The central idea behind Causal Economics is that optimal decision making happens when costs and resulting benefits are tied together. This is a simplification similar to that of boiling Behavioral Economics down to the idea of Nudging (a form of Libertarian Paternalism). Going a step further, Causal Economics asserts that people are rewarded for their
CE is a unifying theory of economics because the other major models of economics can be derived from it at both a micro and macro level. At a micro level, major decision models, such as BE and EU, can be derived from CE through particular restrictions. Specifically, cost and benefit, both deliberate and uncertain are
Nudge theory is powerful and top of mind with many of today’s government, academic and business leaders. It’s earned its place there. But, if one is to pick up on Phil Kotler’s comment that behavioral economics is a fancy new formalization of marketing, certainly it could be said that nudging is even more so directly
Many of the predictions of Causal Economics center on the impact of consolidated power, because that is one of the main conditions that allows for decoupling, driving up B/C ratios for those with power and driving down B/C ratios for those without power. Economic freedom and economic consolidation are at opposite ends of the spectrum.
Causal Economics provides a great deal of insight on compensation practices. It reinforces some well recognized practices, flags some areas of poor approaches and lays out potential new approaches. This post puts a few areas on the table for discussion. Good compensation systems always try to connect pay (the cost to the employer and the
It’s commonplace to see increasing real GDP as a measure of improved utility in society. But it’s less common to imagine an even better scenario of increasing real GDP and deflation. In such a situation, real incomes are increasing in a strong and sustainable fashion, as we’ll show here. The word ‘deflation’ itself conjures up
100% Pure Socialism and Capitalism each convey unstable long-term extremes. Raw socialism will snuff out productive growth and innovation as individual entrepreneurship gives way to reliance on big government, run by bureaucratic elites. It simply removes incentives to innovation. Raw Capitalism will produce powerful capital holders that naturally steer societal rules to their own benefit
If you are one of the few business people, let alone marketers, who hasn’t feverishly digested the work of Anthony Robbins, then we recommend that you get on it. Tony is still the master of applied behavior and decision making in business. It occured to us that in many ways, Causal Economics is an academic
The mainstream economics most of us learned in school is known as neoclassical economics, and it quite simply doesn’t explain human behavior. It’s all built on the 100% rational economic man – homo economicus. And well, people are regularly observed to be irrational/emotional. The recent surge in popularity of Behavioral Economics came about to fill the
The standard in sales and marketing today is to relentlessly communicate benefits of our solutions. Barriers to implementation get very little attention during the buying process. It’s a natural situation, because bringing up costs and problems creates tough discussions. This can slow things down, right? Bringing up things that are negative. It’s actually not true.