From the latest Edge article, “The Thing Which Has No Name,” by Ogilvy & Mather UK creative director Rory Sutherland, who argues, perhaps unsurprisingly, that marketers and advertisers understand certain things better than classical economists:

“It is true of quite a lot of progress in human life that businesses, in their blundering way, sometimes discover things before academics do. This is true of the steam engine. People developed steam engines before anybody knew how they worked. It’s true of the jet engine, true of aspirin, and so forth. People discover through trial and error—what Nassim Taleb calls ‘stochastic tinkering.’ People make progress on their own without really understanding how it works. At that point, academics come along, explain how what works works and to some extent take the credit for it. ‘Teaching birds to fly’ is the phrase that Taleb uses. As I say, I was seduced by economic thinking and the elegance of it, but at the same time having worked in advertising for 15 years, I was also fairly conscious of the fact that this isn’t really how people behave. We’d always known, in those fields of marketing, like direct marketing, where you actually got results—you sent out letters to 50,000 people and saw how many people replied—there was something going on that we didn’t understand. In other words, occasionally you might do incredibly elaborate, complex, and expensive work and have more or less no effect on the uptake of some product. Then someone would redesign the application form and slightly change the order of the questions on the application form, and the number of people replying would double. We knew there was this mysterious kind of dark force at work in human behavior.

The extraordinary thing about the marketing industry is that, by accident, it was pretty good at stumbling on some of these biases which behavioral economics later codified. There’s a wonderful/evil advertisement I mentioned in a recent piece, ‘How else could a month’s salary last a lifetime?’, which is a De Beers advertisement in about 1953 for engagement rings. Now, that’s a brilliant case of framing or price anchoring. How much should you spend on an engagement ring? We’ll suggest that whatever your month’s salary is, that’s what you should spend.

‘No one ever got fired for buying IBM’ is a wonderful example of understanding loss aversion or ‘defensive decision making,’ The advertising and marketing industry kind of acted as if it knew this stuff—but where we were disgracefully bad is that no one really attempted to sit down and codify it. When I discovered Nudge by Richard Thaler and Cass Sunstein, and the whole other corpus on Behavioral Economics…. when I started discovering there was a whole field of literature about ‘this thing for which we have no name’ …. these powerful forces which no one properly understood—that was incredibly exciting. And the effect of these changes can be an order of magnitude. This is the important thing. Really small interventions can have huge effects.”