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Category Archives: Rationality

Brandwashed: The World of Advertising Exposed

What do the following sentences have in common? “Mommy, I want Milka chocolate. Kids who eat it always look so happy…”, “Daddy, let´s go and eat in McDonalds. If have a toy from Happy Meal, other children will admire me.”, “Are you sure you want this computer? It´s not…you know, Apple.”, “How can you use other wash powder than Ariel? It was proven to be the best!”

Correct. They expose the way companies manipulate us to crave their products. As Martin Lindstrom in his Brandwashed shows, there are way more tricks to persuade us to buy stuff we don´t need than we dare to imagine. Let´s have a look at some of them.

1. The Ideal You. All companies love this strategy. If you buy their lipstick/cookies/perfume/add-a-product here, your lips will always have exactly the right shade of red, you will never be lonely again (because everybody wants to hang out with someone with the XY cookies) and always smell like a bunch of roses with a drop of morning dew. Who wouldn´t like that? The trouble is that such an “ideal you” will never exist, because no matter how much fancy stuff you buy, there will always be something you “cannot exist without”, as they would put it.

2. Fear, fear and … fear. If you don´t use this soap, you will catch a terrible disease. If you don´t read this book, the society will disapprove of you. If you… Wait a minute. Most of the threats we hear about in adverts are things we never knew before they existed! We would probably not be much afraid of indigestion, but when we hear how dangerous it potentially may be, we go and gorge ourselves on those super-healthy yogurts. Not-so-fun fact: In Japan, mothers who were “conditioned” by TV advertising to be afraid of germs and hence disinfected every single thing in the household actually made lives of their kids worse, as those could not adapt to a “normal” dirty world, because their immunity was not trained to deal with bacteria and what have you.

3. Sex. Sure, sex sells. Half-naked women have become a norm when it comes to advertising cars, “hidden” references to sex are practically everywhere, including anti-smoking campaigns – and don´t get me started on the whole Photoshop craze (see a nice response to super-thin models here). It may be a great tool to lure customers into buying something, but becomes rather horrifying when you realise that kids as young as 10 (or younger) are exposed to this as well. Not-fun fact: According to Mr. Lindstrom, the average age of children who see a porn site for the first time in their life is 11 years of age.

So here we go. Are you appalled? Surprised? Disgusted? Indifferent? You may be thinking “Well, then just don´t buy branded things!” But unfortunately (?) – this is not an option in the 21st century (try it yourself – for a month, I dare you!): No mobile phone, no games, no branded clothes, no branded food (including your favourite cereals, jam, pasta, juice, beer and pizza), no music (right, not even Lady Gaga), no books or newspapers… The list can go on.

So if “not buying” is not the solution, what is? Well, to me it is mere knowing a) that we are being manipulated and tricked, b) how we are manipulated (our hopes and fears are being exploited) and c) that not everything said on TV is true. The solution is to become a customer who is aware of the hype created around some products and who is able to put a shiny package aside and judge based on the content of the box, rather than just its colour and the face of Justin Bieber on it.

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Posted by on 20 February, 2012 in Rationality

 

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The Pain of Closing Doors aka Human Rationality vol. 2

Studying at a university while not having a single clue what your major is going to be is silly. Applying for ten different positions and then experiencing an excruciating pain in deciding which ones to decline is unnecessary and unreasonable. Going out with more than one girl is outright hazardous. Yet, some people keep on repeatedly finding themselves “trapped” because of their irrational and poor decision making. Why?

Fun fact intermezzo: According to Dan Ariely, humans are very good at creating new ways to kill themselves: If the mortality attributable to bad decision-making was 10% one hundred years ago, today the figure can be as high as 45%. (Think of extreme sports, smoking, alcohol, diabetes…) Not something to be proud of, if you ask me.

The special aspect of human irrationality I would like to expose here is our inability to “close doors”. We all somewhat tend to keep on postponing decisions. Not just the small ones like what to have for dinner, but – more importantly – the big ones like which subjects to study or which career path to choose. The natural instinct is to keep as many options (“doors”) open for as long as possible; however, this often leads to less-informed, more rushed and overall worse decisions.

