The Root of Decision-Making
When it comes to thinking about climate change and renewable energy, many people try to make as many environmentally friendly decisions as possible. With Earth Day coming up, what changes can you make?
Researchers, like our guest, are considering how decisions are made—and if the process people use to make a decision can be influenced to select a more environmentally friendly decision about a product or service.
Choosing an environmentally friendly electric plan is one way of helping keep the Earth green. But what if people select a convenient default choice rather than exploring a more environmentally friendly (and possibly cheaper) option?
In this episode, we ask Crystal Reeck, assistant professor of marketing and associate director of the Center for Applied Research in Decision-Making, about the three different ways people make decisions. We’ll learn if there is a way to change a person’s decision mode—and ultimately impact the choice that they make.
- Crystal Reeck, assistant professor, Fox School of Business
- Center for Applied Research in Decision Making
- Center for Sustainable Communities
- Knowledge Hub: A nudge in the right direction
- Knowledge Hub: What happens when interventions fail
- “How we decide shapes what we choose: decision modes track consumer decisions that help decarbonize electricity generation” published in Theory and Decision (2022)
Host: Welcome to Catalyst, the podcast of Temple University’s Fox School of Business. I’m your host, Tiffany Sumner. Earth Day is Friday, April 22nd and this year’s theme is invested in our planet. Today’s guest is deeply invested in finding ways to help consumers make decisions both for themselves and for the environment.
Crystal Reeck is an assistant professor of marketing and the associate director of the Center for Applied Research in Decision Making at the Fox School. Her research looks at the different ways decisions are made and how each method of decision-making can predict a particular outcome. With these insights is it possible to make better decisions for ourselves and in turn for the planet? Stay tuned to find out.
Hi Crystal, thank you so much for joining us.
Crystal: Thank you for having me. I’m delighted to be invited.
Host: You have such an interesting career path. You have a PhD in neuroscience and psychology and now you’re here at the Fox School of Business. Can you tell me more about how that came to be?
Crystal: Absolutely, so I was working on my PhD at Duke University studying the psychology and neuroscience underlying how emotion influences people’s decisions making and I loved the research that I was doing in the laboratory but I was sort of interested in thinking about different kinds of applications in the real world such as how you can help people in real life make better decisions. And if you look across academia and across different universities the corner in a lot of universities that’s interested in that kind of topic tends to be in the business school where there tend to be researchers looking at things like for example consumer behavior to try to understand how consumers make decisions about different types of products and services.
I ended up pursuing my postdoctoral training at Columbia Business School, where I ended up doing research looking at decision making from an interdisciplinary perspective and I was especially interested in taking these tools from neuroscience and psychology to try to better understand the ways that emotion influences decisions but also how we can help people make better decisions when they’re faced with different real-world decisions.
So as part of that research, I ended up coming to Fox in 2015 and joining the marketing department here, where I’m a researcher on consumer behavior and I’m also the associate director of the Center for Applied Research in Decision Making (CARD). At CARD, we’re really interested not only in understanding sort of the underlying processes behind what’s shaping people’s decisions and then apply it in a sense but we also use different techniques including psychophysiological techniques or neuroscience techniques to try to better understand what’s shaping those decisions. My main goal is to try to take those insights and then use them to help people make better decisions. Choices that are better not just for themselves but also can be more beneficial to society broadly speaking.
Host: Before we go any further I know that decision modes are part of your research. Can we talk about what they are and how they work, and can you provide some real-world examples?
Crystal: Absolutely. So in our research on decision modes we’ve really identified that there’s sort of a taxonomy of three main types of decision modes that are out there.
There’s the calculation based mode which is really about sort of weighing costs and benefits and potential tradeoffs between different things, and this is the kind of mode that you tend to use if you’re choosing an annuity or something like that, if you’re making a really complex financial decision or you want a way sort of all of the financial information and the potential risks and things like that so that’s the kind of thinking that you tend to engage in.
The second type of mode is more of an effect based mode and this is where people tend to be more influenced by their immediate emotional reactions to things so those gut feelings you get as you’re making a decision and sort of let those guide you this is the kind of mode that people tend to follow more often when they’re say choosing a dish at a restaurant right you’ll go with the one that sort of sparks your interest the most.
