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Joel Wade

How To Save a Lot of Money by Recognizing This Bias

By Emotions, Moods and Reactions

You’re out for a very nice dinner with your spouse, and you decide to share a bottle of wine. You look at the wine list, and you see several bottles listed in the $170 range, a few that are in the $50 range, and quite a number of them around $80-$90. $80 is more than you would’ve thought to spend when you left the house, but somehow you’re drawn to the $87 bottle of Cabernet.

$50 being the lowest price seems miserly for a special evening out, and with $170 as an example of a “very nice bottle of wine,” $87 now seems very easy to accept.

This is an example of anchoring. The $170 figure drew your expectations in the direction of that figure, higher than you would’ve chosen otherwise.

If the highest price bottles were all in the $80-$90 range, you probably would’ve chosen a less expensive bottle.

Another example of anchoring is called “rationing,” where you’re told that there’s a limited supply of something.

In one experiment at a supermarket, Campbell’s soup was on sale at 10% off. When there was a sign that also said, “Limit of 12 cans per person,” people bought an average of 7 cans per person – twice as many as when there was no limit. The “anchor” of 12 cans drew people away from the 3-4 cans they would otherwise have bought, and toward the number 12.

If you look for it, you’ll see this technique everywhere in marketing. In most cases it’s relatively harmless, drawing you to buy something that’s a few dollars more than some other product, or to buy a higher quantity of something you would probably use anyway. But as we’ll see, awareness of this technique when you’re facing higher cost items like a car or a home can save you a lot of money.

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Pressing the Pause Button

By Emotions, Moods and Reactions

 

Anybody can become angry – that is easy; but to be angry with the right person and to the right degree and at the right time and for the right purpose and in the right way – that is not within everybody’s power and is not easy. – Aristotle

It’s easy to get caught up in emotions, to follow the flow and intensity of our impulses. It’s natural… animal… primal. And without intervening with our consciousness, it can be dangerous. This is how we operated throughout much of human history… which is why most of human history was so terribly, horribly violent.

But it’s not how most of us today usually operate, because we have a choice. Over time, particularly through the Enlightenment, we’ve culturally refined our ability to choose – and that ability is central to what makes us human.

When we feel like reacting with anger, fear or hurt feelings – anything that feels like it’s an automatic, purely emotional response – we can react without thinking, blindly following the tides of our emotions.

Or we can choose to do something different.

Stephen Covey talks about this ability to choose as being a “pause button.” A moment between stimulus and response, that transforms that response from an automatic, rote behavior to a conscious, human one.

When we feel like reacting to a situation, instead of going right into the reaction, we can “press the pause button” and consider what we genuinely – from our consciously chosen values and priorities – want to do.

During the ‘60s, ‘70s and well into the ‘80s, the idea that we should “let our feelings out” was a common message in psychology that found its way into popular culture.

This had a positive side. Our emotions are where we live. Awareness of our feelings deepens our experience, and can help us understand one another and even think more clearly. Love, joy, excitement, elation, satisfaction, peace, warmth… as well as fear, pain, grief, anger, and sadness… These all bring us essential information about how people and events are affecting us.

Our emotions are how we experience the meaning of life. To be more in touch with our emotions is to be more in touch with ourselves. To be able to easily and appropriately express our emotions allows us to live a rich, full life with satisfying connections with others.

“Appropriately” is an important qualifier here, though. There can be a downside to emotional expression, in two ways:

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The Great Enrichment

By Happiness

 

We are in the midst of remarkable times, and our relationship to money is very different because of it. Appreciating this can open up possibilities for how you think, feel and act with your money.

We all see the world through the lens of the culture and the times in which we live. People living during the Renaissance didn’t know they were living during the Renaissance and didn’t call it that. It’s often only in hindsight that we can see the pattern.

Today it’s hard to fully appreciate the truly remarkable conditions in which we live. For us it’s just life. For our ancestors, it would be breathtaking.

Consider that for nearly all of mankind’s existence, our ancestors lived on the equivalent of about $1-$3 a day. Imagine paying for your home, your food, your clothing, your medical needs – everything – from a total of $1,095 for the entire year/$91 per month. For us that would be dire poverty, yet that’s what our ancestors have lived on – and, until recently, most of the population on earth.

