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March 9, 2021

Behavioral Economics in Marketing: What the 1960’s Marshmallow Test Tells Us About Marketing

Findings in behavioral economics can help us to be better marketers. The way humans think, what influences us, and how we make decisions are essential to effective marketing. Of course, there are inherent behaviors that we are aware of and put to use every day, from understanding the importance of social proof (customer logos can increase conversions by as much as 400%, according to Voices.com) to the best layout for your website menu navigation (the About Us page is the second most visited page on your website).

Even more fascinating is uncovering an inherent weakness we all share so that we can design around it for the good of the consumer and our business. It’s not about tricking consumers; it’s about understanding how we operate so we can design for better outcomes.

The Marshmallow Test

One of the most well-known experiments in behavioral economics is The Marshmallow Test, created by Walter Mischel, a Stanford psychologist who wanted to see if and how children could delay gratification for a short period of time. He offered them one marshmallow right away or two after waiting 10 minutes. According to Mischel, the children in the study who had the self-control to wait were able to do so because they formed a mental image of their future selves enjoying more marshmallows. They also implemented other techniques to help them wait it out, such as distraction and goal reinforcement (singing songs and giving themselves pep talks along the way).

Increasing Saving Behavior Through Age-Progressed Renderings of the Future Self

This is interesting for marketers who sell products or services that don’t fall into the immediacy category. Hal Hershfield, a professor of Marketing at NYU, thought so too and authored a study in 2011 along with Daniel Goldstein of Microsoft Research, Jeremy Bailenson of Stanford, and several other Stanford researchers that explored how we can design around our inability to identify closely with our future self.

They came up with a strategy that helps us to form an emotional connection to our future selves by making them more salient in the present. They did this using aged avatars of the participants to test if we are more inclined to save for retirement or make other long-term decisions over present-day rewards. A key takeaway from Hershfield’s study is that people will trade off immediate gains for long-term ones when they can envision themselves as older and grayer. In other words, we make better decisions if we “see” our future selves.

Applying Behavioral Economics

As a marketer, it’s important to be aware of our intrinsic habits and limitations when it comes to decisions for our future selves. This will help you reduce the time your target audience is in the buyer journey as well as increase conversion rates overall (since you are removing friction for the user and providing more compelling content to convert). After all, business is one part marketing and one part psychology.

Here are some ideas on how you can put the findings from Mischel and Hershfield’s studies to work for your brand:  

  1. Create content that prompts your users to put their imagination to work. If your current retirement calculator is simply running the numbers, find a place to add a step asking what future they are planning for. This will help your users think about the lifestyle they want and prime them for the important step of the investment amount.  Dreaming about the life we want helps us to get clear on what will be needed.
  1. Leverage a third-party app for age-progressing uploaded photos as an amusing alternative to their current photo. Have two calls to action: one for Upload Photo and one for Upload Future Self with supporting copy “Know who you are saving for!”
  1. Use social norms marketing to gently nudge users to take your age-rendering tool for a spin. “Customers who use our photo rendering app save X more and retire with X% more to spend at retirement.” 
  1. Design graphics with generic avatars that show a current-day avatar along with avatar age progressions to help users think about themselves getting closer to retirement.

Research reveals that we make better decisions if we “see” our future selves. Consider how this can inform your marketing. Remember—helping us to see ourselves as older and grayer can move us to make careful and smart decisions now that will benefit us later, invest more for retirement, or select the best insurance.

University days may be in your distant review mirror. But staying abreast of the latest research will keep your marketing sharp and keep your brand ahead of the competition. Check out these titles for fresh perspectives on your strategy:

  • The Marshmallow Test: Mastering Self-Control by Walter Mischel
  • Thinking, Fast and Slow by Daniel Kahneman
  • The Paradox of Choice: Why More Is Less, Revised Edition by Barry Schwartz 

Ready to put these insights to work for your brand? Contact us, and let’s start designing.

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