The last kind of mode is more of a role-based mode where people think about the different social identities that they have and how that social identity sort of influences what they should be doing. So for example if you’re making a decision for your child you know you would be thinking about as a parent you know what are the considerations that you should be making in that role for someone else.
Host: So, I love your — I love all those examples. If I was going to extend the analogy of the restaurant calculation mode, would be, ‘I’m just gonna get an app because an appetizer because it’s the most cost-effective’ or making a decision based on like the prices that you see on a menu item, is that?
Crystal: Or the potential calorie counts or nutritional value if you wanted to get into that kind of information that would be a great relevant way to think about it too.
Host: That’s good and then the effect mode is what makes me feel good so I’m definitely getting the pizza. Best comfort food right? And the role-based mode would be well I want to get something that is sustainably sourced and potentially good for the environment so maybe a salmon or the vegetarian option.
Crystal: I think with that example you actually did a nice job highlighting one of the important features of decision modes which is that they can operate in parallel so for example you can be you know responding to your emotional reactions at the same time you’re weighing these costs and benefits at the same time you’re thinking about a particular social identity, so they’re not mutually exclusive and you can have elements of your thinking that are colored by each one of them.
Host: I can absolutely see that, and your research looks at environmentally friendly choices as specifically how people decide on an electrical plan how and why did you choose to focus on electricity?
Crystal: Yeah, we were interested more broadly in sustainability initially because obviously, it’s an area of consumer decision making that has pretty profound societal impacts, and one of the things that is interesting about it is a lot of consumers actually want companies to help them make more sustainable choices. There’s been some market research showing that as many as 90% of consumers in the United States and in Europe actually want companies to help them make more sustainable choices and we were interested in how we could use our understanding of decision modes to see first what’s the relationship between these decision modes and consumer decisions that impact the environment and how might we be able to leverage those kinds of insights into decision modes to help people make more sustainable decisions.
We focused on electricity for a couple of reasons; the first one is that in the United States electricity generation is the single largest source of carbon emissions with residential energy use accounting for about 20% of all emissions from fossil fuels combined in 2017. So, this is an area of consumer decision-making that has a pretty major influence on the environment.
The other reason we were interested in thinking about residential electricity generation was that it’s an area where we thought that all three of these decision modes could operate in parallel just like we were talking about with the restaurant example a minute ago so electricity decisions involve a lot of tradeoffs of numbers and details of plans you get this more calculation based more effortful cognitive processing they can’t evoke these strong emotions as you’re thinking about say bringing a green consumer or something like that so people can have these strong emotional reactions to the different types of plans. And people can be influenced by different roles or considerations of their sort of social identity when they’re making these kinds of decisions, like for example wanting to be a green consumer or an ethical consumer for instance and that can color the kinds of things they’re thinking about.
Host: Yeah, that’s really good and I have to say like, Crystal, you’d be proud of my carbon footprint. I don’t own a car, all the other — all the things right? I check all the boxes, so I am that person, and I think in thinking about my electric plan, which I did recently switch to a more sustainable plan with PECO. I was surprised at some of the barriers to getting into that plan and so I’m sort of curious what your thoughts are for me or any advice to me as a consumer cause I can see how the three modes might have been activated in me just for simple things such as it took an hour and a half to get on the phone with a PECO Rep to explain to me what this sort of plan was that I could switch to and then they sent someone to my house on December 29, had I not been here I wouldn’t have been able to complete my purchase.
So I think in activating these three modes and some of like the real challenges of today some of these things like convenience could come in and have made me calculate this isn’t actually worth — it’s not worth it because of the time and the effort it’s taken for me to try to be a sustainable and like clean or green consumer.
Crystal: Well, I think that brings up an interesting point here which is that with a lot of these electricity plans it’s often a sort of set it and forget it a decision that people make. it’s typically a one-time decision it’s often an election you make right after you’ve moved someplace new and are setting up your utilities for the first time and so that makes it sort of interesting as a consumer decision because it’s a one-shot type of decision that can have profound impacts on the environment by consumers. As opposed to something that requires more of a consistent daily commitment you know, consistently making say dietary decisions that have low carbon footprints for example. This one is sort of more of a one-shot choice.
