How Daniel Kahneman, the grandfather of behavioural economics, changed marketing

Welcome to an audio-led edition of Unmade. Today we discuss how psychologist Daniel Kahneman changed marketing thinking with his work on behavioural economics. And further down in this post, after hitting an all time low on Tuesday the Unmade Index continues to sink.If you’ve been thinking about upgrading to an Unmade membership, this is the perfect time. Your membership includes:* Member-only pricing for our HumAIn (May 28) and REmade (October 1) conferences;* A complimentary invitation to Unmade’s Compass event (November);* Member-only content and our paywalled archives;* Your own copy of Media Unmade Daniel Kahneman and the rethinking (fast and slow) of advertising strategyToday’s conversation features Australia’s most visible consumer psychologist Adam Ferrier, discussing the huge contribution Daniel Kahneman - who died at the end of March - made to the field of behavioural economics.Kahneman’s most famous publication, Thinking, Fast and Slow, found a place on the bookshelf of every agency strategist. It was only published in 2011 but his ideas on the field of behavioural economics - the concept that humans act in predictably irrational ways - had already begin to influence those in the persuasion business.Among Kahneman’s most important contributions was popularising the concept of System 1 and System 2 types of thinking, whether consumers are behaving automatically or consciously.During the conversation, Ferrier describes how the impact of Thinking, Fast and Slow helped turn his agency Naked Communications into one of Australia’s most talked about by leaning into the concepts. Ferrier is now co-founder of communications agency Thinkerbell and co-presents the Black T-Shirts creativity podcast. Later in the year Ferrier will be reviving the MSIX - Marketing Science Ideas Exchange - conference, which he curates alongside Mumbrella.The interview also offers a primer on some of the key concepts of behavioural economics, explaining ideas like anchoring, framing, the endowment effect, loss aversion, sunk cost fallacy and heuristics.Unmade Index sinks lowerAfter hitting an all time low on Tuesday, the Unmade Index lost another 0.48% yesterday, taking it down to 558.9 points.Among the larger media and marketing stocks, IVE Group had the worst of it, losing 3.29% while Ooh Media lost 2.58%. Meanwhile Seven West Media came off its recent low, gaining 2.7%We’ll be back with more tomorrow. If you missed yesterday’s announcement, we’ve just finalised the program for HumAIn, Unmade’s conference on the impact of AI on media and marketing. It takes place on May 28.If you’re into loss aversion, you should know that tickets to HumAIn get more expensive in five days’ time. You need to act now to lock in a 20% saving. And once you listen to the podcast, you’ll know why we’re doing that. Toodlepip…Tim BurrowesPublisher - [email protected] This is a public episode. If you would like to discuss this with other subscribers or get access to bonus episodes, visit unmade.substack.com