It can be argued that if you are given the opportunity to explore as much as possible, you will ultimately find the right thing for you. However, there are two problems with this statement: a) Unless you have a very strict deadline when you need to pick, there is nothing holding you back from experimenting for far longer than it would have been desirable: wasting opportunities and having only shallow knowledge of a lot of things instead of deeper knowledge of less. b) The more you know about different options, from some point on it may become impossible to choose “rationally”. You love economic thinking, the complexity of biology and the beauty of poetry – how can you possibly drop any of those? You become more emotionally attached to things you spent some time doing (check out the sunk cost fallacy article here) and hence no longer see their true value.

There was a study when the subjects were playing a computer game according to the following rules: There are three rooms: blue, red and green. If you click on one of them and start clicking on things inside, each click will earn you some money. Each room has a different “price level” – i.e. there are more and less valuable clicks in these rooms. You can freely move from one room to another, but you have only 100 clicks “to spend”. After that the game will end. In this setup, people usually explored the three rooms and then settled for one and made some amount of money.

However, then the rules were altered: If a room was not visited for a number of clicks, it would disappear. Guess what! Most of the participants kept on clicking like mad and running from one room to another (because they hated the prospect of a particular room being “lost” forever), effectively “wasting” clicks that could have earned them money. In the end they made significantly less money than the first group.

Morals: It is a good idea to explore the opportunities you are given, but always make sure that other options are not getting out of your reach while you are stuck resuscitating “doors” that should have closed long ago. Curiosity might have killed a cat; do not let stupid decision-making kill your dreams.

 
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Posted by on 6 February, 2012 in Rationality

 

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The Power (Read: Beauty) of Deadlines

“I love deadlines. I like the whooshing sound they make as they fly by.” Douglas Adams.

“Deadlines. What a nasty word!” You say and shiver with disgust. You think of the most recent deadline you missed because of your not-anymore-secret procrastination or extremely heavy workload that would kill a horse. You think of your furious boss/teacher and your ashamed look of which you only caught a glimpse in a shop window on your way back home. Finally, you visualize the relief you felt the moment you sank into bed knowing that there won´t be any deadlines for the following two weeks.

Yet, no matter how evil deadlines may seem, they are actually the best thing since sliced bread. They are the ultimate whip who enforces discipline: They make you stay up late and/or get up early, they approve your increased coffee consumption and make you realize both the stick (punishment for being late) and the carrot (reward for not missing the d- thing).

If you think that deadlines are unnecessary and (especially if imposed “from above”) ineffective because you yourself know best what and by when you are capable of finishing – you are wrong. Let me illustrate it first and subsequently back it up with evidence.

Imagine your boss asks you to submit a paper on the efficiency of the latest advertising campaign you launched but does not give you a specific deadline; (s)he merely hints that “it would be nice to have it by the end of the month”. What will you do? Chances are, you really care about making a good impression. Hence, you take your time to gather data and check every single thing that could possibly go wrong. You process the data and spend many days creating fancy graphs, charts, tables and who knows what else.

However, the evening before the day you want to submit the paper you realize that in Section 3.3.1.a there is a sentence that slightly changes the meaning of the whole paragraph. You change it in the morning, but then you start wondering – was it just this one mistake, or are there more? You postpone the meeting with your boss and go over every detail again. And then you come up with an idea for a new graph that could make the report much better. But you do not have the right data. So, here we go again, two more weeks… And in the end your desire to hand in a “perfect” piece of work (to impress) makes you waste your time and your “normal” work suffers.

Sounds familiar? Now let´s look at what data say:

According to Dr. Ariely and his “Predictably Irrational”, students who got strict deadlines “from above” when their papers (during a semester) were due scored on average much higher than those who just came up with personal deadlines. But guess who scored the worst: It was those, who were not subject to any deadlines at all (apart from the end of the grading period).

The explanation is simple: Deadlines make us realize the value of time. If you are pressed for time, you a) focus more – because you have no alternative, b) prioritize – otherwise you fail, c) plan your work and stick to the plan – the only smart thing to do and d) beat your procrastination syndrome easier – as there is no time left in your plan for “procrastination”.

Of course, this works <=> (non-mathematicians read: “if and only if”) you do not collapse from stress because you are unable to manage your time (tips here).

