Best laid plans go awry again in the credit crunch

Posted by adi on Oct 28, 2008 in Default

The credit crunch has been caused in large part by a series of poor decisions both within the financial sector and the regulatory sector.  I was reading a study today that revealed yet another unintended consequence of a regulatory decision.

The rule in question forces credit card companies to take a minimum sum each month from all accounts with an outstanding balance.  The idea behind the rule is that it stops borrowers from getting too heavily in debt.  However a study by Neil Stewart from Warwick University suggests that it has actually had the opposite effect.  It all revolves around a concept called anchoring whereby people rely too heavily on one particular piece of information to make their decision.  In this instance people were anchoring the minimum amount they had to repay, thus not paying off as much as they otherwise may have done, costing them significantly in the long run.

The anchoring process was famously illustrated in a 1974 study by Daniel Kahneman and Amos Tversky.  The study asked participants to estimate the number of UN countries were African, but only after having rolled a roulette wheel.  Those that landed a higher score on the wheel estimated there were more African nations than those that scored lower on the roulette wheel.

Steward does provide salvation however by suggesting that more information would remedy the situation.  He’s set-up a simple calculator on his website that allows people to caculate how much their actions could save (or cost) them.

Tags: Amos Tversky, anchoring, Daniel Kahneman, decision making, Warwick University

What are your 5 a day stress busters?

Posted by adi on Oct 28, 2008 in Play

I’m sure you’ve all heard the 5 fruit & veg per day mantra that is the key to healthy eating. I stumbled across a project today that sets out to do the same for our mental wellbeing. It’s founded by the RSA and is called Mindapples.  This is what the site has to say:

“Mindapples is a social movement to promote individual self-management of mental wellbeing. The original “5-a-day” campaign encouraged people to take care of their physical health through simple daily activities, and we want to do the same thing for mental health. We aim to create a stigma-free public debate about mental wellbeing, simply by asking everybody the question: “What’s your five-a-day?””

My five-a-day

1. Riding my bike
2. Going to the gym
3. Have crunchy nuts in the morning
4. Walking the dog
5. Listening to music

You can take the survey yourself and help the project compile the 5 most popular activities for mental wellbeing.

Tags: fun, Mental health, mindapples, wellbeing

The power of the unconscious

Posted by adi on Oct 28, 2008 in Work

I’m reading a book at the moment on consciousness called The User Illusion.  The book talks about how our unconscious brain does an awful lot more of our computing work than we are aware of, akin to the visible section of an iceberg.  Back in the 50’s subliminal advertising was all the rage until people took umbridge at appearing to be manipulated by unscrupulous advertisers.

Now we have Tesco spoofing this approach with its advert featuring Paul Daniels.

An interesting meme from the book is that because unconscious thought is, well, unconscious we cannot therefore be conscious of it.  All of which got me thinking how much this approach is used in marketing today and whether it is indeed ethical or not.

Tags: Advertising, Paul Daniels, Subliminal message, Thought, User Illusion