The Maddest Men of All (Ep. 198)

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Rory Sutherland presenting "Praxeology: Lessons from a Lost Science" (Photo: Betsy Weber)

Ogilvy & Mather’s Rory Sutherland, an enthusiast of behavioral economics. (Photo: Betsy Weber)

Our previous Freakonomics Radio episode, “Hacking the World Bank,” discussed how Jim Yong Kim, president of the World Bank, is using the insights of behavioral economics to fight poverty. Kim acknowledged that non-profits like the World Bank are playing catch-up:



KIM: If you were to go to Ogilvy or any of the big public-relations companies and give them this [new World Bank report on behavioralism], I think they would laugh at us in the sense that they would have been utilizing these insights very aggressively for a very long time.

This week — voila! — we have a story about how Ogilvy (& Mather), the global marketing and advertising giant, is indeed pushing the limits on how behavioral insights can be applied in the real world. The episode is called “The Maddest Men of All.” (You can subscribe to the podcast at iTunes or elsewhere, get the RSS feed, or listen via the media player above. You can also read the transcript, which includes credits for the music you’ll hear in the episode.)

The star of the show is Rory Sutherland, the voluble and iconoclastic vice chairman of Ogilvy & Mather in the U.K. (If you’ve never read David Ogilvy’s Confessions of an Advertising Man, do yourself a favor and do so immediately.) I met him last year in London and was nearly overwhelmed by his passion and knowledge of behavioral economics. (For further proof of both, see his Spectator columns or his oral history). When I learned that Sutherland had founded an O&M offshoot called #ogilvychange, which brings the latest behavioral research to mainstream firms (American Express and Nestle, e.g.) as well as non-profits (the European Parliament and Public Health England), I thought he’d be a great podcast subject. I can happily say that my guess was right — and I hope you’ll agree.

In the episode, you’ll hear Sutherland expand on what behavioral economics gets right that classical economics doesn’t; you’ll hear “choice architects” from #ogilvychange teach the employees at a call center to use behavioral tricks to talk newspaper subscribers out of canceling their subscriptions; and you’ll hear how advertisers use behavioral insights like loss aversion and social norming for good and, occasionally, evil:

SUTHERLAND: Let’s take an example where you go to an airline website and it … quotes you a price for your seat to Sacramento, whatever it may be, and it says only four seats left at that price. Now, that works on me. I’ve spent eight years studying this stuff, I know it’s an attempt to exploit my scarcity bias, but it still makes me click. That’s just the way I’m wired. Now implicit in that line is that subsequent seats will be more expensive. But actually the person in their weasel wording hasn’t exactly made that promise, have they? They’ve merely said at this price. At this price is not quite clear. It could be that the subsequent four seats are being sold actually at a lower price.

Along the way, we peel off for a fascinating conversation with Michael Housman, chief analytics officer for Cornerstone OnDemand, which builds software to help employers find the right employees and then track their performance. This is part of the burgeoning field of “workforce science.” Housman tells us what he has learned about employee honesty (and how it correlates with performance), whether salary is as strong an incentive as we think (spoiler alert: probably not), whether the computer browser you use says something about your competence (yep), and how much it matters whether your boss is wonderful or terrible (a lot!).

Housman acknowledges that employers have to decide just how much data to gather on employees, and that it’s unwise to cross the “creepy” line:

HOUSMAN: As an economist and someone who loves data, I want to get every piece of data that I can on everyone to figure out what it is that truly keeps people on the job creates a good employee. Unfortunately, there are things that legally we’re not allowed to touch and then there are also things that we have decided as an organization we shouldn’t touch. The obvious legal ones are race, sex, age, those are off limits and I completely understand why. But beyond that we’ve decided to take a somewhat conservative approach in what we’re going to use. And so we’re not scouring your Facebook profile. We’re not looking at your Twitter feed.

Having learned a few things from Housman and Sutherland, let me leave you with the following message:

I wouldn’t want you to miss out on this or any future Freakonomics Radio episodes. Many people like you subscribe to this podcast — at iTunes or elsewhere. We are so confident that you’ll like it that we’re willing to give it away for free. Happy listening.

Chris S.

Can you please ask the person who was training the call center employees what the customer can say to most quickly get canceled and off the phone? It seems like they must teach them something like "if the customer says this, stop trying to sell them and cancel"...maybe that's wishful thinking.

That would make for an interesting future podcast, what customers, employees, etc, can do to best get what they want (working against these behavioral economics concepts)!


Oddly enough, I cancelled this precise newspaper subscription recently. I said, "I'm cancelling because there are so many great free newspapers available online" and that seemed to work.


I'm currently a grad student studying applied behavior analysis and just the name of this episode alone caught my attention. Very interesting to hear about some of the applications of behavioral science outside of the clinical real. Great episode, keep up the great work!


As a diabetes nurse, I spend alot of my time starting patients on insulin, or new injectable therapies, and i find that fear is the main factor in people not wanting to start these drug therapies. I find myself becoming a salesperson having to extoll the virtues of these 'scary' therapies to my patients, eventually painting a picture where they want to start the therapy right away! My only failures have been with language barriers; with fluent english speakers I nail the sales pitch down every single time ;)

It was amusing listening to this podcast as it is exactly what I am doing with my patients; I'm not selling them the drug, I am selling them the lifestyle that being on a particular drug therapy will afford them to have. Playing on the fears of a diabetic has never worked for me, and trying to scare them into a particular regime has never worked eithher. Going with the flow of what my patient can tolerate instead of dooming them to a diet they will probably fail after half a year .
I wholeheartedly agree that behavioural sciences have an evil side, but the applications for good are also there!

