The Consumer Upside Of An Economic Downturn

Dollarama stock is up. Google searches for “drive-in movies”, “cheap things to do for fun”, and “freezers” are at an all-time high. Individuals are buying more instant noodles. It’s clear that as the economy changes, consumer behavior is changing along with it. But these impacts aren’t as unpredictable as they might seem. With each recession, researchers aim to detail and explain how consumers react to the downturn. And based on these analyses, we can see a clearer picture of what is to come with future recessions.

Consumer responses to recessions can be counterintuitive but can lead to personal growth. Recently, researchers built a framework for consumer responses to financial hardship based on previous recession research. Among all findings, they noticed a pattern of response during an economic downturn. As consumers experience financial restriction, they tend to demonstrate the following steps: “React, Cope, and Adapt”.1

Recessions impact consumers in multiple ways, whether it be their financial limitations, employment opportunities, or through supply chain breakdowns. Among recession research, there are four main perspectives for how economic restriction can impact individuals:

  • Resource scarcity (limited access to money)
  • Choice restriction (limited options)
  • Social comparison (an individual’s ability to elevate their social status)
  • Environmental uncertainty (the predictability of the economic environment)1

Individuals respond differently to each perspective. But in many cases, this reactive behavior results in favorable growth in the long term. Recessions are in no way good, but they might strengthen our behavior in unique ways — like shaping how businesses approach consumerism once the recession is over.

Money myopia: economic restriction causes an increased focus on finances

Consumers have a heightened sense of their access (or lack thereof) to money during recessions. Initially, most consumers react with an increased focus on the price of goods, ignoring quality or other details.2 This focus can be so intense that it even causes cognitive burden.3

There are long term behavioral benefits from these financial restrictions. In an attempt to lessen the burden of financial restriction, consumers more effectively use their resources. Consumers post-2008 recession were better at addressing opportunity costs and making decisions.1 Individuals who were exposed to financial restriction over a long period of time were so aware of monetary value that they were less susceptible to pricing tricks, hidden fees, and taxes. 1

Today, experts are predicting a similar movement among younger generations in the post-pandemic phase. They note this generation will be more enlightened with their spending — they will expect a higher return from purchases while also considering their social impact.4,5,15 The implications of this are crucial for a functioning economy.

How restricted options help creativity and happiness

“We want what we can’t have” — and in a recession, we want it even more. This familiar behavior even impacts those who aren’t experiencing financial restriction, yet feel restricted because they feel that they should prepare for a downturn.5 Once we notice our limitations, we intently focus and frustrate ourselves with them.

When faced with limited choices, consumers cope by savoring ordinary moments. Consumers shift their spending habits towards lower-cost goods that provide feelings of enjoyment or luxury. For example, in past downturns, women have consistently bought more lipstick.1 This behavior is occurring even today. Sales in clothing retail are decreasing, compared to their usual increase in years prior.8,9,10 Demand is shifting toward providing higher quality products in smaller sizes.7

Instead of purchasing plane tickets for exotic locations, consumers are spicing up their summers with more purchases of home party sprinklers and party leis.6 Consumers are looking for more frugal ways to enjoy ordinary moments, instead of spending money on goods like apparel. Our attempt for enjoyment will still prevail, but it may be more of a “bite-sized” fun than a true indulgence.

Not only do individuals better enjoy ordinary experiences, but they are also more creative with their limitations. Researchers at John Hopkins University and the University of Illinois asked participants to complete tasks such as creative writing, solving problems, or creating products. The participants who were asked to think of their experiences with scarcity produced more novel products and suggested better solutions with their products. 11 Ethnographic studies have shown individuals from lower socioeconomic backgrounds have a better ability to use everyday products in a variety of ways, such as using tinfoil for wallpaper. 11,12 Limited choice availability may cause negative behavior upfront, but in the long term can drive innovation.

