Psychology has significant applications in business, so it should come as no surprise that executive education programs are cross-breeding psychology with economics and business.
There are many different fields of psychology that hold sway in the commercial sector, but there is one that currently leads the pack. Behavioral economics, which combines psychology and sociology as well as business and economics, is one of the hottest subjects in executive education.
Also known as decision sciences, this academic discipline is seen as critical for businesses in every corner of the economy. “Every aspect of business depends on human behavior, from what consumers want to buy, to what makes happy and productive companies,” says Nick Chater, director of the Behavioral Science in Practice course at Warwick Business School in the UK. “Every business knows that people are its greatest asset: understanding ourselves better can be a huge advantage.”
In his course, students will get a good grounding in behavioral science, far beyond what they can obtain from the many popular books on the subject from the likes of Richard Thaler and Daniel Kahneman. Participants also gain the opportunity to develop practical proposals for their own organizations.
An increase in the number of executive courses in behavioral economics
There has been a flurry of interest in behavioral economics in business schools, with a number of executive education programs launched in recent years. “It’s no surprise to me the significant interest businesses are paying to this subject,” says Steve Martin, faculty director of the Behavioral Science in Business program at Columbia Business School in New York. “It can help provide tangible boosts to commercial performance, help minimize inefficiencies and, more generally, serve as a catalyst for desirable change.”
The course at Columbia is unapologetically pragmatic. Participants are introduced to the major models of behavioral science including social and cognitive psychology, economics and data science, but always with a focus on their practical application.
“We strive to build a bridge between cutting edge behavioral science and its meaningful practice,” says Martin. “It’s not unusual for participants to leave the program with a concrete plan that they can immediately begin to put into action when they return to their office.”
Beyond the obvious commercial benefits, the high degree of interest stems partly from the belief that behavioral economics has the potential to generate positive social impact: it is one of the hottest ideas in public policy.
Take, as an example, the work that Martin is currently involved in on the COVID-19 vaccination roll out in the UK. With a team, he has employed insights from behavioral science that have proven to be valuable in boosting vaccination rates and combatting vaccine hesitancy.
He says that behavioral science is powerful, but it’s not the panacea that some believe it to be: “Used in combination with the right policies, regulations, incentives and education, it does have the potential to create worthwhile social impact.”
Some concerns about behavioral economics
But there is also a backlash brewing. There are concerns that nudging can be used to manipulate people to their detriment as well as their benefit, so teaching the subject is a delicate undertaking for business schools.
“Just because we can use behavioral nudges to influence decisions and shape behavior, doesn’t mean we always should,” Martin says. “Our focus is always on the ethically acceptable and sustainable use of behavioral science to achieve our goals. There is no place for manipulation or coercion.”
The ethical practice of nudging is also an ongoing theme in the Behavioral Insights program at UBC Sauder School of Business in Vancouver, Canada. “We start with the idea that most tools can be used for positive or negative impact,” explains Kirstin Appelt, academic director of the course.
“From there, we discuss key ethical principles. Throughout the program, learners complete assessments that are specifically designed to help them develop their understanding of relevant ethical considerations.”
Her program is designed to provide participants with the knowledge and skills to design and evaluate nudge solutions in their workplace. Through a combination of coursework and a mentored capstone project, learners also develop skills in research, data analysis, and project work.
“In today’s business world, decisions should be based on evidence,” says Appelt. “Whether it’s the choice of a product to develop, the overhaul of a service, or the design of a website, behavioral economics can help ensure that customers’ needs are met.”
In terms of employment outcomes, these programs tend to attract individuals who are looking to take on behavioral challenges within their own organization, so they tend to advance their through applied behavioral science in their current job.
“This means that personal growth through the learning is transferrable across a career span, and scaled within any organization in which they work,” says Oliver Campton, strategic project manager in the executive education department at Warwick.