Sunday, December 19, 2010

Making Money Ideas


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By Nigel Bradley


 


“Knowledge is Power” is a quotation that dates back to 1597 and is attributed to Sir Francis Bacon. And there lies the reason to conduct market and social research. Surveys, focus groups and observation allow us to build gaps in our knowledge, to identify demand and thereby supply what is needed (or wanted). Research information minimises risks in decision making, it saves money, increases productivity and is generally valuable.


The Labour government recognised the importance of information and directed thousands of pounds of money into research projects. Tax payers’ money was used and so this research was made largely available to the public in the name of transparency. The Office of National Statistics and the research institute IPSOS MORI both have numerous examples of such studies. We have some indications of the amounts spent on research – the Central Office of Information alone spent more than £27m in 2009/2010. The numerous satisfaction surveys for the NHS, the Police, in transport and other areas give food for thought.


The next government came along in 2010 and immediately implemented spending cuts. The BBC summarised these as follows:


– £81bn cut from public spending over four years

– 19% average departmental cuts

– £7bn extra welfare cuts

– 7% cut for local councils from April next year


Research was also cut heavily, we see the impact in government departments – the COI shed a third of its staff, posts in research agencies serving the sector were lost.


Tony Blair’s government was criticised for over using research. Sometimes it seemed that decision makers would refuse to make decisions without results from focus groups or surveys. Decisions would be postponed until research was made available. Sometimes there was “information overload” and a sort of decision paralysis.


In 2004 Oxford City Council commissioned a market research agency to find out how residents thought it should spend its budget in the next year. A method was proposed which led to interviews with 28 people and involved a day of “community discussion”. The fee was £15,000. The agency described it as a “powerful day”, but angry taxpayers, who funded the project, called it a waste of money. One councillor said: “We could all have written this report in 30 seconds, and for free.”


Under the new government the tables seem to have been turned. Decision makers have been given back their skills of using instinct, intuition and persuasiveness. Some would say their integrity and raison d’être have been restored, others would say they have been stripped of up to date information.


The recent Student Fees issue is a good example. In an ideal situation the policy would have been tested with different people: 16 year olds, parents, academics, undergraduates, postgraduates, school teachers, union representatives. Individual depth interviews and questionnaire analyses would have identified the good and bad points.


Focus groups would have sensed the frenzy that we have seen on our streets that results from person triggering another person into action. Careful consultation would have identified the best ways to communicate unpalatable ideas; indeed this would have guided the package. All of this was missing and so we saw an attack on Prince Charles, the hospitalisation of demonstrators and police alike. We saw dignity and common sense stripped away. Penny pinchers will have seen an unnecessary expenditure on policing, medics and repairs. This is an amount of money that surely exceeds efficient pre-testing research.


Perhaps that research took place? If so, something went terribly wrong. We can only wait to see similar mistakes.


Meanwhile the new government have decided to pump research money into a continuous study which will monitor “well-being” of the British public (we are told not to call this happiness). Cameron said: “It’s time we admitted that there’s more to life than money, and it’s time we focused not just on GDP but on GWB – general wellbeing.” Measure for Measure not a good start methinks.


Nigel Bradley is a senior lecturer in marketing at the University of Westminster in London and a Fellow of the Market Research Society. This year Oxford University Press published the second edition of Nigel’s textbook: Marketing Research – Tools and Techniques. He has previously written this post for OUPblog.







The Revolving Door




I agree with Ezra Klein that sometimes people get too upset about the “revolving door” phenomenon, but in this post I think he misstates the main objection to it:


My hunch is that this is fundamentally because of money. If the public thought that expertise was the actual good being provided, they wouldn’t mind very much. But the trail of cash suggests that the real trade is that firms and groups give money to former players, and then those former players give money to their former colleagues, and what the firms and groups end up getting isn’t an explanation of how the committee process works, but some giveaway that they bought at the expense of the public. Put differently, the market isn’t for people who can navigate the government. It’s for people who know how to bribe it.


As I understand it, the concern is that the the job itself is a bribe. In a super-crass version of this, Firm A says to Regulator Z “you won’t be in this job forever, but if you make a lot of decisions favorable to Firm A then we’ll hire you after you quit.” In a more realistic version what happens is that Regulator Z observes that many of his predecessors have gone on to lucrative careers in Industry A and that they probably couldn’t have had if they’d pissed off all the Industry A CEOs. This biases his decision-making in a problematic way.


Sometimes I think this problem is more apparent than real. Any conceivable set of decisions that the FCC makes is going to be favorable to some set of large corporations. So being in the pocket of “big business” as such isn’t a big problem. But sometimes the problem is very real. The entire financial reform debate, for example, has featured a lot of ideas that put the interests of the financial sector as such at stake. Many observers, including Ezra Klein, have posited that shrinking the size of the financial sector overall should be a goal of reform. Obviously, though, people with an ambition to go get jobs in the financial sector are unlikely to espouse such goals.






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