Something changed all that, beginning in the later 1600’s in Holland, and spreading and growing in England in the 1700’s and moving gradually – and then recently more quickly – throughout the rest of the world.

That $3 a day grew by a very conservative factor of 16, and more realistically, when you include the vast improvement in the quality of goods and services, more like a factor of 100 (how do you compare an iPhone, or antibiotics, with anything in existence a few hundred years ago?).

This was the beginning of the Industrial Revolution, followed soon after by what Deirdre McCloskey calls “The Great Enrichment” – which we are very much still enjoying.

Throughout history there have been times and places of improved economic conditions. But for perspective, the best that you’ll find is maybe a raising of average income to $6 or maybe $8 a day, and that never lasted for very long; and it’s still dire poverty by our standards.

Today, worldwide average income is about $33 a day, and in the wealthier countries it’s more like $100 a day or more.

So if you’re reading this, it’s very likely that the average income among everybody in your country – not just a fortunate few – is more than 30 times what our ancestors could expect to live on. Adding the incalculable innovations and improvements (those iPhones and antibiotics again), we can conservatively more than triple that.

This isn’t the difference between having a clunky car or a nicer car; a small apartment or a large house; shopping at a discount store or a fancy store. This is the difference between a high probability of an early death by starvation or disease; or living a relatively good life until about 80.

In other words, this change since about the year 1800 is a phenomenal improvement in life for all people.

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A Happy Life is Not Perfect Happiness

By Happiness

 

There’s a great misunderstanding about what it means to live a happy life, and it can be summed up in the popular symbol of the smiley face.

Now, I like to smile. I love feeling that kind of glowing, delighted state of emotional bliss. It’s wonderful to be full of joy and love and laughter. But feeling those things doesn’t in and of itself make for a happy life; and just because you don’t happen to feel them in the moment doesn’t mean you are unhappy.

In fact, if simply feeling those emotions all the time was what constituted happiness, then it would be a simple matter to find the right combination of drugs that would perpetually bathe our neurons with joyful chemicals, and we could all be perpetually happy.

But this smiley face view of happiness is not the whole story, at all. And we all know it.

A happy life is an engaged life, an active life, an ethical life, a life that you create; a life you can be happy about, a life you can be proud of.

It is not a perfect life.

If you have a view of happiness that tells you that to feel sad or angry or afraid is a sign of failure, or a moral shortcoming of some kind, you’re actually setting yourself up for a miserable bind. The “negative” emotions of life are just as important as the “positive” emotions, in their own way.

Nobody wants to walk around feeling afraid all the time… or angry, or sad. These feelings, in and of themselves, don’t make you happy either.

But they do provide you with important information about what is going on. Used well, they are responses to actual circumstances.

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Self-Esteem is More Complicated Than You Think

By Happiness

 

In a study by Jean Twenge of San Diego State University, she found that college kids today are more likely to call themselves gifted and driven to succeed, while their test scores and hours spent studying are decreasing. Their tendency toward narcissism has also increased over the last 30 years.

Today I want to look at what I consider one of the sources of this trend: the unearned self-esteem movement.

Many years ago, when I was young psychology graduate student studying with Nathaniel Branden, I remember him talking one day about how he had been invited to be part of The California Task Force to Promote Self-Esteem, lead by California State Assemblyman John Vasconcelos.

Nathaniel couldn’t see why he would be involved in that, since he did not see a role for government in the development of self-esteem. Nonetheless, the Task Force carried on, and created guidelines for building “self-esteem” in a way that Branden would never have advocated.

According to a New York Times article about the study group in October of 1986:

Mr. Vasconcellos, a 53-year-old Democrat, is described by an aide as “the most radical humanist in the Legislature.” Mr. Twombly said the study group was an attempt by the Assemblyman to translate into political action his 20 years of “personal emotional work” in various forms of psychological therapy at Esalen Institute near Big Sur and other places.

”I’ve explored a lot of alternative ways of being and relating,” Mr. Vasconcellos said. The bill that created the 25-member study group says its aim is to compile “the world’s most credible and contemporary research regarding whether healthy self-esteem relates to the development of personal responsibility and social problems” such as crime, drug abuse, teen-age pregnancy and welfare dependency.