Economic uncertainty causes focus on the short term

Another aspect of a recession is that it throws us into uncertainty. In order to cope, reactions span from buying beauty products to gaining a sense of control or eating higher-calorie foods.1 During these times, we are more likely to value short term information. For example, investment managers are being urged to update how they supply information to clients in tighter cycle times with more real-world activity.13 The irrational decision making can go as far as to impact our parenting — where parents are found to spend more on their daughters than their sons when they are doubtful about their financial future.14 The research suggests that people consider their daughters more likely than their sons to have children, and unconsciously cater to ensure their family descent. These examples demonstrate how uncertainty influences our decisions in strange ways. We unknowingly think long-term but prefer guarantees to assure us.

What to watch out for in the coming months

To summarize these behavior changes, there are three pieces of insight to keep in mind as consumers enter another recession:

  1. A little goes a long way – across all of the different categories in a recession, we learn to live with less. Whether it is savoring moments with increased limitations, or buying smaller goods to feel luxury on a budget, consumers focus on using their financially available means to make memorable experiences in any way they can.
  2. Money on the mind – all people have an increased awareness of the economy during a downturn. Consumers in times of financial hardship are more price-aware and are aware of changes in the economy as they use the information to prepare themselves.
  3. The upside of a downturn – initially, we may respond abruptly to a recession. But our coping mechanisms in the long term spur beneficial change like more innovative behavior, and reduced susceptibility to pricing tricks.

People are adapting. Those are the folks that will do more than just survive. They are going to explode in positivity afterwards.”

– Stephen Poloz

Adaptability is on our minds with the current onslaught of new events on a weekly basis. Through analyzing previous recession research, we know that consumers cope with financial hardship in unique ways. Yet these very same coping mechanisms can ignite long-term behavioral changes that bring substantial benefits. Although we can’t yet predict the consumer who will emerge from this recession, we have a good idea they will be more aware, innovative, and resilient than before.

Turning Empathy Into Innovative Solutions During COVID-19

People have started scouring the internet for virtual ways to connect with friends and loved ones. Netflix parties, Animal Crossing, and Zoom calls are all doing a lovely job at keeping us occupied, so it seems. But when days turn into weeks and weeks turn into months, feelings of loneliness can begin to creep in. We start to miss visiting the trendiest restaurant spots with our friends, and attending those dreaded (but ultimately fun) family barbecues. 

If you have felt scared, isolated, or restricted during this quarantine, then I challenge you to explore those feelings and consider how they may allow you to better empathize with our aging population.

Loneliness and social isolation are prominent issues amongst older adults.1 Loneliness has been associated with a variety of physical and mental health outcomes, including depression, Alzheimer’s, and cancer mortality.2,3,4 Multiple studies have found that loneliness may increase the risk of premature mortality in the senior population.5,6,7 Suffice to say, loneliness and social isolation have a tremendous negative influence on the quality of life of seniors, which is only being further exacerbated by the current situation. We who are young can only imagine the devastating impact that the current pandemic has had on vulnerable individuals living in retirement and long-term care homes around the world. 

Why do we need empathy now?

The current stigma against aging is prevalent in our society and has a negative impact on the physical and mental well-being of seniors. Older adults have been shown to internalize ageist stereotypes such as the inevitably of poor health, inactivity, and deteriorating cognitive abilities.8,9 This creates a self-fulfilling prophecy that can result in reduced levels of engagement, memory loss, and poor health outcomes for an already vulnerable population.10

Ageism may result from viewing elderly persons as part of an out-group — i.e. a group that does not share the same beliefs, norms, or behaviours that we do, and is therefore unlike us.11 Research has shown that members of out-groups have difficulty soliciting feelings of empathy from in-group members. The implications of this aren’t trivial: Empathy is important because it can improve intergroup relations and result in helpful behaviors.12,13 Current events have the potential to elicit feelings of loneliness, uncertainty, and dejection in seniors and youth alike. Regardless of age, this unique experience of living through a global pandemic together has given us the opportunity to practice empathy. It is time we harness that and use it as a tool.

How can we use our empathy productively?

