Behavioural Economics meets Electronic Communications: Working with telecoms regulatory specialists Cullen International as part of a training programme for BEREC 

I’m delighted to be working with Cullen International on creating and delivering a workshop on behavioural economics and telecoms regulation as part of a major training programme for BEREC, the Body of European Regulators for Electronic Communications.

BEREC’s mission is ‘to foster the independent, consistent and high-quality regulation of digital markets for the benefit of Europe and its citizens,’ and the Cullen International training programme is in support of that mission. 

It’s a particular pleasure for me to be linking up my current practice and research area of behavioural economics with my former life in Telecoms, Media and Technology, as shown in the graphic below.

More information on the content that I will be delivering in May and June 2021 is in the following section.

Key concepts from behavioural economics, and some implications for telecoms regulation

Economic policy in regulated markets has historically focused on removing barriers to entry and facilitating effective competition. Standard economic theory holds that consumers will then exercise their sovereignty to bring about optimum outcomes, both for themselves and for society as a whole.

Behavioural economics seeks to explain why this might not work in practice, by bringing insights from psychology and other behavioural sciences into an economic framework to explain why consumers behave the way they do.

This can help us to understand how consumers may make choices which may not conform to economic rationality and are not always in their own best interests., due to factors such as:

• Cognitive and behavioural biases
• Limited time and decision-making capacity
• The influence of others
• The role of emotions and stories
• The impact of heuristics, or ‘rules of thumb,’ as drivers of decision making.

These factors are compounded in ICT markets where choosing the right product or services can be more difficult because of complexity and fast-changing technology.

As behavioural economics becomes main-streamed, informing policy-making and regulation around the world, this training session will draw on work by key figures including Daniel Kahneman and Richard Thaler to outline some key findings. The session will:

• Compare and contrast standard economics and behavioural economics
• Set out the main premises of behavioural economics, by reviewing factors not included in standard economics, such as heuristics, biases and mental shortcuts, loss aversion, defaults and framing
• Consider what behavioural economics means for consumer behaviour and effective markets
• Suggest how behavioural economics could help TMT regulators make policy and regulation more effective.

The Biggest Behavioural Intervention of our Lifetimes

Sometimes, something happens that seems too big to comprehend. And although we have been able to predict it was highly likely to happen (after all, it has happened before), a global pandemic definitely qualifies. 

When I worked full time as a consultant (ICT, not medical, not management), we would sometimes advise clients that a problem was just "too big to get your arms around."  COVID-19 is the ne plus ultra of that category. So many different facets, so many different ideas, such complexity, such contention. Everyone has an opinion, regardless of how well qualified (or more usually, not) they might be. 

In this context, the paradox has been that, despite being the biggest behavioural intervention we have ever seen, the response to the pandemic has created a challenge for those of us concerned with behaviour - how to bring genuinely useful insights to the mix? Particularly if one doesn't have a background in immunology, virology, epidemiology, or even medicine. The answer is that the behavioural sciences have a definite role to play. Because before vaccination came along, defeating COVID-19 was all about behaviour: there was nothing else in the armoury other than trying to avoid passing on the virus to others, whether that was by hand washing, disinfecting surfaces, social distancing or shielding the vulnerable.

Now, thanks to the extraordinary efforts of the people who developed the vaccines, the emphasis has shifted to rolling out a mass programme on an unparalleled scale. But, despite the efficacy of the medication, behaviour is still crucial - what's the use of a vaccine if people won't take it? So defeating COVID-19 continues to be about the behaviour of each and every one of us. 

It can be useful to try and learn from history, but reading about the last global pandemic, the Spanish 'flu outbreak of 1918 in Laura Spinney's book Pale Rider, it's striking that, although there were many parallels, there were also many differences between then and now (and not just that COVID-19 isn't a 'flu). 

Differences fortunately include the turbo-charged development of the vaccines, from which we are now benefiting. Similarities include the harrowing deaths and incapacitation of so many. Differences also include the scale of the mortality - it's still unclear how many died in the Spanish 'flu, possibly 50 million people. And the biggest unknown of all - whether COVID-19 could just peter out. Or are we waiting for herd immunity to develop (see vaccines, above).  

And given the links between health, demographics and economics, particularly inequality, we need to ensure that we have learned some lessons along the way, and will use the opportunity to build back better. 

Thinking about all this, the complexity and the huge number of issues raised by the pandemic, the image that comes to mind is a word cloud. Which seems appropriate because, even for those of us who have managed to remain physically untouched by COVID-19, it has clearly invaded our psyches and annexed our conscious and unconscious minds.