You Can Bet Your Bottom Dollar 3
Bias of the Month 4
How Menu Design Can Nudge Healthy Living5
The Evolution of Casino Psychology6
The Midlife Personality Crisis 7
The Summer School 8
Real Life Nudge of the Month 9
Coming Up: Happiness By DesignLaunch10
We all know it’s painful to run out of money at the end of the month, but new research shows that this can even affect our satisfaction with the items we purchase with the last few pennies in our bank accounts, a phenomenon known as the bottom dollar effect. Soster, Gershoffand Bearden (2014)gave their participants credits with which they could purchase short films, and asked them to rate their enjoyment of the films afterwards. Participants with only enough credits to purchase three films were significantly less satisfied with their third film choice than participants who had enough credits to buy two more, and satisfaction ratings steadily declined as budget dwindled. The authors suggest this decrease in satisfaction is due to the pain of paying, which occurs when we have to part with our money, being exacerbated as funds drop to zero, and this feeling of discomfort is conflated with our opinion of the product we received in exchange.
YOU CAN BET YOUR BOTTOM DOLLAR
The bottom dollar effect was modulated by the amount of effort that went into earning the credits; participants who had to perform a tedious task to earn their credits were significantly less satisfied with the last film they could afford, while the effect was reduced for those who received a windfall of free credits. This is consistent with previous work on mental accounting: the way in which we think about different ‘pots’ of money, such as a salary versus a bonus, despite it all being the same on a rational level. In other words, you are likely to be less happy with an item bought with the last of your hard-earned salary than something bought with an bonus, which feels more like a treat. Intriguingly, the effect was also reduced by knowing that the supply of credits would soon be replenished; participants who were approaching the end of their budget did not show the bottom dollar effect when they knew they would receive more credits imminently. Moreover, participants who weren’t approaching their limit but knew they would not receive more credits for a while were far less satisfied with their choice.
In all, this study demonstrates that stress associated with running out of money is translated into dissatisfaction with the items we buy with the last of it, an effect which is influenced by how the money was earned and when the money would be replenished. In other words, go out and treat yourself on pay day, when you’ll be most satisfied with whatever you buy.
Soster, R.L., Gershoff, A.D. & Bearden, W.O. (2014). The Bottom Dollar Effect: The Influence of Spending to Zero on Pain of Payment and Satisfaction. Journal of
Consumer Research, forthcoming.
BIAS OF THE MONTH
The Introspection Illusion
As conscious animals, we are constantly in touch with our thoughts and feelings and we judge ourselves and predict our behaviour according to this internal dialogue, despite evidence that we also have implicit attitudes and motivations we are not aware of. This means we can often see bias in others but not in ourselves, and perceive others as being influenced by external factors, like advertising, while feeling that we ourselves are immune, as they operate separately from our conscious access.
Given we have access to our own mental states but not those of others, we also tend to overemphasise the importance of them when predicting our own future behaviour, but largely ignore the capacity for a rich inner life in others and judge them solely on their behaviour. University students and their peers were asked to estimate how long it would take them to complete various projects. The students, biased by their virtuous intentions to finish quickly, underestimated how long it would take; their peers on the other hand, who were basing their prediction on past behaviour and remembered their friend’s previous all-nighters in an attempt to get work finished, were much more accurate. The introspection illusion means we’re not as impartial as we think we are, and perhaps we don’t know ourselves as well as we think we do either.
Pronin, E. (2009). The Introspection Illusion. In M. P. Zanna (Ed.), Advances in Experimental Social Psychology, Volume 41. Burlington, MA: Academic Press.
HOW MENU DESIGN CAN NUDGE HEALTHY EATING
With most Western countries facing an obesity crisis, many believe that new legislation on reduced portion sizes and soft drink sizes should be implemented in restaurants to help solve the crisis. Brian Wansink, marketing professor and director of the Cornell Food and Brand Lab, argues that this is not necessary and we should instead look to menu psychology to encourage people to make healthier choices. He argues that by using psychological insight, menus can be designed in such a way that nudges people to choose low calorie options with high profit margins which benefits both consumers’ waistlines and the financial health of restaurants. In a recent paper, Wansink and Love (2014) explain four different nudges that can be implemented on a menu to influence consumers’ food choices. The first nudge is “menu anchoring”, where healthier, low cost starters are placed around
the restaurant’s most expensive item. These starters, which previously didn’t seem
particularly good value, now seem like a great deal as they surround the expensive item.
