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Building Theories of Behavioural Economics

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Economist Michelle Baddeley makes the case for why understanding the built environment should be a vital part of modern economic research.

Building Theories of Behavioural Economics

Michelle Baddeley was the first female Director of The Bartlett’s School of Construction and Project Management. She is currently Research Professor at the Institute for Choice at the University of South Australia.

There is little that’s more important in our modern lives than having good buildings for living, work and leisure.

Professor Michelle Baddeley

Despite the fact that behavioural economist Michelle Baddeley has moved on from The Bartlett School of Construction and Project Management, her work is still much discussed here. Baddeley puts that down to the fact that she wants to “explore practical problems by bringing economic insights together with multidisciplinary insights, not only from other social sciences but other science too”.

And that, she believes is relatively rare among academic economists. “Economics gets a bad press when it comes to connections with real-world problems even though, in principle at least, economics is the most practical of subjects.”

Her passion is translating technical economic analysis into powerful but intuitive insights, “and construction is a great starting place for that.” She explains the relevance it has as an industry. “There is little that’s more important in our modern lives than having good buildings for living, work and leisure.” But it’s largely neglected in modern economic research and teaching. She was able to “help fill the many gaps in our economic understanding of construction specifically and the built environment more generally”. It’s research that people still talk about The Bartlett.

Building Theories of Behavioural Economics

Cover of Michelle Baddeley's latest book published in July 2018.

Building a collaborative culture

Baddeley was the first female Director of The Bartlett’s School of Construction and Project Management (CPM). “What I brought was a focus on the individual decision-makers – drawing on insights from information economics and behavioural economics.” Baddeley says she never struggled with gender biases within the university, although she did notice that the construction industry is male-dominated.

“At one meeting of construction industry professionals – I was one of the few academics there, and one of two or three women – the Chair broke for lunch with the announcement: ’Time for lunch, Gentlemen’, which surprised me. He meant no harm, he was just used to meetings in which women were not present. I hope that’s changing now with more emphasis on encouraging young women to join the construction industry.”

The Bartlett was a great place for collaboration, she says. “Put together lots of bright people, with diverse knowledge and expertise and blend it with a culture of collaboration within one of the best universities in the world, then there’s not much more you could need, apart from time.”

Baddeley cites her collaboration with Anglian Water as an example. And with CPM’s Vedran Zerjav, she built the research with Anglian Water in the context of devising behavioural route maps to help them navigate their relationships with their diverse suppliers.

Economics gets a bad press when it comes to connections with real-world problems even though, in principle at least, economics is the most practical of subjects.

Professor Michelle Baddeley

Quantifying people’s choices

However, at The Bartlett, “I never seemed to have enough time properly to develop all these exciting ideas and collaborations. Now, for the first time in my career, I have the luxury of being able to devote myself entirely to research, which is such a great privilege.”

She is Research Professor at the Institute for Choice (I4C), University of South Australia (UniSA), and has recently taken over as the I4C Director. The institute is a world leader in discrete choice modelling – a methodology for quantifying people’s choices, preferences and trade-offs. “I’ve found that there are some robust and promising connections between choice modelling and behavioural economics, across a wide range of domains—everything from housing through to migrant employment.”

This all feeds into her latest book, Copycats and Contrarians, which explains our instincts to follow others, and draws on insights from economics, psychology, sociology, neuroscience, evolutionary biology and behavioural ecology.

“Economists explain these as a rational process of learning from others. We see people make choices and we follow them because we assume they may know more than we do,” she explains. “But psychological influences are important too, we are susceptible to group pressure and obedience to authority, so sometimes we follow others in ways that are not constructive.”

Despite her distance from the UK, there are plenty of links with Bartlett research and Baddeley maintains a number of collaborations, especially with The Bartlett’s Institute for Global Prosperity and with UCL Computer Science. And she continues to supervise and advise some UCL PhD students, in ways which tie well with what I4C is doing. “My dream would be to cement some strong collaborations between UCL and UniSA.”

The School of Construction and Project Management is an international centre of excellence in the teaching and research of project management and economics. It is part of The Bartlett, UCL's Faculty of the Built Environment. Find out more: https://ucl.ac.uk/bartlett/construction

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