New economic order

Using accelerated analytics on data from more than a million respondents across 3 continents, Dr Ross Honeywill identified a new $US3.9 trillion economy within the conventional economy. His NEO typology (NEO = new economic order) is today widely recognized as the defining high-value economic framework of post-industrial countries.[1]

The classification breaks into two broad types,[2] derived from a multi-dimensional scored approach using the automatic interaction detector method (AID) across 194 determining factors:

In addition to these two main groups is the Evolving Economic Order. This group comprises about the same proportion of adults as NEOs. They are similar to NEOs in values and attitudes but may not have the spending behavior to automatically qualify them as NEOs. Typically they are included in the New Economic Order classification.[5]

Based on evidence from more than 800,000 respondents over 15 years, the New Economic Order is an ascendant economic force.[6]

Independent Evaluation

Application

The NEO typology has been embedded by companies on three continents. Specifically, the NEO typology has been used by household brands in the US, the UK and Australia including Lexus, Sony, Moët-Hennessy, Yahoo!, National Australia Bank, Qantas, National Association of Independent Schools, Clydesdale Bank, Yorkshire Bank, Telstra, David Jones department stores, Macquarie Bank, among others.

Methodology

Application of social economics, including work on Social intelligence, represents a major shift away from the traditional orthodoxy of demography and socio-economics as predictor variables of an economic trajectory.

The NEO typology uses standard psychographics (values, attitudes & behaviors) + a statistical discriminant model (SDM) using multivariate modeling (to characterize the differences between social types) + a spending propensity model (SPM) to identify the respective economic impact of each social type.

In short it uses a directed, multi-dimensional approach to:

Defined by 133 broad factors in the original (1999) algorithm, developed at KPMG, and now by 80 attitudinal, 100 behavioral + 12 discretionary spending factors, the NEO typology is a complex model with each social type scored at 5% increments (each has 20 scores). The social types are developed using the automatic interaction detector method (AID). This method indicates the combinations of characteristics which best predict, describe or explain the membership of a defined target group. The AID procedure uses a chi-square test to split customers into groups based on the best predictor variable, and the resulting score is based on actual incidences of response not an assumed or forced relationship (e.g., regression).[8]

Operating at a societal level, this is an epi-segmentation model sitting above market segmentations produced at an enterprise level.[9]

New Economic Order and Society

NEOs are largely metropolitan dwellers, with more of them living in inner urban areas than anywhere else - these include San Francisco, Portland (Oregon), Vancouver and Boston. Forty-five per cent of NEOs are women and 55 per cent are men; and while NEOs range over all age groups, they tend to be younger than Traditionals. NEOs exceed the national average in every profile between age 20 and age 50, while Traditionals exceed the national average in every profile above age 50. Half of all people with a university degree are NEOs; when compared with Traditionals, four times the number of NEOs have degrees. They are as committed to learning a living as they are to earning a living. NEOs are most likely to be in professional or management occupations, and earn more than the rest of society. Specifically, they dominate every income category above $45,000 a year, and are five times more likely than anyone else to earn in excess of $100,000 a year. NEOs spend more … and more frequently … than anyone else. Ninety-three percent of NEOs are in the Big Spender category, compared to only 4 per cent of Traditionals.[10]

Genetic Determinism

The science underpinning the NEO classifications parallels other international studies including the work done in 2005 by John Alford at Rice University, Houston, Texas. Alford and his colleagues found that only 11 per cent of any variance is due to early childhood socialization, including parental influence.

Elsewhere, psychologists have found that people with conservative attitudes demonstrate more structured and persistent cognitive styles, whereas those with liberal views are more responsive to informational complexity, change and new experiences. David Amodio, from New York University’s psychology department reported that, “conservatives (Traditionals) have been found to be more structured and persistent in their judgments and approaches to decision-making, as indicated by higher average scores on psychological measures of personal needs for order, structure and closure. Liberals (NEOs), by contrast, report higher tolerance of ambiguity and complexity, and greater openness to new experiences on psychological measures.”[11]

The NEO typology reveals that people in society with very conservative social attitudes (Traditionals) are also highly resistant to change, are risk-averse, introverted, and more likely to participate in organised religion. In short, they lack trust and are motivated by a need to impose order on a world running hopelessly out of their control. Conversely, people with very progressive social attitudes (NEOs) are open to change, willing to take calculated risks, are outgoing, and unlikely to have anything to do with organised religion. They eschew order, trust change and embrace new experiences.

These very different NEO and Traditional personality traits have genetic origins; a view that correlates with John Alford’s study. Alford analysed two decades of work in behavioral genetics and found that specific social attitudes have a direct link to genetic inheritance. Identical twins, sharing identical genomes, are significantly more likely than non-identical twins to give the same response to core personality or social questioning. Genetic determinism is the only explanation.

Different gene variants produce profoundly different social responses. The gene D4DR, for example, leads to higher levels of the neurotransmitter dopamine which is in turn linked to the need to impose order on the world. Traditional personalities are therefore likely to be genetically hard-wired to attempt order in an otherwise chaotic world.[12]

Books

Books on the NEO typology have been published in North America, Australia, New Zealand and mainland China, and are sold internationally on Amazon:

References

  1. ↑ Honeywill, Ross, NEO Power: how the new economic order is changing the way we live work and play. Scribe Publications,2008
  2. ↑ Bulletin Magazine, 3 March 2004 - The Shop of Things to Come
  3. ↑ Roy Morgan Research
  4. ↑ Roy Morgan Research
  5. ↑ Roy Morgan Research
  6. ↑ Sydney Morning Herald, The Rise & Rise of the Recession Busters - March 2009
  7. ↑ Honeywill, R 2006, NEO Power, Scribe Publications, Melbourne.
  8. ↑ Roy Morgan Research
  9. ↑ Honeywill, Ross, NEO Power: how the new economic order is changing the way we live work and play. Scribe Publications,2008
  10. ↑ Australian Financial Review, August 2009
  11. ↑ David M Amodio, John T Jost, Sarah L Master, & Cindy M Yee 'Neurocognitive correlates of liberalism and conservatism' - Nature Neuroscience 9 September 2007
  12. ↑ David M Amodio, John T Jost, Sarah L Master, & Cindy M Yee 'Neurocognitive correlates of liberalism and conservatism' - Nature Neuroscience 9 September 2007

External links

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