The bottom line is – do not loathe your boss for giving you deadlines (you can do that for a million other things). (S)He is just trying to make you more productive and better organized. Remember that having freedom to do whatever you want to do is great only as long as you know where you are headed. Always think of the whip and the cake (promotion?) and do “what you gotta do“. It pays off.

 
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Posted by on 12 December, 2011 in Rationality

 

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Human (ir)rationality: A few thoughts

People are fascinating. They smoke, take drugs, gamble, have unprotected sex (not necessarily in this order), procrastinate, become shopaholics/chocoholics [just google how many people blog under the name of “Chocoholic”]/ and all other sorts of -holics, fail to use hands-free mobile phones in cars, keep on dieting “tomorrow” [sounds familiar?], skip their regular medical check-ups, fall prey to biases (see a simple list here) and logical fallacies and do not give a damn.

Two months ago, I launched a questionnaire that was supposed to test to what degree are we subject to the sunk cost fallacy (explanation here). When I saw the results, I could not believe my eyes how irrational we are. Two examples:

First, I asked the participants whether they would stay in a cinema if the first 15 minutes of the film were extremely boring. Almost 40% of respondents said that they would, “because they have already paid for the ticket”.

Do you see the irony there? They did not expect the film to get better, they didn´t want to stay and enjoy the company of someone, they didn´t want to leave and do something they would enjoy more (although all these rational options were on offer). They just felt that if they didn´t sit in the cinema for the two hours, they would have wasted the money. (As if they didn´t waste it at the second they paid for the ticket, ignorant of the fact how bad the film was.)

Second, the question was along the lines of: “Imagine that you are an owner of a firm. You are building a factory A which has so far cost you 10 billion. If you wanted to finish it, you would have to pay additional 10 billion. Alternatively, you could abandon this building and buy factory B (equivalent to factory A) for 9 billion. What will you do?”

69,5% of respondents answered that they would finish building the old one. Do you see the problem? This should have been a simple mathematics question (10 > 9, hence option B is cheaper, yay!), but it turned out to be the question with the highest percentage of “irrational” answers (please ignore the squabbles about the proper definition of this word, let´s stick with the intuitive definition “irrational decision” = “stupid”).

You say “Fine, but that is not that important – who cares about sunk cost, anyway?”. Well, another example: Yesterday I was reading Predictably Irrational by Dan Ariely when I came across the results of his survey on the effect of arousal on our decision-making. Or, to be more precise, on male decison-making. So while only 5% of nonaroused men would “slip a woman a drug to increase the chance that she would have sex with [them]”, 26% of aroused men would do so (420% increase). Or while 88% of nonaroused men claimed they would use a condom if they didn´t know the sexual history of a new partner, only 69% of aroused would (22% difference). Scary, if you ask me. And worrying. Not just the numbers themselves, but also – as Dr. Ariely himself points out – the degree to which people underestimate their reactions in a less-than-cold-blooded state of mind.

The problem is that – unlike in many other cases – education doesn´t seem to be the cure. As I was skimming through my data on the sunk cost fallacy, I noticed that the level of attained education did not affect the results significantly. (Funnily enough, even the people who have an Economics degree and know exactly what “sunk costs” are ticked the “irrational” options.) Interestingly, age, income and nationality seemed to play a bigger role (the older and richer you are, the more likely you are to avoid this particular logical fallacy – and preferably, you should be European).

At the end of my musings I came to two conclusions: A) Behavioral economics deserves more attention in classes, perhaps as early as in high school. Chances are, if you warn people early enough how many and which mistakes someone else has made (and WHY), some of them will not repeat them. Do not teach the kids all bones and parts of our brain in Latin – teach them how human mind reacts to certain states (passions, anger, lust) and how to avoid (or, realistically speaking, significantly decrease the probability of) waking up in the morning in someone else´s bed without a clue what happened the night before. I.e. teach them to THINK and predict better their behaviour. B) Human irrationality should be of greater concern in economic models, because we all at some point do “stupid” things and do not behave in the way economists would like us to behave. No wonder half of all economic models that are taught on the undergraduate level are wishy-washy. Drop the assumptions and be brave enough to say “I only know that I know very little.”

 
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Posted by on 28 November, 2011 in Rationality

 

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