What we choose to do in order to combat social isolation in the senior population is up to us. Options include creating interventions, volunteering, and reaching out to senior members of your social circle. Most importantly, it is how we go about engaging in these activities that will determine their effectiveness. 

For example, creating an intervention without speaking to members of the population that you are attempting to help can prove futile. The intention is noble, but the execution can fall flat for multiple reasons. It may be that the intervention does not adapt to the user’s lifestyle, or that it addresses a problem that does not exist. This is why our ability to empathize is such an important step in the pursuit of becoming positive changemakers. 

It is for this reason that empathy is a key tool that is consistently used in human-centered design.

An empathy-informed design process can result in products, interventions, and policy changes that are tailored to the needs of consumers. When done correctly, the results are highly favored by the recipient. Understanding needs is easier to accomplish when you have empathy for the individual that you are creating a product for. There are various ways that designers can gain empathy, such as ethnographic studies, empathic modeling, and mapping out user experiences.14 It allows them to see the world from the perspective of the user and create solutions that fit into their lives. 

Empathy for the elderly

Young people like us have no way of fully understanding what it is like to live in a retirement home or long-term care home during these unprecedented times. However, due to the impact of the pandemic on all of our lives, we can see a faint glimmer of what it can feel like to be lonely and isolated from friends, family and loved ones. 

Personally, this makes me more inclined to understand the dispositions of seniors with whom, until now, I had difficulty relating to. We can use this as an opportunity to listen to the experiences of senior members of our society. Not only will this help us understand the perspective of the other party and put us in a better position to help them, but empathic conversations can also be extremely valuable and therapeutic in nature.15 

What else can be done

Another way that we can utilize our empathy is by volunteering. The benefits of volunteering are bi-directional — doing so can encourage a sense of community and belonging for the giver and the receiver. These are feelings that are extremely beneficial during a crisis like the one we are currently living in. It is understandable that many individuals may not want to volunteer in-person visits during the pandemic. Fortunately, online volunteering opportunities are available and still provide benefits in the form of improved psychological well-being and social connectedness.16,17

Finally, reaching out to friends and loved ones during times like this can make a world of difference. There is a sort of comfort to be found in conversations that reminisce, appreciate the little things in life, and look forward to a post-Covid world.

Although we are in a position that allows us to empathize, using this to facilitate positive change is a conscious decision that we must make. A natural response to a health crisis is fear. The threat of disease may result in increased ethnocentrism and negative behavior towards out-groups.18 In the past, this has led to discrimination and prejudice that have compromised our ability to empathize and act. We are better than that. Now that you are aware of the tools that you have, I hope you will let your empathy guide you towards making a positive change in the world.

Fitting The Behavioral Science Piece In The Organizational Puzzle

I often joke that if a contest for the most mysterious job title in my company existed, I would be the clear frontrunner. It seems as if every time I’m introduced to someone, I’m asked the same question: “So, exactly what do you do?”

This week marked my two year anniversary of working as a behavioral scientist in a product-driven tech company, and I still don’t have an exact answer to that question. But, having worked my way through the company, I’m now in a comfortable position to think about the question more clearly at least. 

My biggest realization about this role is a double-edged sword: Behavioral science actually overlaps with many roles in product-led tech companies. That’s good because that means behavioral science is becoming increasingly relevant to everyone, irrespective of what role one is in. That’s also bad because the onus of proving the importance of a stand-alone behavioral science role is entirely on us.

Based on my experience, I’ve put together some thoughts on where product organization and behavioral science overlap, and what differentiation a behavioral scientist can bring to an organization as a whole. 

Is behavioral science the same as user research?

In a generic sense, yes. User research is, rather obviously, about understanding users. Behavioral scientists do the same; yet, the nuance is in the process.

User research teams conduct qualitative research through in-depth interviews, discussions, and usability tests. They also conduct quantitative research through surveys. This research is then condensed into a form that product and design teams can consume and use for the product development.

