Stephanie Cook, a rising high school senior in Texas, U.S., used a summer of discovery to jumpstart new learning and experiences.

An Intern’s Deep Dive into Behavioral Economics

Stephanie Cook is a rising high school senior at Fort Worth Country Day in Fort Worth, Texas, U.S. We first met Stephanie last summer when she won Round 3 of the KWHS Comment & Win contest for her personal story about Taekwondo on the article Advice from New York Stock Exchange President Stacey Cunningham.

More recently, Stephanie reached out to us to pitch a personal essay about her growing fascination with behavioral economics. This type of economic analysis applies psychology to human behavior as a way of explaining economic decision-making.

In another KWHS student essay that is yet unpublished, Rachit Surana, a high school senior at La Martiniere for Boys in Kolkata, India, explains behavioral economics like this: “I’ve made an interesting observation when I go shopping with my grandmother. The available products are always changing. But I realize that we stop more often in the shops that offer wider selections of things to buy. That is expected, right? But here’s where it gets curious. We actually buy more often from the shops that provide fewer choices. This theory is called decision paralysis. Whenever our brain is faced with a complex decision, it either tries to take a shortcut or to avoid the decision entirely — so, when shopping we might buy less. In contrast, the shop with fewer options presents a simpler decision and thus better conversion.”

Stephanie has taken her economic interests a step further by immersing herself in field research through a remote internship at the University of Southern California’s Los Angeles Behavioral Economics Lab. She writes about her experiences in this personal essay.

On a daily basis, we are all confronted with one basic behavior – decision making. Have you ever thought about why you make certain decisions and if they are rational? I had never given much thought to the impact of my decision making until I started my remote internship in behavioral economics with Professor Brocas from the University of Southern California.

Let me back up a minute and explain how I even got interested in behavioral economics, which merges economics and psychology. Simply put, it studies and tries to understand decision making, in an attempt to make economic models more accurate.

We Are ‘Predictably Irrational’

Last summer, I attended a program called “Economics for Leaders,” a program run by the Foundation for Teaching Economics. I fell in love with economics and using economic analysis to tackle public policy issues.

Soon after, I began my college tours. During my first visit to Duke University in North Carolina, I learned that Professor Dan Ariely was a highly regarded behavioral economist. Through my research, I bought and read his book, Predictably Irrational. It highlighted how humans make decisions without rationalizing their outcomes. A simple example is how we react to the promise of free products or services. We may jump at the chance to take advantage of a free day at the museum, but we don’t think about the long lines and hour-long wait to see one exhibit.

My research then led me to discover that a Nobel Prize in Economics was presented to Professor Thaler of Chicago University for developing “nudge theory”. This behavioral economic theory suggests that positive reinforcement and indirect suggestion can influence decisions and actions without people realizing what is happening to them. A practical example is of a grocery store placing arrows on the ground leading to the produce department. Research showed that this simple nudge resulted in nine out of 10 people following the arrows, and produce sales increasing significantly.

The more I learned about behavioral economics last summer, the more determined I became to finding an internship in the field. I explored whether or not any universities would take on a rising high school junior, rather than just graduate students who already had a college degree. I then stumbled across University of Southern California’s website for their Los Angeles Behavioral Economics Lab (LABEL). As I dug deeper into the website, I found that the school accepted visitors and on occasion, remote interns. So, I reached out to the director, Professor Isabelle Brocas, sent a résumé, and wrote an essay about my interest in this field and why I wanted to be involved.

It worked! For the past year, I have been working remotely from my home in Texas as an intern for LABEL. As a behavioral economics intern, my role is to summarize scientific literature reviews for Professor Brocas. A scientific literature review provides an overview and analysis of what has been published on a certain topic by accredited researchers. I usually prepare two-to-four literature reviews a month. I have spent my junior year researching how bilingualism affects decision making. My reviews help Professor Brocas conduct experiments, develop new experiment paradigms, plus support her findings.

“Condensing a scientific article from 20 pages to one page involves understanding how completeness, accuracy and editing work together. It takes time and practice!” — Stephanie Cook

The research I have read and summarized has allowed me to learn how monolinguals (people who speak one language) and bilinguals (people who speak two languages) differ in their decision-making process. The various methods of scientific testing have been incredibly enlightening in understanding how children, teens and adults inhibit, switch and suppress information.

Many experiments have shown that since bilinguals monitor and practice two languages, they are more successful in inhibitory control and switching control. These are scientific terms that refer to the thought processes that permit someone to regulate their impulses. Effectively, being bilingual enhances decision-making. Studies consistently reveal that if you speak two languages, you have better problem-solving abilities and it challenges certain parts of your brain that focus on memory and reasoning. Speaking in another language shapes the way individuals think.

