Professional Certifications & [Behavioural] Economics

I was thrilled to see many people responded well to my earlier post on certifications in the context of information economics (particularly information asymmetry). There was lots of interesting feedback, including some that were somewhat critical of certifications in general.

This led to an interesting question – what are the negative aspects of professional certifications, if any?

Again, we can use economics. There’s quite a few things to keep in mind…

First, there’s no denying that pursuing certifications can have significant costs, both explicit and implicit. Some of the clear explicit costs include preparation materials, tuition, travel costs, not to mention exam fees themselves: some run into thousands of dollars. It pains me to see how expensive it can be to prepare for some certifications, knowing that in many cases candidates may be latching too much hope in just having “that” cert.

There’s also implicit costs. Think of the hours of studying, preparing materials, etc… It is not uncommon for some of the more advanced certifications to eat up hundreds if not thousands of hours of preparation. The ‘opportunity cost’ of missing out on months or years of ‘regular’ life can be staggering.

Are these costs worth it? It depends, of course. In many cases, I think the answer is yes, but I want people to know what it is they’re getting themselves into. More than ever: Caveat emptor (buyer beware!).

I also wanted to explore something else: how can having a certification negatively affect you? This brings us to the extremely interesting field of behavioural economics

Behavioural Economics

Behavioural Economics is not one of the ‘foundational pillars of economics’ – those would be macroeconomics and microeconomics (of which information economics is a subset). Rather, it is more of a multi-disciplinary application of several fields – sociology, [micro]economics, psychology, finance, … . It looks at how sociological, psychological, cognitive, or emotional factors can affect economic decisions and processes.

Behavioural economics has taken the world by storm for the past few decades, notably with the work of Dan Kahneman and Amos Tversky on Prospect Theory, then many others. It was Nobel-worthy (though sadly Amos passed away before they were awarded the prize, and Nobels are not awarded posthumously). For those that are interested, I highly recommended the works of Dan Ariely, a popular researcher from Duke University. Dan has several books, blog posts, online courses, and even movies on Behavioural Economics.

Within behavioural economics, one area of great interest is cognitive biases – how our quirky little minds often behave in non-rational but predictable ways. There’s dozens of biases that have been identified – I recommend this Wikipedia page as a starter…

There’s lots of discussions about why these biases exist. My simplistic take is that the human mind evolved over millions of years and is not yet adapted to the changes that civilization introduced over the past 10,000 years or so. The behaviour that would save you from being eaten by a wild animal in the savannah or help you survive a harsh winter is the same that nowadays makes you susceptible to bad products on late-night TV and binge eating…

Let’s look at just a few biases, effects, …:
  • Endowment Effect. This is the notion that if you happen to “own” something, you value it more than if you don’t.
  • Loss Aversion. Somewhat related to endowment, this is the key insight that one feels the pain of loss of a certain amount ‘x’ as greater than the pleasure of gaining the same amount ‘x’.
  • Availability Bias.  You’ll attribute more importance/frequency to information that you have come across recently.
  • Cognitive Dissonance. The stress caused by holding contradictory thoughts and the rationalizations that are done to resolve this.
  • Social Proof and variations (group bias & others). When one assumes the behaviours of others to be correct.
  • Sunk Cost Fallacy. Continuing to invest in something because so much as been spent on it already.
There’s *tons* of information on biases, influence, manipulation, etc… Too many to list here. A particularly popular author on the topic is Robert Cialdini. Well worth taking the time, trust me.

Cognitive Biases & Professional Certifications

So, how does all this apply to professional certifications? Quite well, actually.

Note: I’m more familiar with the network security space, so that’s where my examples come from. When thinking of certifications, I’m thinking of the likes of Cisco, Microsoft, VMware, Juniper, Novell, or groups such a SANS, CompTIA, or the (ISC)2. In this space, many vendors have formal certification programs, often with multiple levels of certifications (associate, junior, senior, master, …) and regular recertification requirements. This makes sense, as today’s technology darling ends up as tomorrow’s legacy option, supplanted by a new option.

In the IT industry, a company that sells, distributes, or provides services for products with ‘certifications’, often receives benefits from the vendors that are tied to certifications: better margins, warranties, marketing dollars, easier access to support resources, etc… This incentivizes having and maintaining a healthy number of professionals on staff with the required level of certifications. This, in turn, means that someone working at these companies is strongly incentivized (or even required) to obtain these certifications.

Even if you don’t work for an IT reseller/distributor/integrator/…, there’s a strong message from vendors incentivizing you to certify, to show your skills, etc…

Why is that?

Because, amongst other things, having a professional certification from a vendor influences you, even if just a little.

If you, as a professional, worked to obtain a professional certification from a traditional “vendor”, you can expect the following to occur unconsciously:
  • due to a desire to resolve any cognitive dissonance, you’ll hold a generally more positive opinion of that vendor. “If I went through the effort of certifying on that vendor’s product *and* I consider myself a good person, then that vendor must be good too.”
  • because of the the endowment effect, you’ll likely hold a more positive opinion of others who have the same certification. This may come through on sales calls, hiring, etc…
  • the availability bias will kick in when thinking of alternatives, meaning you may have an easier time recalling a specific vendor’s offerings or technology, particularly if they refer to [re]certification topics.
  • social proof will kick in when you see that certification in prominent display by vendors when visiting trade shows, elections, … Vendors often offer certification exams at their shows (sometimes even waving the exam fees): it is extremely convenient for the test taker, but the visual of hundreds or thousands of your peers taking those exams is a shining example of social proof in action..
  • it’ll likely be really difficult to let go of that cert, or that particular vendor. That communication saying “your certification has now expired” is really painful. Such is the impact of the sunk cost effect (and loss aversion).

Now, this does NOT mean that everyone is going to mindlessly give in to their biases, but that these biases exist, and some will give in sometimes. Given enough nudges, that’s a powerful effect…

Vendors know this, and use it as an instrument. It helps them sell more product – be it an IT product, training, or a certification. It helps them maintain their base of customers, it helps them maintain a wide network of partners, which expands their reach, and so on…

They’re well within their rights to do so, just as you are within your rights to be aware of it and judge things on their proper merits.

Wrapping up

We’re all biased and susceptible to manipulation at different levels. (Yours truly included: among my many, many failures, I once fell – hard – for the “free Disney tickets pitch”. It hurt, it cost me money and stress, but I learned my lesson and moved on.)

I think professional certifications can be wonderful things:
  • They can provide a roadmap for learning, checkpoints for measuring your skill.
  • They can be a very effective (though not perfect) means of resolving the information asymmetry inherent in professional situations, both as signals and as screens.
  • They can help establish relationships with like-minded professionals.
That being said, we just saw how there’s potential negative aspects to certifications: explicit &implicit costs, along with being more vulnerable to cognitive biases that may work against your best interests.

Again, I’m absolutely not against professional certifications, quite the opposite actually! It is precisely because I value them that I want people to be cognizant of what the benefits and yes, the pitfalls, of certifications might be. That guy Sun Tzu said it best… 🙂

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