Behavioral science research is more focused on uncovering the reasons behind why people do what they do. While interviews and surveys are useful techniques, it is more important for behavioral scientists to understand the context under which decisions are being made. Doing so helps them use that context to map and diagnose the behavior of the user. In other words, putting into words what the user cannot say. This comes not just from interviews, but from experiments and observations and conducting literature reviews of existing theories.

Can user research benefit from behavioral science?

Absolutely. If you are a user researcher and you have a behavioral scientist in your organization, integrate them into your research to help you uncover biases and blindspots that are not necessarily visible in plain sight.

Is behavioral science the same as design?

As someone who loves all things design, I wish that this answer is a yes. A designer in a product organization focuses on putting the product into a visual form, taking into account the users’ and the business’ needs. This is a highly technical process that involves immense stakeholder management and a deep understanding of how various systems interact in the backend, with the goal of producing a front-end that is simple enough for the user.

Behavioral design is a subset of design that is concerned with using design elements to affect behavior change.1 Borrowing heavily from behavioral science, this stream helps designers design for the real user — the one who is busy, inattentive, biased and not perfect, as opposed to the perfect user (who may or may not exist). 

Can design benefit from behavioral science? 

Absolutely. Behavioral science helps designers understand the actual user, rather than the theoretical user. If you’re a designer and you want to involve a behavioral scientist, reach out to them in the initial phases of design. They can help you understand the ‘why’ behind what people really do. It is immensely beneficial to get a behavioral scientist to audit your design from a behavioral perspective so you can uncover fail points early on in the process.

Is behavioral science the same as data science?

No. Data science is a field that analyses structured and unstructured data using machine learning and algorithms to extract useful insights, as well as predictive models.2 Data Scientists typically use mathematics, statistics, analysis, and machine learning to investigate existing patterns in data. The models that they create feed directly into products, making them smarter. For instance, if you have used Spotify and love the recommendations the app gives you, that’s the output of a data science model at work, which takes into account your music preferences and a bunch of other variables to predict what songs you might like.

Behavioral science, on the other hand, puts the predictions of data science models into the real world and helps drive the ‘last-mile’ behavioral change.3

Can data science benefit from behavioral science? 

If examples are anything to go by, then yes. The 2012 Obama presidential campaign was a groundbreaking experiment that employed data scientists to predict voter behavior, which was then used to optimize marketing resources.3 The distinctive part about the campaign was the complementary use of behavioral nudges along with data science models. The data science models could accurately predict which way a voter was likely to vote. But the campaign’s main objective was to sway voters to vote for Obama, and that’s where behavioral science comes in. The campaign team was able to get more votes in their favour by using nudges in communications towards those who were undecided, or not likely to vote for Obama. In other words, behavioral science provided the “last mile” connect that the data science models needed to reach the voter.

If you are a data scientist and you want to see your models being used to drive real behavioral change, reach out to a behavioral scientist — they might just know exactly what to do.

Is behavioral science the same as product marketing?

Not quite. Product marketing is the connection between business and product, and is a critical part of the product life cycle. Before a product is launched, product marketers create the positioning and the go-to-market strategy based on user research. During the launch, they help business teams understand the product and drive its adoption through campaigns.4

Behavioral science plays a critical role in parts of this process, such as providing a deeper understanding of the consumers’ behavior, conducting a diagnosis of the users’ current behavior to identify biases, and identifying interventions in communications that can nudge the adoption of a product.

Can product marketing benefit from behavioral science? 

I’m sure you’re seeing a pattern now, but the answer is yes.  Product marketing relies heavily on understanding users and creating positioning based on that. However, marketing thrives on insights, and behavioral science can help unravel insights that allow a product to be positioned better.

A simple example of this is the difference between explicit and implicit goals.5 If you are marketing a food delivery app, the explicit goal is to make it easier to order food. This is what you would learn from talking to consumers. But, if you were to dig deeper to understand the implicit goal, you might uncover the goal of “excitement” — that is, when customers order food because they want every meal to be a surprise and different from what they’ve had previously. The product positioning then changes from convenience to a more nuanced “variety with convenience”. So, if you are a product marketing manager, talk to a behavioral scientist to uncover insights that might help position the product better.