Embracing Statistics

How does this fit into economics? The big picture of studying the impact of bilingualism is to develop programs that increase cognitive skills in schools, so public finance and government spending are more effective. Studies in Canada have shown a positive impact between bilingualism and Gross Domestic Product, a key indicator used to gauge the health of a country’s economy.

Here are a few other valuable takeaways from my internship:

  • Writing clearly and simply is critical to delivering a research article summary that a professor can rely on. Condensing a scientific article from 20 pages to one page involves understanding how completeness, accuracy and editing work together. It takes time and practice!
  • Nearly every research paper I worked on displayed results tables with such mathematical concepts as mean scores, standard deviations and regression analysis. People assume that Statistics is the “easy math” in high school compared to Calculus. Professor Brocas has encouraged me to add Statistics to my senior schedule, and I now see the value of its application.

My research over the past year has opened my eyes to the area of decision-making. I am so intrigued by the “why” of decision-making and now want to understand the “what”. This summer I’m going to explore data science to understand what numbers tell us about the decisions we make.

I am excited to pursue economics in college, and I also want an interdisciplinary nature of study where economics can be studied with mathematics and then applied to business. My internship at USC’s Los Angeles Behavioral Economics Lab has helped me to make better decisions about my own interests and my future.

Conversation Starters

What is behavioral economics?

How did Stephanie Cook build on the summer program she attended? How is she truly acting on her interests and not just checking a box?

How does "big data" factor into Stephanie's research around behavioral economics? Consult the "Related KWHS Stories" tab with this article if you need help exploring that concept.

5 thoughts on “An Intern’s Deep Dive into Behavioral Economics

  1. I think Behavioral Economics as a school of thought has much more to offer than the general economic theories which assume consumers to be rational, since it’s no doubt that the smartest creatures on earth are not so smart while making decisions, being influenced by forces like brand value, social acceptance, etc. than the actual utility.

    But then again, if people were rational, then ‘Advertising’ as a discipline would not even exist as no influence would be able to change their decisions based on achievement of utility.

    Already being in the process of opening a start up, I can easily say that it would have been impossible to create a strong marketing front without knowing anything about consumers and their reactions.

    And it’s not only business, the economics of behaviour has endless possibilities.
    Say, being a part of the KWHS Investment Competition, creating and developing a good strategy was one thing, but I personally believe that a bit of study and knowledge about how to present the real deal and what all could convince the judges and the audience of the essence of the strategy is what actually helped me and my team ‘ Filter Coffee Investments’ to bag the global round one in the 2019 edition of the same competition.

    All I mean is that behaviour economics is the key to humans. It can tell you everything about a person, his decisions and reactions. And that one strong key that one needs to crack the lock of successful marketing.

    1. I agree with Dipit G. that Behavioral Economics is special because we need to consider consumers’ thoughts in a way that directly involves the influence of emotions and feelings. I also agree that we, as human beings, are the smartest creatures. Moreover, based on Stephanie’s experience, Dipit G. thinks of his own experience of taking part in KWHS, which is really encouraging.

      But what I disagree with his comment is that we are not always smart enough to make rational decisions because we are constantly influenced by factors such as brand value, social acceptance, etc. than actual utilities. I do not think there is anything shameful about being influenced though. First, influence is not always a bad thing. Also, emotions and ethics from ethic and preference do not mean that the decision is irrational. For instance, according to data released by IDC, Chinese people prefer to buy HUAWEI phones instead of iPhone these days because of their preference for the Android System, rising patriotism, and price considerations. Is that irrational? Is iPhone better than HUAWEI? This kind of questions are hard to answer. Also, why we will pay more for “brand value”? Because in a long history of the brand, it always had high quality and confirmed by customers, so brand value is the proof of good quality. Moreover, these things can always improve the actual utility. For instance, clothes are always similar and the uses of them are covering, keeping warm and decorating. However, the price of T-shirts ranges from 15 dollars to 500 dollars, because of brands or design. Design and brand value do not offer actual utility. Yet, sometimes people are benefited from them. With our experience, we know that formal and fancy suit can improve the chance to trade successfully because it is fit to your social class and wealth level. Another thing that I need to mention is the use of advertising. It is so narrow to declare that “if people were rational, then ‘Advertising’ as a discipline would not even exist as no influence would be able to change their decisions based on achievement of utility”. We need to understand the use of advertising: help people to know better about products. It is not always irrational to believe advertisement. In the end, I disagree this sentence“It can tell you everything about a person, his decisions and reactions”, because it is too absolute.

