O BEHAVE!Issue 25 • April 2016

Money Can Buy You Happiness 3

Bias of the Month 4

Is It Luck or Skill? 5

How a View Can Make You Healthy 6

Repetition, Repetition, Repetition 7

Real Life Nudge of the Month 8

Upcoming Events 8

CONTENTS

MONEY CAN BUY YOU HAPPINESS

It’s a well-known adage that money can’t buy you happiness, but is that really true? The latest research in the field suggests it is not necessarily true, and in fact, money can increase happiness if spent in the right way. Carter and Gilovich(2010) found that spending money on experiences rather than material goods increases well-being, while Dunn, Akninand Norton (2013) found a similar effect when people spent money on others rather than themselves. Recent research shows that these insights do not hold universally and are moderated by individual differences. This highlights the need to investigate the relationship between money and happiness on an individual rather than a group level.

Taking this into consideration, a new study sought to investigate the relationship between peoples’ personality traits, their spending habits and happiness levels. Personality was assessed using the “Big Five” model (Goldberg, 1992) which consists of five axes: openness to experience, conscientiousness, extraversion, agreeableness and neuroticism. Spending was measured by looking at more than 76,000 bank transactions. The transactions were grouped into 59 categories and matched to personality type. For example, "eating out in pubs" was rated as an extraverted and low conscientiousness (i.e. impulsive) spending category, whereas "charities" and "pets" were rated as highly agreeable spending categories.

Matz, S. C., Gladstone, J. J., & Stillwell, D. (2016). Money Buys Happiness When Spending Fits Our Personality. Psychological Science, 1, 11.

Looking at the participants’ personality type and spending, researchers found that individuals who spent more on purchases that matched their personality type reported higher levels of life satisfaction. What is really interesting to note is that the effect of spending in line with one’s personality type and happiness was stronger than the effect of individuals’ total income and happiness. So maybe instead of expecting your next pay increase to make you happy, look at your current spending habits and ensure that your money is going towards the things that make you feel good.

Roese, N.J., & Vohs, K.D. (2012). Hindsight Bias. Perspectives on Psychological Science, 7 (5), 411-426.

BIAS OF THE MONTH

Hindsight Bias

After an unexpected event occurs, we typically see it as inevitable and assume we knew it would happen all along; this effect is known as the hindsight bias. Humans are natural storytellers, which means that we have a tendency to interpret the world around us in a way that fits with our narrative. If events occur that do not fit our existing narrative, we simply change our memory of it, as if we knew what was going to happen all along.

There are three levels of hindsight bias, as defined by Roese and Vohs (2012):• Memory distortion, when we remember ourselves as believing or saying

something would happen before it did,• Inevitability, that it was bound to happen, and• Foreseeability, that we personally could have seen it coming.

The issue with the hindsight bias is that it can stop us from learning from past mistakes, as we assume we already knew the consequences before taking a particular action. This can also lead to oversimplification of cause and effect. One way to get around it is by considering how events that didn’t happen could have happened, understanding conclusions that could have been reached before the true outcome was known.

IS IT LUCK OR SKILL?

How did you get to where you are today; is your success entirely down to your own talent and hard work, or did luck play a role as well? For the most part, we like to think our achievements are the result of our innate skills and industriousness. Thisis largely due to the availability heuristic: when we reflect on our progression, what comes to mind is all the times we’ve worked late and tackled tough challenges, rather than when we’ve simply been in the right place at the right time. Of course,the growing inequalities in Western societies indicate this is unlikely to be the whole story. People who are born rich tend to remain so, and vice versa.

Bartlett, M.Y., & DeSteno, D. (2006). Gratitude and Prosocial Behavior: Helping When It Costs You. Psychological Science, 17 (4), 319-325.

Research has shown that what you attribute your success to can influence the way you behave towards others. One experiment asked participants to think about a recent positive event, with one group asked to focus particularly on how their own personal actions led to it, while the other group thought about external causes. They were then asked if they would like to donate all or some of their payment for participation to charity. Those who had reflected on external factors, such as luck or the kindness of others, donated 25% more than those who thought about their own involvement. Similarly, Bartlett and DeSteno demonstrated in 2006 that feeling gratitude increases generosity. After a confederate helped the participant with a staged computer problem during the experiment, the participant was then asked if they would help with a long and challenging survey either by the confederate or a stranger. In both cases, participants who had their computer issue solved spent more time and completed more questions on the survey than participants who had not been helped. Taken together, these studies suggest that the more we recognise the involvement of others in our own success, the more altruistic we become.

Clearly, this has important implications for people’s political attitudes, particularly towards taxation, which has been explored by economist Robert Frank (keynote at this year’s Nudgestock) is his recent book Success and Luck. When people attribute the entirety of their success to their own hard work, they understandably are less open to redistributive taxation. By this logic, anyone should be able to have the same success if they work hard enough, which therefore means everyone at the top is subsidising people who haven’t worked as hard; an understandably off-putting proposition. Perhaps encouraging people to reflect more on the influence of good fortune could change the way tax is perceived.

