posts Plugin for WordPress, Blogger...