      Hereinbefore, these are my ideas about the comment of “Dipit G”. Furthermore, I have my own thoughts about this article.

      Stephanie Cook’s experience to learn and pursue the knowledge she wanted is really impressive and inspiring. At the same time, the explanation of Rachit Surana with the example of shopping is easy to understand. Through the article, I knew the existence of LABEL. Also, I knew the work of Stephanie and have a glance at “nudge theory” with a vivid example. Moreover, I can feel the strong and firm determination of her to study this area and how hard she worked. In the end, I understand the importance of math and statistics of economics and how data worked to help analyze.

      In short, I learned a lot from the article. If a person really wants to study something, no matter how difficult, he will always hold on to it. The experience is super inspiring and I knew some new way to study economics and get the chance to pursue knowledge. I am from Xinjiang, which is the northwest corner of China. Sometimes, it is difficult for me to get this kind of chance to study economics and finance in high school. Fortunately, I have kept pursuing my dream for many years and have never given up. Finally, with the help of internet, I can get the chance to study this knowledge and know about KWHS. Behavioral Economics is a big but meticulous area in our daily life. From “nudge theory” to make decisions, they are all about Behavioral Economics. I do not agree that the final purpose of Behavioral Economics or other economics areas is only to maximize benefits. Instead, I believe the final goal is to help people, no matter sellers or buyers, find the balance in economics life. I do not want people to ignore emotions and feelings when they considered economics because money and feelings are all valuable. Behavioral Economics can help sellers make more suitable tactics to fit the market and help buyers do the decision that they won’t regret. All in all, after I opened the door of economics and finance world, I am pretty sure this is my future major and career choice. I will hold on my dream and endeavor to pursue it like what Stephanie do.

      1. You raise several intriguing points, Xiangxin! I’ve also noticed that “brand value” chiefly affects a consumer’s perceived value of the product. I remember reading a Time article, which mentioned the heaps of zany, pricey fashions that high-end designers are able to sell. From an emblazoned dry cleaning bag to a $290 paper bag, it’s clear that neither the designer’s nor the consumer’s choices are completely transparent. I also reckon that Cook demonstrated a stellar initiative to pursue her passion, and to seek such a fascinating opportunity. This article has also raised my interest in the field of Behavioral Economics, and I think that your own enthusiasm is quite admirable!

  2. Stephanie, this was a great article to read! Seeing how your interest in behavioral economics has led you to pursue amazing opportunities is absolutely inspiring.

    What I loved most about your article was learning about behavioral economics. I’ve never heard of the subject before, but was thrilled to realize that I am familiar with its concept. While reading, I was reminded of an interview I read about in the PennToday newsletter featuring Patti Williams, Wharton Professor of Marketing, and felt like it offers an interesting perspective on behavioral economics. It’s titled, “How shopping became a version of social impact” and discusses how shoppers increasingly want meaning from their purchases. Factors such as brand sustainability have increasingly begun to affect purchasing decisions made by millennials, demonstrating how young consumers purchase things that are consistent with and help expand upon their own values and beliefs, rather than solely for the physical attributes of products and services. Though this phenomenon is more intentional than nudge theory and your research in monolingual vs. bilingual decision-making in the sense that consumers are making a more proactive decision to shop from sustainable brands, I believe it is a valuable example of behavioral economics in a different lens. It is valuable because it outlines two human behaviors which I think play a key role in the study of behavioral economics.

    The first behavior is self-actualization from Maslow’s hierarchy of needs. As Dr. Williams states, “This notion of self-actualization… means to find my place in the world in even very mundane, everyday activities. And I think it’s part of economic development, part of a changing cultural ethos about what matters to us.” To an extent I agree with Dr. Williams’ perspective, because I indeed feel as though consumers have increasingly become concerned with sustainability, especially with the media projecting immense concerns about climate change and environmental degradation. However, the second behavior I would like to point out is the self brand connection (SBC) construct, in which brand associations are used to construct one’s self or to communicate one’s self to others; I believe it is essential to acknowledge the SBC construct in response to Dr. William’s point, because it highlights a deeper desire to enhance one’s identity, rather than one of pure altruism. Sustainability has become a trend, especially due to stigmas surrounding fast-fashion and its pollution-prone business model, causing consumers to feel the need to shop at sustainable brands in order to construct a with-the-times identity. Arguably, this is not true of all consumers, however, it is an important aspect of today’s fashion industry and provides a different perspective to behavioral economics.

    I am incredibly interested in other perspectives, so what is your take on behavioral economics? What examples have you seen in your day-to-day lives?

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