Phil Hauck's TEC Blog

Tuesday, September 22, 2015

On Irrationality

This summer, we had a chance again to spend several days at an incredible place in New York State called the Chautauqua Institution.  The theme of the week was Irrationality, with several speakers dedicated to it.  We initially poo-pooed it, but instead found the discussions very intriguing. 
Here’s some of what we were exposed to … trying to understand the rationality within our irrationality:

Preface:  The day before we got there, Dan Ariely, a Duke professor and coordinator of the theme, kicked off the week with these observations:
•  The battle generally comes down to a question of preference between instant and delayed gratification.
•  Temptations are what run our economy, and we’ve accepted behaviors that kill individuals faster, from texting-while-driving to smoking to obesity.  100 years ago, only 10% of deaths are due to poor decisions.  Today, it exceeds 40%.  “Who actually cares about your long-term well-being?”
•  One key:  Reward Substitution as a motivator.  To aid your positive decision-making to behave appropriately toward a long-term result, create very desirable short-term opportunities.
•  Regret motivator:  Contrast between where we are and where we think we could have been.  What’s more aggravating … missing your plane by two minutes, or two hours?  “If only …"
•  The Ulysses Contract:  “I will be tempted, so I will act to prevent it.”  Pay up front for a personal trainer … It’ll get you to the sessions.  Otherwise, you won’t.
•  The idea that providing more information/education will help isn’t true, he said.  We know the information, but we don’t act on it … lack of self-control (immediate vs. delayed gratification).
•  Temptation is everywhere.  You have to create your own rules for deciding and acting!!
•  Somebody asked me a question about what do I think about schoolteachers having weapons.  My answer was I don’t think I would have lived through middle school if my teachers had guns."

Dan Ariely, professor at Duke
Money and Irrationality
•  Money is the Common Good, and as such it often becomes the measure of our irrationality.  Often, he said, we use it as we analyze Opportunity Costs … what else it could be spent on.  What exactly are we giving up?  Usually, we analyze this in terms of alternative like products/services … and/or time.  
•  Relativity … Example:  You can buy this great $15 pen in this store right now … or walk five blocks for the exact one at $7 dollars.  Which would you do?  Probably walk the five blocks.  But:  You’re buying something right now for $1008 … or you can walk five blocks and get it for $1000.  Which would you do?
•  Pain of Paying … Example:  Pay for that $400 golf driver with cash, or with a check?  Which feels easier?  More interesting:  The steak costs $25 at the restaurant, but you don’t want it all.  Okay, what about paying by the bite?  Pay up front $10 for 12 bites … or be charged $.50/bite.  How will those scenarios affect how much you eat?  When you pay every time, the expense is miserable … so you do very little of it.
— Another example, Energy:  You pay your monthly gas bill without blinking … but when you buy gas for your car at the pump, you’re very attentive.
— Also, you’ll pay more when you SEE effort being made … even though the end result is less effective and less efficient than the software-driven one where you see no effort, or the result appears instantaneously.  That may be why you see the little circle circling on your computer while it looks up pricing for you.  You’ll feel more at ease paying more.
•  Okay, this one applies in lots of ways:  A worker is required to make 1000 of something, but if he/she exceeds 1200, he/she will receive $25 in cash.  Or, in an identical experiment, pizza delivered to your home.  Or, in a third, a phone call from the “big boss” complimenting him/her on the success.  Which yielded the most people attaining 1200?

Michael Norton, Harvard Business School
Money and Happiness
•  “Okay, how many of you think Money can buy Happiness?  Now, how many of you think it can’t?”  “Huh!  Those of you who don’t probably do a  lot of Yoga, or are wealthy.”  (Lots of laughter!)
•  Money DOES buy happiness … especially at the lower income scales as additional money pays for items that are needed and relieve anxiety.  The upper threshold is about $75,000 … and it doesn’t improve thereafter at ANY annual income or net worth level.
•  Lottery:  Will that buy happiness?  What it does, studies show, is create marital conflicts, stimulate thinking of upgrading your spouse, and deterioration of support system relationships.
SO, here are several things you can spend money on that WILL buy you more happiness …
1.  Experiences (vs. stuff):  Take a vacation, go on a cruise, etc.!  When you’re done, it is so unique to you that it is incomparable … you’re wonderful experience can’t be topped by anyone else’s.  Of interest:  With your next $2,000, should you buy a fantastic TV or go on a cruise?  Once you decide, your dominant emotion with the TV will be irritation (when will it get here!), but with the cruise, it’s anticipation!  The happiest day of your cruise experience is the day before you leave … because thereafter you’re consumed not just with the wonderful parts of the cruise, but the logistics of it as well.  And, the day after you get the TV, happiness drops because a newer, upgraded version just came out … and your neighbor bought it!
2.  Take A Break:  If married, spend a few days away from your spouse.  Not only will you be able to do things you want to do alone (that he/she doesn’t want to do anyway), but the anticipation of getting back together will heighten.  Hey, isn’t that the same effect as TV commercials?  They heighten your desire to get back to the program.
3.  Improve your use of TIME:  Usually, we do the reverse … as incomes rise, we get bigger houses, farther away from work, increasing the dreaded commuting time.  Commuting ranks right there with going to the dentist … so think about going to the dentist every day.  Key:  Increase your Human Connections!!!  You might want the “no worries” goldfish or cat, but the dog will have you meet other dog owners.
4.  Pay Now … Use Later:  It just makes you feel good when you finally use it.  Take the All-Inclusive Resorts.  Isn’t it great to do everything there FOR FREE!!
5.  Finally, the obvious one:  Spend Money On Others … whether to show appreciation for a birthday or anniversary, or because the other person truly needs something and can’t provide it himself/herself (Charity!).  Alert:
Insights from Questions:
•  Remembering a Lost Loved One:  Create a Ritual that remembers the person … like, continuing to do something you did with that person, which brings back the memory and honors him/her.
•  Accomplishment brings Happiness/Satisfaction:  Work.  Golf.  Ceramics/Art/Music/Crafts.
•  Losing something hurts much more than the equivalent amount of gaining something!
•  Measure:  “Happiness-Bang-For-The-Buck!"

David Parazzo, Prof. of Psychology, Cornell
The Emotion of Disgust ... and Irrationality
•  Emotions often take us to considering what we should have done, rather than what we did do … the “loss.”
•  Emotions interfere with the objective of rationality … which is consistency and self-interest.
•  One emotion, Fear, very often over-rides rationality … reacting to statistics that show virtually no risk, while continuing to do something that has higher risk.  (Think much of science … whether PCBs, genetically altered foods, bovine growth hormone.)
So, Disgust:
•  Most of what we find “disgusting” from a visual standpoint derives from bodily fluids … pus from an open wound, blood, sweat, mucus, snot.  They create a negative attitude regarding whatever they are related to.
•  Also:  We have a “disgust” reaction to what is different that we are used to … such as other people (racial color).  We assume the worst characteristics, and react accordingly.  And “cooties” or “bacteria” … a sip from another’s soda.
•  There is also a strong relationship of “disgust” to moral views … people who disgust “easily/frequently” often have strong moral views about certain social issues (think abortion, gay marriage, even barefoot hippies).
•  How these get analyzed:  Using a “Feeling Scale,” where Cold is “0” and Warm is “100.”  Inducing disgust, through the above techniques, will move people more towards the Cold end of the scale.

•  Disgust is what is called an “Avoidance Motivator.”

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