The second nudge he refers to is about reducing the “pain of paying”. For this nudge he
explains that by removing the pound sign, people become less conscious of the price of
the item and are therefore more likely to choose it. Thirdly, as most customers read
menus by scanning the four corners of the page before flipping to the next, Wansink
advises restaurants to place the healthy choices in these locations to ensure customers
engage with the healthy items which therefore increases the likelihood that they will
purchase them. The final nudge is about utilising the
power of adjectives: Research has shown that children are more likely to order “X-ray carrots” than just “carrots”, and adults are more likely to order a “succulent Italian seafood filet” than “fish sticks”. Wansink believes restaurants aren’t doing enough in terms of using language to push healthier choices, but often use the enticing words to push the unhealthy items. For example, he suggests that restaurants should take the “velvet” from “velvety chocolate mousse” and apply it items such as “velvety mashed cauliflower” and the “South-Western” in the “South-Western Tex-Mex salad” can be applied to “South-Western kale salad”.
Restaurants don’t need to implement these suggestions for moral reasons, as Wansink argues that restaurants can also financially gain from selling healthier food. He notes that healthier food is cheaper and easier to make and therefore by increasing the number of people who purchase the healthier food, restaurants will only stand to make a profit.
Wansink, B., & Love, K. (2014). Slim by Design: Menu Engineering Strategies for Promoting High-Margin, Healthy Foods. International Journal of Hospitality
Management, 42, 137-143.
THE EVOLUTION OF CASINO PSYCHOLOGY
If you were to ask most people to think of a casino and say where all the big spending and winnings happen, most would say blackjack, roulette and poker. If you were to say, “What about the slot machines?”, most would say, to quote a friend, “That is where old ladies and amateurs sit”. Until recently, I would have agreed. Recent research by Natasha Dow Schull, a cultural anthropologist at MIT who spent the last 15 years in Las Vegas tracking the evolution of slot machines states that although slot machines were once only marginally successful for casinos, they are now driving the industry and responsible for 85% of the profits. What caused this change? Firstly, new relaxed legislation on the availably of slot machines that were implemented during the recessions in the early 1990s and mid 2000’s (see Pulmer, 2014), but secondly and more importantly for those interested in psychology, casinos are now drawing on psychological insights to help them design an environment and devices that will “maximize time on device”.
Casinos have carefully designed their environment in such a way that allows people to move around the area without ever having to consciously make decisions. They have started implementing curving hallways within the environment so people never have to make a 90 degree turn. This is because, according to Schull(2012),when people make a right angled turn, they are forced to activate the decision-making part of their brain and therefore reflect on their behaviours. Casinos do not want people to do this, so by having curved hallways people are free to walk around without having to consciously think. They have also designed the slotting machines themselves and their environments in such a way that allow people to sit on play the device comfortably for hours. They now have ergonomic seats that don’t cut off circulation so you can comfortably sit for hours and the buttons and money slots are placed so that they can be reached with minimal effort and disruption to play. To remove the “pain of paying” (Ariely, 2009) they now allow players pay with card so that they can play for longer without thinking about the payment aspect.
Not only have they drawn on psychological insight to design the environment but they have also drawn on recent research on reward mechanisms to ensure people continue playing the game for as long as possible. Traditionally, slot machines were a single line game that when you pulled a lever you either won or lost; when people lost they would walk away but if they won they would stay. Now with the development of new technology, players can bet on up to 200 lines at a time. If a person wins on some of the lines, it feels like a partial win and neurological research has shown that people experience this type of win in their brain in an identical way as a complete win. If casinos continue to draw on psychological insight, how casinos will evolve over the next 10 years is both exciting but also worrying in terms of the possibility of addiction.
Schüll, N. D. (2012). Addiction by design: Machine gambling in Las Vegas. Princeton University Press.
Although intuitively one would assume that personality characteristics are determined in early life and only become more fixed as time goes on, new evidencereveals that personality stability actually peaks in midlife in an inverted U-shape, with personality traits becoming less fixed with old age. Milojevand Sibley (2014) tested almost 4000 New Zealanders aged 20 to 80 on the Big Six personality traits –agreeableness, extraversion, conscientiousness, neuroticism, openness to experience and honesty-humility –twice over a two-year period. While decades of social psychology research has demonstrated that these personality traits are relatively stable throughout one’s lifetime, the authors found that this stability increases towards middle age and decreases again as one approaches old age. Extraversion and neuroticism measures were even less stable in the oldest participants than the youngest participants. Interestingly, agreeableness was the only trait to not show this pattern, and in fact slightly decreased in stability with age. The authors suggest that personality variability responds to social and environmental influences and demands, which become often steadily more stable when moving from youth to middle age, then less stable again as one gets older.
