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Oh, Those Irrational Humans!

This morning, as I was driving in to work and listening to NPR, I heard an interview with Obama’s new Director of the Office of Management and Budget (OMB), Peter Orszag. Orszag has been described as a number-cruncher extraordinaire and super-nerd. Reflecting on his previous tenure at the Congressional Budget Office, Democrats and Republicans spoke in awe of his command of spreadsheets.

So what did the economist say about his role? Mostly that the numbers don’t tell you much if you don’t also account for the idiosyncrasies of human behavior:

“Too many academic fields have tried to apply pure mathematical models to activities that involve human beings. And whenever that happens ā€” whether it’s in economics or health care or medical science ā€” whenever human beings are involved, an approach that is attracted by that purity will lead you astray,” Orszag says.

This was also the theme at last week’s Advertising Research Foundation (ARF) conference: a gathering of thousands of market research professionals, many of whom have spent their lives asking about representative samples, statistical significance, and empirical indicators.
The main theme? The importance of listening – and of accounting for the human element behind all of the numbers. The keynoters said:

  • We need to understand people as humans and not as consumers. Their consumption is only a small slice of the pie.
  • Research has lost its ability to hear the unexpected.
  • Our work needs to move away from testing and measuring and more to exploration.
  • The best market research is fast, relevant and flexible – and it also brings the consumer to life.

As social media helps us become better at opening up, sharing, and explaining, it’s time for marketers – and governments – to be open to what’s behind all of those statistics. By acknowledging that people are not rational, and by combining the numbers with a broader picture of people’s lives, companies will make better decisions, governments will create better policies, and people just might finally feel heard.

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