Whether it was Vasconcelos’s intention or not, the model of self-esteem that the task force has effectively encouraged was the one that my favorite social psychologist Roy Baumeister showed did nothing to improve a person’s happiness, success, or character.

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The High Drama Biases of Politics

By Happiness

 

As this political season heats up, and all the arguments, indignation and accusations that go with it come to a rolling boil, I thought it would be worth having a look at some of the deeper biases that we all can get immersed in, regardless of ideology or political sentiments.

I write this, not because I think you should be apathetic about politics, or choose a particular side that I might like. I write this because the bombardment of manipulations we are subject to can cause us to lose focus on the meaningful details of our own lives; and the biases which politics are teeming with can throw off our judgment about what’s most important.

By politics, I mean the process by which we – politicians and media most strongly, but individuals as well – persuade, cajole, manipulate, trick, argue, deceive, and otherwise do everything we can to empower those we want to empower, and disempower those we want to disempower.

This is an equal opportunity inquiry. We all have our personal beliefs, and, regardless of what they are, every single one of us gets seduced by our biases.

Emotional Bias:

First of all, politics, and the media hype around it, creates an emphasis on emotion. From the regal music of the Sunday news shows, to the passionate oration of the politicians, to the choreographed sneers and eye rolls of the political commentators, politics feeds into our emotional system much more than our rational, intellectual assessments, no matter how much a given speaker may insist that they offer the “True Facts.”

Tribal Bias:

Human beings are by far the most caring, empathetic creatures on earth. We have unique wiring in our brain that makes this possible. If a chimpanzee in the wild is injured, he will not be taken care of by the troop – they will let him suffer and starve; but when current day members of human hunter gatherer bands were questioned, fully half of the members had been in just such a situation, and the band nursed them back to health.

This is significant, because the exceptions stand out in stark relief. When we see or hear about examples of people doing monstrous things to other people, it horrifies us – because this is not how almost all of us behave toward our fellow human beings. (There are examples of other animals, dogs, elephants, etc. showing deep caring; but these are moving because they seem so human – they are also, almost always, toward direct relations.)

But politics feeds into a tribal bias. That level of compassion and empathy mostly disappears when we think of people as outside of our group. These days, more than any time in history, the whole world is our group, which is a very good thing. But when we judge a politician from an opposing party, we lose that empathy and compassion. Our bias is strongly for our party, and against the other.

Which means we’ll tend to see only or mostly the good in members of our team, and only or mostly the bad in the other. Regardless of what the actual truth may be.

Immediacy Bias:

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How Trade Has Helped Make Us Human

By Happiness

 

One day in East Africa, deep in our primitive past, an exceptional innovator carved a palm sized, pear shaped, razor sharp axe head out of stone. This must have revolutionized the ability for he or she and their band of hunter-gatherers to hunt, to butcher food… and to wage war on their neighbors.

This was about seventeen hundred thousand years ago, long before homo sapiens had even appeared on earth. Over time, others learned to copy this stone ax head, and the innovation spread throughout the relatively small population of pre-humans, known as homo erectus, or “upright man.”

The identical design of what archaeologists call Acheulean hand stone axes has been commonly found at many different archaeological sites throughout different eras, and up to about a hundred thousand years ago they were still being made, in exactly the same way, by our homo-sapiens ancestors.

For over a million and a half years, as far as we can tell from the archeological record, this was the extent of human and pre-human innovation. That was it! Nothing new for over 1,600,000 years.

Then, something revolutionary happened; something that changed the nature of humanity and transformed our cultural growth as a species… the world’s first jewelry was invented.

One day, about 90,000 years ago, something new appeared in the heart of Africa. Beads. Beads, made of the shells of a tiny marine snail called Nassarius gibbosulus, painted, and with tiny holes drilled in them.

What was truly transformational, though, wasn’t the beads themselves, it was the mystery they presented. How did beads originally found at the seashore of Mediterranean Algeria make their way hundreds of miles to the south? That would be crossing the Sahara Desert now, but back then it was a lush, green hunter’s paradise.

They were brought there. Not as some one-time haul from a murderous raiding party – which would have been the most likely way up to that point for one tribe to get something from another tribe.