I think one of the things that’s a little bit unusual about how people often make decisions about their utility plans is there’s typically a standard or default plan and people often don’t often look past that to consider what the other options were here. So in the research that we presented in this paper, we were actually typically making it explicit that you were making the decision between one of two plans, one of which was more environmentally friendly and one of which was less environmentally friendly to make it clear that there was really a choice to be made.
Host: Let’s talk about the research itself and your findings.
Crystal: So, we were interested in understanding how decision modes potentially influence these decisions about electrical utility plans, and I should say one of the reasons we were interested in electrical utility plans was also the fact that we had a partner in a Swiss utility company that was interested in introducing a new type of environmentally friendly plan and was willing to give us access to some of their customers to run some of our research.
But the format in most of our studies was that we presented consumers with an option between two different electrical plans. One that was typically more environmentally friendly and one that was less environmentally friendly, and then after they made their selection we asked them to complete a series of survey questions assessing the extent to which they were using each of these three modes while making the decisions and we sort of gave them descriptions of what the kind of thinking involved in that mode would be and sort of asked them the extent to which that was influencing their working during the decision making, and what we found was that the more people used calculation based modes the less likely they were to choose environmentally friendly plans. Whereas the more that they used either affect-based modes or role-based modes the more likely they were to choose those environmentally friendly plans.
Now this was especially striking because in some of the cases the environmentally friendly plan was actually the cheaper option, the less expensive option so even under those circumstances using the calculation-based mode makes people less likely to select it, and so that suggested to us that there’s something specific about the kind of thinking involved that’s really shaping the decision-making process for people.
Host: And what was it in the calculation mode that made them sort of rule that this wasn’t the plan for them or decide that this wasn’t the plan for them?
Crystal: So we think that what’s driving it is that it leads to a focus on sort of transactional thinking sort of what’s in it for me, what’s been my personal best interest and really focusing on the potential cost to the self so even the cheaper plans involve some kind of non-financial cost like having to monitor your usage at particular times of day for example. So we think that it basically folks more of this focus on like transactional exchange as opposed to one that focuses more on sort of social welfare for example so I think that’s part of what’s driving the effect there.
Host: So how can your research be applied to get people to make more sustainable choices?
Crystal: In this paper, one of the things we were really interested in was trying to find a way to actually change people’s decision mode use and as a result changed their decision making. So one of the things we actually had people do is we gave them a little description of what that kind of decision mode was (either the calculation based mode the effect mode or the role-based mode) and we asked them just to write about a time that they had used that kind of mode to make a decision.
After people did this short writing task we then gave them the presentation of the two energy decisions and asked them to make a selection and one of the things that we found is that when we prompted people to remember a time they had used the role-based mode to make a decision in the past that actually made them more likely to choose the environmentally friendly option than if they had written about the calculation based mode in the past. And this was a really short writing exercise that just took a minute or two and it really had this profound impact on people’s choices that they made.
Host: So, it’s clear that better decisions lead to a better environment how can your work be applied in other areas to have us all making these types of decisions?
Crystal: So, I think the hope here is that we can get this information into the hands of people who are trying to encourage others to make sustainable choices and there are groups interested in doing this from businesses that are interested in promoting more sustainable decisions, to governments or NGO’s that are interested in promoting more sustainable decisions, etc.
What we think is really relevant here is that the kinds of things that people are thinking about when they’re making these choices can have profound impacts on what they choose. So what that means is that when you’re putting together say the marketing materials for promoting potential sustainable options you may want to do so in such a way to say prompt that affect-based mode or that role-based mode you know especially in cases where we think that this role-based mode in a particular sort of evokes the sense of social identity and connectedness and so you know investment in the societal welfare.
Evoking that kind of thinking when people are presented with this kind of information or considering these kinds of options can really help make it more likely that people will make environmentally beneficial selections. You brought up the struggle that you went through to try to switch to a more environmentally friendly electrical plan it would be really great if when companies were sort of presenting their customers with these different types of options if they could make it clear sort of what the benefit would be to that kind of plan to help you get over the hump of going out of the more standard plan that most people enlist in and also to try to remind you of some of that sort of societal commitment that you might have to make those kinds of choices.