THE MIDLIFE PERSONALITY CRISIS
This runs in parallel with work by Blanchflower and Oswald (2008), who have demonstrated across different countries and cultures that lifetime happiness follows a U-shaped pattern, with most people at their unhappiest between the ages of 40 and 50, and peaking in contentment in old age. (This pattern has even been found in chimpanzees, with experienced chimp handlers rating how happy they perceived their chimps to be over time.) While personality traits and happiness are not necessarily related in a causal way, it is possible that they are in some way linked; perhaps by a lowered mood may lead people to behave in less variable ways, or vice versa, with greater predictability leading to a decrease in mood. Given Milojevand Sibley’s hypothesis that personality stability is due in part to life stability, it is intriguing that stability seems negatively correlated with happiness. This suggests that perhaps humans need an element of spontaneity to be most content.
The really bad news, however, for those approaching middle age is that with personality stability peaking at this time, a midlife crisis is even easier to spot amongst your other, more predictable attributes.
Milojev, P., & Sibley, C.G. (2014). The stability of adult personality varies across age: Evidence from a two-year longitudinal sample of adult New Zealanders. Journal of
Research in Personality, 51, 29-37.
The main focus of the week was two challenging pro bono briefs from Sky Badger and the WISE Campaign, coordinated by Pimp My Cause. Sky Badger, a charity dedicated to helping both mentally and physically disabled children and their families, are launching an interactive programme for primary schoolchildren to raise awareness and understanding of living with disabilities. They wanted an injection of behavioural science to help the message of their programme create lasting behaviour change long after the sessions were over, with the long-term aim of eradicating the bullying of disabled children altogether. The WISE Campaignwork towards getting more women into STEM (science, technology, mathematics and engineering) careers, given the shocking statistic that currently only 13% of the STEM workforce in the UK is female. They asked for help with a campaign aimed at parents, teachers and school governors, as well as the girls themselves, to encourage more girls to take STEM subjects at university and go on into related careers. Our summer school students had less than a week to work on these challenging briefs and their clever and creative ideas will be presented back to the clients in coming weeks. The team at #ogilvychangewould like to thank them for all their hard work and enthusiasm.
THE SUMMER SCHOOL
This month, #ogilvychangewelcomed six behavioural science students and recent grads into the agency for the Summer School 2014. During the week, they worked alongside Rory Sutherland and the team, met influential people from across Ogilvy, and spent a morning with Professor Dean Karlan, professor of economics at Yale and founder of stickK.com.
If you are passionate about the behavioural sciences and would like to participate in next year’s summer school, follow uson Twitter or visit our websiteto see our latest updates as they are released.
Spotted: Priming in Kings Cross Station
As all Londoners know, when you get on an escalator you stand on the right and walk on the left. Also, as many Londoners know, one of the most frustrating things is when tourists on the escalators don’t know this and stand on the left. To overcome this, those at Kings Cross Station have used the principle of priming to encourage people to stand on the right. They have done so by placing foot prints on the right hand side of the escalator. This technique has also been used before to encourage people to put rubbish in the bin: When researchers placed green footprints leading to the rubbish bin they saw littering reduced by 45%.
REAL LIFE NUDGE OF THE MONTH
Behavioural Boozeonomicswith the London Behavioural Economics Network
Tuesday 9thSeptember, 6.45pm
Conference: Decision Making Bristol 2014
Tuesday 9th–Friday 12thSeptember
The Mind is Flat: the Shocking Hollowness of Human Psychology online course by Professor Nick Chater
From Monday 13thOctober
COMING UP: HAPPINESS BY DESIGN LAUNCH
On Wednesday 24thSeptember, we will be hosting a talk by Professor Paul Dolan for the launch of his new book, Happiness By Design.
Our happiness is a combination of experiences of both pleasure and purpose over time, and it depends on what we actually pay attention to. Using what Dolan calls deciding, designing and doing, we can overcome the biases that make us miserable and redesign our environments to make it easier to experience happiness. Does having children affect happiness? Should you change your job to achieve happiness - or perhaps just your commute?
“Bold and original” –Daniel Kahneman
“His book is a powerful reminder not to get caught up in overthinking things, but to focus instead on maximising what actually delivers joy. "Listen more to your real feelings of happiness than to your reflections on how happy you think you are or ought to be," Dolan writes, and most of us would benefit from listening to him.” –Oliver Burkeman, The Guardian
Stay tuned for more information and ticket release.
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