Be all, end all?

My advice seems to be that everyone in the organization should talk to behavioral scientists. But, my intent is the opposite of that. I want behavioral scientists to proactively reach out to others in their organizations to offer insights. The simple truth that runs the world is “ask, and you shall get”. A stand-alone behavioral science role comes with the responsibility of proving its value, and this will happen only and only through collaboration. So, if you are a behavioral scientist in a product organization waiting for someone to give you a project, don’t waste your time. Instead, reach out and tell others how you can add value.

Don’t Ask If Your Job Will Be Automated. Ask These Questions Instead.

The Jetsons dreamed of a futuristic utopia in which we would have flying cars and robots to take care of work and domestic tasks for us. And, as logically follows, we would have more free time than ever in this new, automated society.

But the future isn’t turning out anything similar to what we expected. Even before the pandemic hit, technology was supposed to free us from nonstop work. Instead, our devices became tools that kept us locked into work and spilled over into evenings and weekends. Looking into the future, we expect that automation will fill our workplaces, pushing out humans in favour of robots. How much of this is true? Is this idea of an automated world like The Jetsons — interesting to think about, but hopelessly outdated?

Most of us are worried about artificial intelligence (AI) making our jobs obsolete. I’m not immune to this kind of thinking — I actually think about it quite often, especially as a recession is nearing. After all, most of the buzz about AI focuses on the doom and gloom of a robot-driven future where humans have been pushed aside.1 But what if we’re asking the wrong questions about how AI will change our lives?

Asking if automation will make certain jobs obsolete implies that there is a possibility that these jobs will be completely taken over by AI and the rest will be left alone. This misrepresents both humans and AI technology: Automation will rarely get rid of entire jobs, but it will change nearly all of our careers in some way.

Let’s explore some new questions to find out about what automation may change and what will stay the same: 

Will AI eliminate my job?

Most likely, no. Entire jobs rarely get automated all at once. After all, jobs are a collection of tasks: A doctor’s job involves writing prescriptions, reviewing charts, talking to patients, and filling out paperwork, among many other things.2 Rarely, if ever, is a job only about completing one task. As we’ve seen throughout the last 200 years, some tasks (e.g., tilling soil) have been automated while others haven’t (e.g., raising children). Many of our daily tasks don’t exist in the same form as they did 40 or 50 years ago. Work as we know it is a continuous process of automation and adaptation, and so far very few entire jobs have been automated away with AI alone.3

Rather, AI will create new tasks and destroy existing ones, much like previous forms of automation, albeit at a rate that is potentially much faster than anything we’ve seen before.

So far, cycles of automation have changed the tasks we spend our time on, but we’ve always managed to bounce back and avoid mass unemployment. As it turns out, the economy can be quite resilient to structural change. Women are part of the workforce and people of colour have lower unemployment than in the 20th century, for example.4

Technology has automated some of the Western world’s most time-intensive tasks, like farming, manufacturing, bookkeeping, and data entry, as more workers found different jobs in the labour market. But the new jobs don’t look the same; and the tasks people work on have changed as well. Instead of replacing human workers, the automation process can lead us to discover more valuable, human-intensive tasks.5

Which of my tasks will be easier to automate, and which are more automation-resistant?

Controlled, repetitive tasks, like moving car parts and packaging food, are the kinds of tasks that can be easily taken over by robots. Tasks with complex human elements, like answering customer service calls or delivering a pitch to investors, will not be automated so quickly. Consider a two-by-two matrix of repetitiveness and human interaction: Tasks that are less repetitive and involve more human interaction won’t be taken over in the near future.

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To understand where your job is going, analyze where it is right now. Job analysis is the process of understanding the tasks that make up a job, and the knowledge, skills, and abilities needed to succeed at it. You can use this process to determine which of your job’s tasks have the highest risk of being automated. By doing so, you might be surprised by the tasks that computers aren’t so good at.6

Consider the following to analyze your job and understand how your set of work tasks may change:

  • Which tasks take the most time?
  • What skills do I need for each task?
  • How easy is it to break down each task into a logical formula or a repetitive process that a computer could do?
  • Now that some of my old tasks are automated, will I have any new responsibilities to keep the automated work running smoothly?

