Thinking fast and slow

 

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Thinking fast and slow is a book by Daniel Kahneman. It unpicks how humans make decisions and the rational and

(more often) irrational processes that our brains go through in making them.

The book outlines the fundamental principle of two processes in the brain that influence our decision-making. Kahneman describes them as ‘Systems’.

System 1 is fast, intuitive, automatic and unconscious and cannot be switched off. It is simple and efficient because it operates on the WYSIATI or ‘what you see is all there is’ principle. It is easily biased, jumps to conclusions and is terrible at interpreting statistical evidence.

System 2 is slow, deliberate, and effortful and requires attention and concentration.  It takes over from System 1 when things get difficult. System 2 is fundamentally lazy so only takes over when it absolutely has to, it tires easily and will always defer to an ‘easy’ conclusion suggested by System 1 if it can.

Thinking fast and slow highlights a range of experiments that show how these two systems work together – and how our decisions are influenced by different and often subtle changes in circumstances.

One factor that influences System 1 is called anchoring. An anchor effects our immediate response to decisions involving numbers. For example some visitors to the San Francisco Exploratorium were asked the following questions.

Sample group 1

Is the height of the tallest redwood tree more or less than 1,200 feet? (this sentence is the anchor)

What is your best guess about the height of the tallest redwood tree?

Sample group 2

Is the height of the tallest redwood tree more or less than 180 feet? (this sentence is the anchor)

What is your best guess about the height of the tallest redwood tree?

The two sample groups produced very different mean estimates of the height of the tallest redwood tree (which is a System 1 – fast decision) – influenced by the level of the anchor in each of the two questions. Sample group 1, with a high anchor of 1,200 feet estimated the tallest tree was 844 feet and sample group 2, with the low anchor of 180 estimated the tallest tree was only 282 feet.

If we know the effect that anchoring has, e.g. a high anchor number influences a significantly higher number decision, how can we apply this anchoring principle to our fundraising?

We already use anchoring (even if we don’t label it as that). For example it is usual that when asking for sponsorship, either online or on a paper sponsorship form to apply a high anchor to the first sponsor amount. For example if the first sponsor value is £100 the other sponsors are likely to sponsor higher amounts that if the first sponsor value is just £5. This first donation sponsor amount is an important anchor.

Consider how you can test the anchoring principle across your whole fundraising portfolio, for example regular giving, face to face, direct mail, pledges at events, reserves on auctions – the list goes on. People are influenced to give a higher level if a high anchor is suggested.

There are factors to consider when setting your anchor, understanding your audience and the context in which they are giving. Set your anchor too high and you could discourage people from giving. However, finding the optimum anchor for different fundraising techniques has to be worth testing if you are not doing so already.

It might seem obvious or just common sense, but how often in the rush to get something out the door do we overlook subtle messages or small changes that we can make that could add up to make a big difference to our fundraising income?

Thinking Fast and Slow highlights many more fascinating experiments that provide insights on human decision making that can be applied to our fundraising.

I’ll post some more examples on this blog in due course.

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