• Martha Gordon

Rational or Irrational Consumers…What’s the Truth?

As a market researcher and consultant, from time to time I’ve been posed this question: "Don’t we know that what consumers say they do and what they actually do is different? What’s the point of research if we can’t really believe what they tell us?” Fair question, I think, and one that deserves an answer. So how to respond? Is there value in doing research if it can’t help us understand what people really think and do?

The field of Behavioral Economics has been gaining popularity in both the business world and market research community in the past decade or so, sparked by Daniel Kahneman, recipient of the 2002 Nobel Prize in Economics and author Thinking, Fast and Slow. I became more familiar with the field about a year ago, at the annual Qualitative Research Consultants Association (QRCA) conference. What I learned confirms my clients’ suspicions… consumers often think they make rational decisions, and thus they often give us the rational, logical answer to our questions if asked directly. But in reality, the stronger force in decision-making isn’t rational – it is based on our ‘gut’ or intuition, the part of our brain that is fast, instinctive and emotional (known in psychology as ‘System 1’). Below is an example, borrowed by Dan Ariely, author of Predictably Irrational.

You walk into a store to buy a pen, and the one you want is $30. You find out that fifteen minutes across town there’s the same exact pen for $15. Most people would make the trip across town for the $15 savings. Now let’s say you go to a store and there’s a suit you want to buy that’s $500. The same suit is available for $485, again fifteen minutes across town. Do people make that drive across town? The rational decision would be yes – $15 is $15, right? But in fact, in the case of the suit, most people say it’s not worth the trip!

This is just one example of Behavioral Economics at play, and it has to do with the relative value of something in consumers’ minds. In short, context matters.

So back to the question – is there a point to market research if people tend to respond rationally, but don’t act rationally? My resounding answer is absolutely – in fact it makes qualitative research (my specialty!) even MORE valuable. Why? Because qualitative researchers are armed with the tools and know-how to get to that deeper level of thinking, that ‘irrational’ and emotional level that really drives decision making. Think of the indirect questions and methods that you may have heard of or seen – projective exercises, conceptual maps, laddering, the list goes on. Those are all techniques that qualitative practitioners use to get beyond the rational, to dig deep into what’s really going on in consumers’ minds.

In conclusion, Behavioral Economics gives us good news. It proves out what we’ve all suspected, or known, for years – that consumers are more driven by emotion and intuition than they are by practical, functional benefits. Certainly both are important, and both play a role in decision-making, it’s not all black and white. But it does put further ‘evidence’ behind the need for well thought-out probing qualitative research that can really help us uncover the key drivers of decision-making.