Host: Yeah, absolutely I agree with that and I think you know in some ways as a consumer I try to take on as much responsibility as I possibly can to help but to your point, I think if businesses are thinking about this too and helping to educate consumers on how to make these decisions that do positively impact the environment I think it’ll be all the better.
Crystal: Well and one of the interesting things we found in this research too is we did a little bit of work looking at the kind of information you give people about the plan so for example some of these environmentally beneficial plans as I described end up being financially cheaper for people and so we looked at what happens when you emphasize just the cost benefits of the environmentally friendly plan, the environmental benefits or both when you’re promoting these to people.
And one of the things we found is that just promoting the financial benefits alone seems to backfire a bit where if you do that even though the financial benefits are attractive, people are the least likely to select the environmentally friendly plan under those circumstances compared to just having the environmentally beneficial aspects emphasized or having both the financial and environmental points emphasized. And again we think that might be because this focus on the environmental impact gets people thinking more about this transactional what’s in it for me kind of mentality.
Host: So then how as a consumer can I put myself into a role-based mode more often?
Crystal: So I think one of the things that help is thinking about different identities that people have so one of the key things that comes up and I think you’ve mentioned this with your own consumption is having that identity as a green consumer or as someone who contributes to sustainability or who fights climate change and having those be front of mind. I think more broadly speaking having a role that sort of is a citizen in your community or a contributor in your community also helps promote this kind of thinking and indeed some of the interventions that have been previously shown to be the most effective at promoting environmentally friendly behaviors are ones that tend to tap into this more sort of socially-minded thinking.
Host: And then I guess we’ve talked about some of the ways that companies can help to overcome barriers that consumers may have such as you know kind of the benefits, reminding them of maybe their own role-based identity as a consumer. Cause I think that your example about having those who wrote it out like sort of remembered this about themselves and that influenced their behavior and I’m sure like in some very good marketing or communications or advertising just even being able to tout that is going to really really make a difference. Are there other ways that we can overcome barriers to making more environmentally friendly decisions?
Crystal: So within the context of this work, I think our focus has really been on thinking about how the decision modes can be used to tailor marketing materials and other types of information that are provided to consumers in order to promote environmentally friendly choices.
One of the things I will say is that a lot of my research focuses on choice architecture which refers to how options are set up and presented to people and one of the things we’re really interested in understanding how we can set up how the options are presented to people to try to encourage folks to make decisions that are better for them and better for society. So for example, adopting less expensive plans that are also better for the environment.
So my research is really focused on trying to understand how we can set up how those options are presented to people to try to nudge them to make the decisions that are going to be not just best for them but best for society more broadly. I think to connect the two, one of the reasons that some of these nudges work is that they also tend to evoke some of the more role-based thinking that we found in this current work, and promotes environmentally friendly choices.
Host: Thanks to our guest, Crystal Reeck. It’s incredible to think of the behind-the-scenes activity that goes on in our brains when making a decision. I think we can all benefit from taking a step back and realizing how we’re processing information. If we can tap into the role or identity we want like an environmentally-conscious consumer we can encourage ourselves to make better decisions for the environment more frequently. And hopefully, policymakers, executives, marketers and advocates can position information and choices so that sustainable environmentally friendly decisions are easier to make. I know I will continue doing my best to be an eco-friendly consumer, I hope you will too.
This concludes our third season of Catalyst. We hope you’ve enjoyed all of our conversations featuring incredible alumni and fascinating faculty. If you missed any, check the archives for episodes around the intersection of marketing and music, being your authentic self at work, changes in college sports, artificial intelligence, the metaverse, the positive impact of a Fox board fellow, and what the future of healthcare looks like through the eyes of an innovative leader.
Catalyst is a podcast from Temple University’s Fox School of Business. Subscribe wherever you listen to podcasts and visit us on the web at fox.temple.edu/catalyst. We are produced by Milk Street Marketing, Megan Alt, Anna Batt and Karen Naylor. We can’t wait to share season 4 coming next September until then I’m Tiffany Sumner and this is Catalyst.
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