What new tasks might I start doing now that some of my work is automated?

Once simple and repetitive task are gone, what will be work on instead? Technological advances have saved receptionists time filing documents, which can now be spent serving as office managers. Sharing documents over the internet means that researchers can now access a journal article in three seconds instead of three weeks. This frees up researchers’ time to make more breakthroughs and explore their respective field more thoroughly.

Taking automated tasks off of your plate can free up your time to do more valuable work. Instead of cleaning data and creating databases, data scientists could shift to communicating their insights to more people in their organization. If AI programs can read through thousands of legal cases, lawyers could spend more time crafting arguments and interviewing key people for their cases.

While more interesting and challenging tasks can get us into a flow state — where time flies and we find ourselves enjoying work8 — there’s a downside. Mind-wandering can actually help us be more creative.9 Stripping our work of the seemingly boring and less ‘useful’ tasks can lower our creativity. Instead, we should schedule occasional breaks from deep, intellectual work to give ourselves more time for creativity. 

Consider the following to analyze what new tasks you’ll fill your time with due to automation:

  • What high-value tasks am I not prioritizing right now because I spend so much time on repetitive yet necessary tasks?
  • If I need to brainstorm, will my job still have downtime to explore new ideas?
  • Where can I add times to let my mind wander and be more creative?

Takeaways

The way we talk about AI is steeped in fear. That’s because we’re facing a huge unknown that could change our work lives drastically. But we will get a much better, more personalized picture of our potential future if we go beyond the dichotomy of full automation or no automation. AI will impact each of us on a gradient — some of us will be less affected than others, based on the tasks our jobs are composed of. These changes are more likely to give us new work which requires our uniquely human skills, and will not simply leave us with less to do. Yet with this new set of responsibilities, we may lose the chance to turn boredom into creativity.

The good news is we can design our jobs so they motivate us and improve our well-being. As it turns out, we can design better jobs using principles from behavioral science.

COVID-19 May Worsen Biases During The Hiring Process. Here’s How That Can Be Avoided

COVID-19 has disrupted the lives of millions worldwide. It is estimated that unemployment in the US alone will hit 32% — that’s 47 million recent graduates, experienced professionals, minorities, and overseas professionals.1 There is no doubt companies will start to hire skilled and unskilled labour in substantial numbers as we pull through this crisis. But, the ‘new-normal’ presents new challenges for Human Resource (HR) managers. Ethnicity and race-based biases have become more entrenched — all while marginalized communities are suffering disproportionately from the impacts of the virus itself. 

As we rebuild from COVID-19, individual and group identities will emerge based on one’s experience during the crisis. It might then become far too easy for us to judge others based on their past behavior; for example, compliance with quarantine rules, actual infection status, race,2 and perhaps most importantly, job status during the crisis. Such information could create pitfalls that HR managers may find themselves in when evaluating candidates.

By drawing on behavioral science insights, HR managers can develop a new set of tools that can help their evaluations remain unbiased.

Research shows that person-organization fit and person-job fit are established predictors of performance.3 However, these fits don’t always occur because of large informational asymmetries between organizations and job aspirants.4 For example, job applicants may be influenced by a range of factors including perceived job value, perceptions of interview performance, cultural norms, beliefs and interests, and even the wording of the job posting itself. Conversely, the recruiting team may unconsciously attribute certain qualities to specific demographics, and may have an affinity for people with characteristics similar to those who they are familiar with. From this, applicants may be discriminated against on account of their race, gender, or other demographic factors, including where they live or go to school.5,6

In order to reduce the impact of these biases, HR managers can take the following steps: 