I also have to disclose that I work within the NHS, and that I have no adgenda over convincing my patients to being on a particular drug; it is my goal to ensure that my patient has the best therapy available to them without any misconceptions or fears that injectable therapies have been placed upon them.


Daniel C

Speaking of ideas that need to die: Rory is fat because he eats carbs. The myth that eating fat makes you fat needs to die. Carbs make you lazy and want to eat more carbs. The choice of how much to eat and exercise is not nearly as important as the choice of what to eat. What you eat affects how much you eat and how you feel about exercise.

Hugo Sanchez

This episode was great! I could have listened to 3 more hours of it. I'm Director of Marketing at a retailer and a huge fan of behavioral economics. I find myself reading a lot on the subject and applying it to the work I do here. You guys did a great job in digging into the marketing and advertising side of the topic. Another direction that could have gone well with this episode is loyalty programs and how behavioral economics and consumer behaviors are used to get people to shop more or add more to their purchasing habits. Either way, great episode!


Stephen, I first had the privilege of listening to you speak during your visit to University of Louisiana at Monroe. Since then, I have been an avid follower of your radio program.

Is there any chance of listening to your interview with Rory in its entirety?


I enjoyed this episode but had one concern. I wonder if the concept that the amount of pay and pay raises do not equate to an employee staying long is correct. I understand the alternative finding that a good supervisor was the strongest correlation. I am suspicious that finding pay is not a valuable way to keep employees isn't an answer that most employers want to find and therefore one they would most likely accept readily. I also wonder if not giving pay increases retains a lower quality of employee since employees of quality are usually also ambitious. Perhaps the study could delve into what quality of employee was being retained at low pay. It might be interesting.


Hey! The podcast stops at about 25 minutes!

Willborg the Hippo

Won't tricks like this stop working when people stop using those heuristics because the heuristics are being exploited by ads?


I found this topic and podcast very interesting. I think that behavioral economics will be used by some for good and others for bad. But realistically I think the question should be ought we as humans trying to teach and train and educate type 2 thinking? If so I worry that big business (including the public sector at times) may push for a poor education system aimed at keeping us as lemmings not allowing for anyone to gain, if it is better, type 2 thinking. It would be to marketers and producers benefit that we think type 1 and they could sell us more crap we don't need to raise their bottom line.

On an aside, Motivational Interviewing is a piece of this behavioral economics pie that I find intriguing. How do we get a smoker to quit? Usually they know it's bad for them. How do we get a person with diabetes to take medications, watch their blood sugar? How do we convince people they ought to vaccinate?


Jamie Czerwinski

About self-professed honesty, Evolv CAO Hausman said:

'People who said they were honest actually were 33% more likely to be terminated for policy violations."

He implies that people who claim to be honest are actually less "honest" than those who make no such claim.

Perhaps honest-claiming people are more likely to freely -- honestly, even -- provide evidence comprising cause for termination.
Maybe they were more likely to behave in a way they consider to be ethical, over following questionable policies. Someone who is less likely to "follow the rules", perhaps?

Maybe Cornerstone/Evolv *is* having success excluding such people from employment.

Bully for them.


Interesting; except for the part of the OM England fella who perpetuates this myth that economists believe in that old solid rubber tire that "homo-ecomomicus" is how people think. I've never met an actual economist that thinks this way - we all think this characterization is rather amusing actually - but there seems to be no end to the number of sociologists (whatever they are), marketing folks, and politicians that believe we actually do think this way.

Keep in mind too that you were talking to marketing people today and that's exactly what they were doing - marketing to you.


Behavioral science rocks. I really enjoyed the episode.

Mark Bennett

Regarding the call centre -and perhaps the subject of weasel wordery in general- one question not asked about the spiel the employees were being told to use was "Is it true?" It's ok to say "most people do this..." if most people actually do it. If not, it's a lie. Is the lesson of this program that behavioral economics can put you on the path to more successful grifts? Coming to your town, for a limited period, the Snake Oil boys are back. But this time they have phDs, so everything must be alright.


Great episode, more on behavioral science, please!

Derrick Charbonnet

You asked in the podcast if I liked this episode. You may well do that every time but I didn't notice. I noticed this time. This is one of your best. So good, that I'm even going to track down how I give you money (didn't get around to it in 2014). I didn't even notice if you used any of the clever behavioral queues on me!
I do enjoy the podcast and listen faithfully, keep 'em coming.


Hey! Thanks for the episode!

The better way of improving passengers satisfaction Rory says about is implemented in Moscow - we actually have free wifi in the subway.


Wow, that part about the call center kind of got me upset.
I sometimes use the phone to cancel subscriptions or services or sometimes I get called back by a call center after cancelling online or by mail.
And that kind of conversation really frustrates and sometimes angers me. When I really just want to cancel. And instead of obliging my request, as they are by law required to do, they try to push even more stuff on me.
And I am kind of disappointed, that our host didn't look more critically at these kinds of very manipulative tactics.


One thing you can be sure of: If somebody's trying to sell something, they're trying to manipulate you in some way, or they're straight-out lying to you. That should be obvious to anyone who has their eyes open.