HOW A VIEW CAN MAKE YOU HEALTHY

As some of you may know, Ogilvy Change have moved to the stunning Sea Containers building on the South Bank, which is full of full-length windows looking out over the River Thames. This means that instead of looking at a brick wall all day, we are lucky enough to be looking out at the river, watching the boats go by. When choosing this venue, it seems likely that senior management were aware of the positive benefits that this view would have on employees’ well-being. As humans, we are drawn to natural rather than urban environments, with scenes of water and vegetation being found to elicit positive feelings, reduce or block stress, and aid recovery from anxiety.

A fascinating study illustrating the full extent of the benefits of a natural view took place in a suburban Pennsylvania hospital over a nine-year period. Researchers wanted to investigate what impact the patients’ view from their bed (a brown brick wall or a tree) would have on their recovery. Looking at patient records from this time period, researchers matched patients for surgery type, sex, age, smoking habits, obesity, general nature of previous hospitalisation and floor level (due to the differing colour of the walls on each floor). They were also matched by surgeon where possible. Patients over 65 or under 20 were excluded from the sample, along with those who had a history of psychological disturbances. Patients had limited access to outdoor environments and therefore the only thing differing between the matched patients was the view from their window.

Ulrich, R. (1984). View through a window may influence recovery. Science, 224 (4647), 224-225.

Comparing the patients’ records of the brick wall versus the tree view, the patients who could see trees spent fewer days hospitalised post surgery, had fewer negative comments written about them by their nurses (e.g. “upset or crying”, “needs much encouragement”), took fewer moderate and strong analgesic doses and had fewer post surgery complications.

Our environment plays a significant role in our well-being, so whenever possible, get out of those four brick walls and work outdoors. If this isn’t possible, try to place yourself looking out at a lovely natural view – it could help those stress levels when they begin to creep up.

REPETITION, REPETITION, REPETITION

The next time you want to persuade your clients or colleagues, you may not need to keep thinking of different information that supports your point of view; new research suggests that just repeating the key points could be enough to change their minds. In rational economic terms, repeated information adds nothing and is therefore redundant. However, with our behaviour being influenced by non-rational heuristics and biases, repetition turns out to be a powerful persuasion tool.

Schulz-Hardt, Giersiepen and Mojzisch (2016) asked participants to review the CVs of two potential job candidates, both of which had equal numbers of positive and negative traits. They were then asked to discuss the applicants with a confederate. The confederate had been briefed to repeat four pieces of information that supported the choice the participant had already made, or four pieces of information that supported the other applicant. A full 70% of participants changed their minds when the confederate repeated information supporting the other candidate, despite the fact they were only making the same points over and over again. When the confederate’s points supported the participant’s original choice, only 2% changed their minds.

Schulz-Hardt, S., Giersiepen, A., & Mojzisch, A. (2016). Preference-consistent information repetitions during discussion: Do they affect subsequent judgments and decisions? Journal of Experimental Social Psychology, 64, 41-49.

This could be due to the mere-exposure effect (Zajonc, 1965): when we are presented with a stimulus more than once, we tend to like it more. The repetition can also enhance memory, meaning that, when participants thought about the two candidates, these repeated points could have been more salient. However, the authors also tested this hypothesis. They repeated the experiment paradigm, but, instead of a conversation with a confederate, asked the participants to read a scripted dialogue giving the same repeated points for one of the candidates. When the participants were asked which points they remembered, they were no more likely to recall the points that had been repeated than any others. This suggests that memory does not play a role in this effect.

An alternate explanation put forward by the authors was that we use repetition as a social cue to understand others’ preferences. If someone makes the same point again and again, they obviously feel strongly about it, so it’s therefore important that we respond by taking these points into account. Research into this effect is still ongoing –but in the meantime, it could be a good strategy for your next meeting.

Spotted: Reducing Choice Overload at Big Fernand

Humans hate making decisions, especially when there are lots of options to choose from. When too much choice exists, the chance we will make the wrong or sub-optimal decision increases, which in turn increases the risk that we will feel regret. In order to avoid this feeling of regret, we often end up doing nothing at all, refusing to make a choice. To make decisions easier, we often look to what others have chosen, which is why indicating which items are the “most popular” works so well. Alternatively, we look to experts in the area to tell us what to choose. Taking this insight on board, the burger chain Big Fernand wanted to making choosing a burger in their restaurant easier for customers with the expert recommendation of “The Big Fernand and Fries”. Great - I don’t know what to choose, so I’ll just take the recommendation. Sold!

REAL LIFE NUDGE OF THE MONTH

UPCOMING EVENTSBehavioural Boozeonomics with the London Behavioural Economics NetworkMonday 9th May, 7.00-10.30pmThe Comedy Pub, Piccadilly

Nudgestock 2016Behavioural Economics FestivalFriday 10th June , 10am-6pm Leas Cliff Hall, Folkestone, Kent

Cíosa Garrahan@CiosaGarrahan

ciosa.garrahan@ogilvy.com

BROUGHT TO YOU BY

Juliet Hodges@hulietjodges

juliet.hodges@ogilvy.com