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Macro Change at the (Irrational) Micro Level

Feature Article | May 10, 2017 by Jeff Woods

Our belief that humans are rational is fundamental to society. Philosophers have spent thousands of years explaining why we are more than our irrational emotions.

Participatory government and the free market are designed for us to choose our leaders and spend our money according to our best interests. We assume that societal and economic progress depend on our rational behavior. Show us how we benefit, and we will buy, participate, or cooperate our way to economic growth, social cohesion, and representative government.

We have been largely successful on a macro level. Economic well-being has advanced exponentially from our agrarian roots, and Participatory government keeps expanding its reach. However, we still face complex problems—climate change, economic inequality, and injustice. Despite forceful efforts to address these issues, they still plague us because at the micro level—the intricate interplay of personal decisions—it is difficult to understand how small, individual (and often irrational) acts can create large problems or how micro changes in behavior can affect the big picture.

We didn’t deliberately intend to create an issue of Digitalist Magazine, Executive Quarterly about how digital technology can reinforce human rationality, but that’s where our current thinking about digital transformation has taken us. The combination of Big Data, machine learning, and personalized yet pervasive digital user experiences enables entirely new ways of thinking about how humans behave. Economists even have a trendy name for it: libertarian paternalism. This concept, advanced by behavioral economist Richard Thaler and legal scholar Cass Sunstein, states that public institutions and the private sector can (and may have good reasons to) take steps to influence people’s behavior while preserving their choices.

Our Q2 cover story looks at the commercial implications of Thaler and Sunstein’s insight. “Primed: Prompting Customers to Buy” explores how both consumer and business-to-business purchasing decisions can be influenced by digital experiences and personalization. In physical stores, salespeople help consumers make their buying decisions. In digital stores, the race is on to codify years of expertise into our digital interactions.

Insights from the Deep” probes Big Data’s changing role in enabling a greater understanding of human behavior. As our ability to store data advances, we will move from the era of Big Data into one of vast data. The more data we can use to  discern human behavior, the easier it becomes for us to understand what individuals do. We can find and test for particular decision-making patterns at the micro level—and train machine-learning algorithms to detect these relationships even more accurately.

Finally, “Heroes in the Race to Save Antibiotics” looks at how data and digital technologies that generate insight into human behavior can be applied to one of the most pressing issues of the planet: the looming crisis stemming from the proliferation of antibiotic-resistant microbes. Many researchers and public health experts are preoccupied with enabling a rapidly available and flexible supply of antibiotics and with developing new treatments. We delve into how digital technologies such as individualized patient analysis could provide the edge we need in the race against the microbes.

The case for digital technologies as tools to help us make more rational decisions and, in doing so, improve human well-being, is stronger than ever.

We offer the Q2 2017 issue of Digitalist to help point the way forward. Read the issue online or download the free app on your mobile device from iTunes or Google Play store.

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