Syndicate content

The Things We Do

The Things We Do: Your Pain is My Pleasure

Roxanne Bauer's picture

Mel Brooks once famously said, "Tragedy is when I cut my finger. Comedy is when you fall into an open sewer and die."

Certainly, we can all relate to this, whether we like to admit it or not.  When something unlucky happens to us, we feel it more deeply than those around us do, and we wonder why people do not immediately recognize the calamity.  Equally, we take pleasure when an opponent is beaten or find it a little rewarding when our enemy is cut down.  

The joy we experience from the pain of others is known as “schadenfreude” in German and is translated as “harm-joy”.

According to Richard H. Smith, a psychology professor at the University of Kentucky, schadenfreude is an adaptive function that evolved from our need to make social comparisons.  These comparisons, he argues in a new book called The Joy of Pain, allow us to asses our strengths and weaknesses in the social order and thereby determine our social status.  Comparisons, though, can invoke envy, insecurity, and a sense of inadequacy if we find ourselves lacking in one dimension or another compared to someone else. These feelings can then trigger a desire to compete with or knock down those perceived to be superior.  When these desires are fulfilled organically, through no fault of our own, schadenfreude arises. 

The Things We Do: What Obamacare Teaches Us About Consumer Behavior

Roxanne Bauer's picture

How bad would the customer service at your bank have to be for you to switch to another?  How long would you have to sit in a waiting area, reading bad magazines, before you would look for a new doctor?  How about switching health insurance plans?

At the foundation of economics is the premise that people make rational choices, based on the information they have. This may be true, but as a decision becomes more complex, so does our desire to avoid it. According to the literature on economic behavior, this phenomenon is known as consumer inertia.

As Stigler and Becker (1977) state: “the making of decisions is costly, and not simply because it is an activity which some people find unpleasant. In order to make a decision one requires information, and the information must be analyzed. The costs of searching for information and of applying the information to a new situation may be such that habit is often a more efficient way to deal with moderate or temporary changes in the environment than would be a full, apparently utility–maximizing decision” (pg. 82).

​The Things We Do: Is the Culture of Banking Dishonest?

Roxanne Bauer's picture

Despite its relevance to the broader economy of states, there exists little empirical information on the culture of the banking industry. Identifying the effects of business culture poses several challenges because comparing employees in one sector to those in another can be misleading. Some professions may naturally attract different kinds of people, making it tricky to separate cultural factors from individual ones. Moreover, the financial industry is broad and comprised of many different kinds of businesses and institutions, with some more focused on the consumer and others more focused on fiscal details.

Attempting to shed light on the subject, academics from the University of Zurich designed an experiment inspired by the economic theory of identity.  Identity economics states that economic choices are not only based on personal taste but also on what an individual considers to be appropriate.  Whether a choice is appropriate or not depends on a person’s social identity– their sexual orientation, race, religion, occupation, or where they live.

In the experiment, 128 employees from an international bank, with an average of 11.6 years of experience in the financial sector, were split into two groups. About half of the participants worked in a core business unit, like private banking, asset management, trading, or investment management.  The other half worked in support units like human resources or administration. They were randomly assigned to a treatment or control group.

The Things We Do: How Goals Corrupt

Roxanne Bauer's picture

China has a long tradition of burying the dead and building tombs to honor them. This ancient practice, however, has recently been butting heads with modernity as the Chinese government now needs to conserve limited land for farming and development to support its people.  In an effort to use land more effectively, the government launched a campaign to encourage cremation instead of burial, and authorities demanded that a minimum number of corpses be cremated each year, based on the total population of the previous year.
 
The campaign, however, led to unexpected results.  At the start of November, two officials in China’s Guangdong province were arrested for allegedly buying corpses in order to meet the strict cremation quotas. Police from Beiliu City in Guangxi Province began investigating the theft of bodies in the region during the summer and apprehended a grave robber named Zhong in July. Zhong admitted to stealing more than 20 bodies from the graveyards of local villages in Guangxi at night. He then transported the bodies to Guangdong province to the east, where he sold them to two local officials. These two officials, He and Dong, were formally in charge of funeral management reform in the province and were arrested for purchasing the corpses with the intent of delivering them to a funeral parlor for cremation on the official registry.

Compare this to public school teachers in the United States who cheated on standardized test scores by illegally viewing tests ahead of the test date and changing their students’ answers to meet high yearly targets for student progression.

The Things We Do: Why Habits Stick and How to Fix Them

Roxanne Bauer's picture

"In the gap between intentions fading and habits forming, interventions fail.”
 
These are the wise— and scientific— words of Wendy Wood, a Professor of Psychology and Business at the University of Southern California, who presented her research on how habits guide behavior at a brown bag lunch at the World Bank.
 
Standard interventions are generally successful at increasing the motivation of people to change as they raise awareness and understanding around behaviors we'd like to change and new behaviors we'd like to form. However, they often fail to develop long-term habits for people.
 
