Understanding How Behavioral Economics Affects Our Decisions
During election season we are barraged with instructions and influences, it has been nonstop. But how are these messages influencing us? This is the perfect time to highlight how and why bias plays a role, not only in our election, but the everyday decisions we make too.
We vote or decide on thoughts efficiently and quickly via our subconscious mind. We decide who to vote for president, what to wear, whether to eat ice cream or carrots. Our brain goes through a whirlwind of voting, using a risk vs. reward assessment which we call “behavioral economics” every second. Defined in the article “The Marketplace of Perceptions” in Harvard Magazine Behavioral Economics is: …“the study of how real people actually make choices, which draws on insights from both psychology and economics.”
So much happens subconsciously before we select a candidate or the ice cream; the end result of this myriad of influences is an actual decision. We already know that the world influences our decision-making by creating biases, through advertisements, data, experiences and stories. Our own biases are established via our personal stories. Biases may be fluid or more fixed depending on actual life experience.
What has influenced you? How can the story be changed to influence a decision and the bias that exists within your subconscious? Should it be changed? What story do we tell and why?
Behavioral economists (and campaign managers!) know the world preys, or more gently, thrives on how people feel in the present because people are biased to what is current. This is a “confirmation” of our existing bias with some comfort coming from agreement with others. The stories we hear are weighted or clouded by the seduction of instant gratification, costs and benefits. This can result in consequential decision making. In the moment, we’re not thinking about how carrots are good for us in the future, we’re thinking about how ice cream tastes good right now!
Our bias now stands at the front of our brains, especially during an election season. Political commercials make statements about which people to vote for or who not to vote for. This compels our confirmation bias. A seed is planted and a positive or negative commercial can impact our opinions. Once we opt-in, we’re weighing the risks and rewards of each candidate and deciding which one we think will be best for the country. Based on these commercials, past experiences, history, facts and emotions: is your bias in check?
The best decisions can be made when we purposefully “slow down to speed up”. Understanding the story, we tell ourselves, recognizing our own biases and the what or who are informing our bias, allows solid decision-making. Effective decision making comes from taking the time to consider these components in voting whether business and personal.
No matter who, please remember the most important decision on Tuesday, November 8th is to exercise your right to vote and cast a ballot!
November Nudge: Think about, what stories you hear or tell yourself that inform your biases?
Other Points of View
Harvard Magazine: Why we procrastinate, buy, borrow, & grab chocolate
Psychology of Success: 5 Cognitive Biases That Affect Your Work Success