No, these beads were part of something new; something that from any evidence we currently have, had never been seen on the face of the earth before; something we take completely for granted today:

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Positive Subtraction

By Emotions, Moods and Reactions

 

I met my wife Sue over 30 years ago at a Thanksgiving party with some friends of ours. Normally I would have been with my extended family – Thanksgiving was always a favorite of my parents – but this year they hosted our family dinner on Friday, so other family members could be with their respective in-laws.

Had my parents not changed the routine that year, Sue and I might never have met; we never would have been married, we would never have had our kids, and the life we know would be different in so many ways it’s hard to fathom.

Many other circumstances lined up just right to lead to that night that might not have worked out – my wife might not have come to the dinner (she almost didn’t), one or both of us might have lived in another town, we might not have known these particular friends…

It’s pretty remarkable if you think about it, that two people ever meet. But people do, and we did.  If you’re married, it might be worth considering there’s a chance the two of you might never have met.

Doing this deliberately can also make you happier.

In the classic Frank Capra movie, It’s a Wonderful Life, George Bailey is so despondent from events that he’s on the verge of committing suicide. Clarence, a new angel hoping to earn his wings, shows him what life would be like for those he cares about had George not existed. George comes to appreciate the many ways he has deeply affected people, and how much he had taken his good effect toward all those people he held dear for granted.

Seeing clearly what his absence would have meant – and would mean – for so many people he cares for puts suicide out of the question, and brings him to a state of profound gratitude.

That’s more than a sweet story and a classic movie; there is something very true and strong in it that has consequences for a life well lived.

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The Shocking Impact of Personal Influence

By Emotions, Moods and Reactions

 

It‘s easy to underestimate our effect on others. We go about our business in our own world, and assume that everyone else is going about theirs.

New parents can be stunned sometimes to hear their own words coming out of their kid’s mouths; their own actions being recreated by their children. But our impact on each other runs deep, and extends far beyond our immediate family.

Those we are close to, and even those people who are three degrees of separation away from those we are close to – friends of friends of friends – are our sphere of influence… and we are theirs. What we say and do makes a real impact on those around us, and even on those a moderate distance away.

Appreciating this can be a great motivator for living our best life.

In studies by Christakis and Fowler, drawing from the Framingham Heart Study subjects, they found just how powerful our personal contacts with people can be. Here are some examples:

  • For every happy friend we have, our likelihood of being happy ourselves increases by 9%.
  • Our chances of becoming obese increases by 57% if we have a friend who becomes obese.
  • Among pairs of adult siblings, if one sibling becomes obese the chance that the other will become obese increases by 40%
  • If one spouse becomes obese the likelihood that the other spouse will become obese increases by 37%

That’s for our immediate connections; in other studies, they found that we can have a remarkable effect on others even several steps removed from our direct contact:

  • If our friend’s friend’s friend quit smoking, we are much more likely to quit smoking ourselves.
  • Even happy people we’ve never met, three degrees of separation away, have a positive effect on our own happiness.

Good and bad behaviors pass from friend to friend; we influence each other’s health and happiness just by our social interactions.

But the impact of our behavior in one arena is particularly significant… shocking even.

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The Most Destructive Emotion

By Emotions, Moods and Reactions

 

Envy is an ugly emotion with awful effects. Many religions forbid or warn against it, as with the 10th commandment in the Old Testament; storytellers show its horrible effects. We all know that it’s bad on a feeling level, yet envy persists as a powerfully destructive force.

It isn’t about having very little; we aren’t particularly unhappy when we have very little. But we do become very unhappy, depressed, and bitter when we dwell on having less than our neighbor.

Yet there is an antidote to envy: empathy, curiosity, admiration, and the effective redirection of our initial impulses. It can also help to more fully understand this destructive and bitter emotion.

Envy de-humanizes the person envied. When we envy another person, we are not seeing that person for who they are, we are seeing him for what he has. It breeds malevolence; when we envy, we are not happy for the success of our neighbor, we are resentful of it.

Envy diminishes our capacity for empathy, and this lack of empathy makes it possible for people to do horrible things to one another.

It also reinforces a self-image of helplessness and impotence. Envy implies disbelief in ourselves; it presupposes that we don’t believe we can create the wealth, the relationships, the values that we see in others, and this helplessness can become a self-fulfilling prophecy, limiting our ability to work toward what we would like to create in our lives.

But like any negative emotion, by catching ourselves and understanding what we’re feeling, we can redirect our actions in a way that works much better for us.

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