According to Professor Wood, even if you can change behavior for a short period, old behaviors may be stickier and reappear after a while. The formation of new habits is often analogous to climbing a mountain and returning back down again: the new habit is performed at the start of an intervention but then falls off again as intentions are overcome by other factors.

The Things We Do: Do Good Things Come to Those Who Wait?

Roxanne Bauer's picture

It’s an iconic test of willpower: sit a child down in front of a marshmallow, tell the child that he/she can either have the marshmallow in front of them now or they can have two— if they wait. Then leave the room and watch what the child does.

Some children will sit patiently for the adult to return so they can have their reward.  Others will try to wait but will ultimately succumb to eating the delicious treat. What is the difference between the two sets of children?

In the early 1960s, Walter Mischel conducted a series of these tests, popularly known as the “Marshmallow Tests”, at the Bing Nursery School of Stanford University to study temptation and self-control. There were other variations of the test, in which children were offered pretzel sticks, mints, or colored poker chips. The tests were also replicated in different settings, including South Bronx, where children experience high amounts of stress and poverty and in a residential treatment program for young people at high risk for aggression/externalization and depression/withdrawal. Joachim de Posada, co-author of the book, Don’t Eat the Marshmallow… Yet!, also tried the test in Colombia. The results were consistent. Some children could wait, others could not.

The Things We Do: We Don't Trade Rationally

Roxanne Bauer's picture

Imagine you are shopping for dinner.  You go to the local grocer and notice that rice costs $4 per package and noodles cost $2 per package.  You think to yourself, “hmmmm for one package of rice, I can buy 2 packages of noodles… but I can make more meals with a bag of rice than 2 packages of noodles. I’ll buy the rice.” 

This mental equation tells us much more about what a consumer values than knowing that rice is $4 per bag— a variable the shopper cannot control. It tells us they value rice above noodles.  It tells us about the shopper’s opportunity costs.

Opportunity costs represent the next best option relative to the current choice. Every economic decision necessarily involves an alternative that is passed up in order to pursue it.  The idea is central to how economics views costs and relies on the assumption that in a world of scarcity, the use of resources in one way precludes their use in other ways. 

Nevertheless, while the concept is central to economic theory, there are inconsistencies in how people apply it to their every-day decision-making.  

What would happen if you already had a bag of rice? What would be the opportunity cost of selling it? Would you sell it at the market rate or ask for more?

The Things We Do: Design with the User in Mind

Roxanne Bauer's picture

City planners and design professionals have long known that the way in which physical space is constructed affects human behavior. Walkways, doorways, and lighting direct people for strategic reasons, colors and textures impact our sensory experiences, and the size and flow of space affects our social interaction.

Physical space is also important in designing transportation infrastructure where entry and exit points direct the flow of traffic, ticketing affects efficiency, and roadways shape the speed and orientation of traffic.

As one architect puts it, “Designers often aspire to do more than simply create buildings that are new, functional and attractive—they promise that a new environment will change behaviours and attitudes.”

Consumers consider these aspects when they decide how to travel in a process known as translation in which they consider personal benefits and costs of a product. In this case, people make ask themselves, ‘I know a new bus line is available, but will it save me money or time?’ or 'I can ride my bike, but will it be safe?'  The process is complex, and occurs over time and through repeated interactions.

In order to put design to good use in changing attitudes and behaviors, the city of Bogotá immersed itself in the lives of its residents and created solutions to tackle the heavy congestion and lack of safety that were common on the city’s streets. They used the economics of nudge, paired with design principles, to increase public use of bicycles and buses.

The Things We Do: Shame is a Powerful Thing

Roxanne Bauer's picture

Billions of dollars are spent each year on sanitation, healthcare, and good governance, but the results vary quite a bit from place to place.  What separates successful programs from the unsuccessful?
 
Those that achieve their goals try to change behavior alongside introducing new methods or making investments. One way to change behavior is to use shame— an overwhelmingly negative emotion —to emotionally link individuals to the communities in which they live.
 
Shame and Sanitation

Shame was, in fact, a central ingredient to a program in Bangladesh that reduced the percentage of Bangladeshis defecating out in the open from 19% in 2000 to only 3% in 2012.

The program utilized the Community-Led Total Sanitation (CLTS) method, which “focuses on instigating a change in sanitation behaviour rather than constructing sanitation infrastructure.” Changes in sanitation behaviors are accomplished through a process of deliberation and discussion within communities to build consensus on the need to end open defecation and clarify the hazards that open defecation poses.

The Things We Do: I'll Have What's She's Having

Roxanne Bauer's picture

Swimming is to cats what rational thinking is to humans- they can do it, but usually begrudgingly.

While people like to think of themselves as independent thinkers who employ rational thought to make decisions (and this can sometimes be true), many of our choices are influenced by social instincts. What goes through our minds is derived, in large part, from what goes through the minds of those around us. 

According to a book, I’ll Have What She’s Having, by Alex Bently, Mark Earls, and Michael J. O’Brien, humans are fundamentally pro- social creatures that collaborate and copy the behaviors and choices of others when making decisions.

Pages