Carefully craft job descriptions to remove bias

The wording of job ads matters. When job ads include more masculine than feminine wording, women find these jobs less appealing.7 For example, job postings that state “we will challenge our employees to be proud of their chosen career” or “you will develop leadership skills and learn business principles” are more likely to attract males when compared to “we nurture and support our employees, expecting that they will become committed to their career” or “you will develop interpersonal skills and understanding of business.” Ad wording can also impact how different demographic groups view the organization.8

Anonymize resumes to remove bias against specific groups of people

A racial gap in labour market outcomes exists – we know that African-Americans face differential treatment when searching for jobs such as getting fewer callbacks for each resume they send out.9, 10 There is evidence to show that East Asians may face discrimination in the coming months as well.11 Research shows that bias can be removed by anonymizing resumes in the job screening process. 

Evaluate candidates jointly to help reduce bias against the marginalized

Gender bias in the evaluation of job candidates exists across business, government, and academia. An “evaluation nudge”, in which candidates are evaluated jointly rather than separately, can stop evaluators from relying on cognitive shortcuts, such as group stereotypes. This will focus evaluators’ attention on what they should be doing — evaluating the ability of candidates. Joint evaluation can help address bias against groups other than women, as evaluators have access to more information than they would if they evaluated candidates separately.12 

Use structured interviews and tests to ensure objectivity and fairness

The unstructured interview as a predictive technique is unreliable because of its lack of validity. Research suggests that structured interviews — in which the questions to be asked are predetermined and are directly related to the job — are far more effective in ensuring objectivity and fairness. HR managers must try and articulate attributes they look for in candidates as objectively measurable criteria.13

HR managers will have their hands full as they start evaluating millions of applicants who wish to re-enter the job market when the economy starts to recover. The financial and time-related costs of unbiasedly evaluating candidates are low, and the benefits can be long-lasting and immense. HR managers just need the will to do so.

Watch Out For These Cognitive Biases When Working From Home

As the third month of lockdown approaches, the novelty of working from home has undoubtedly worn off as we’ve adjusted to this new way of working. Whether it is really the “new normal” or not, the reality is that many individuals have transitioned to remote work. Working from home comes with its own set of distractions, but it can also impact our decision making. Two biases in particular — the spotlight effect and distance bias — are prominent in remote work.

The spotlight effect: Why we feel more noticed more than we actually are

The spotlight effect describes our tendency to overestimate the extent to which people notice us.1,2

We have flawed predictions about how others view us, especially those who we see regularly. Research demonstrates that individuals perceive changes in their appearance — a good hair day versus a bad hair day, for example — to be more prominent than they necessarily are. In reality, these changes tend to go relatively unnoticed.1 Even glaringly obvious changes aren’t as apparent to others as we may think. The spotlight effect can help explain why we may feel continually noticed despite this.

Given the changes in business communication over the past few months, it is no surprise that the spotlight effect is relevant to workers today. With the switch to video communication, we are more aware of our appearance, and increasingly feel watched.

Video conferencing in particular may worsen the spotlight effect. Approximately half of all adults are more self-conscious on camera than in real life, with some research suggesting that participants spend over half of a video meeting looking in the camera at their appearance.3 The spotlight effect contributes to what’s known as “zoom fatigue” — the feeling of exhaustion that video conferencing gives us.

To further complicate things, some essential attributes of visual communication are missing in video-conferencing. The removal of instant non-verbal cues, such as body language, causes taxing mental exhaustion.5,6Aspects like intense-staring, silence, or delays in response can lead to negative perceptions of others.7,8As much as we try to use video conferencing to simulate in-person communication, we can’t quite duplicate the aspects that matter the most. Video calls may actually do more harm than good compared to phone conversations. The spotlight effect can be a significant cause of stress and anxiety for individuals and worsens task performance and goal pursuits.4 Overcoming it is no easy task, as even those who are aware of it still don’t correctly gauge how others perceive themselves.1

So, given the spotlight effect’s impact, how can we prevent this bias from hindering our work?

1. Bask in the glory that is our insignificance. Remember, the spotlight effect is an individual’s overestimation of others’ perceptions. That is to say, no one really cares. What individuals find to be more unpleasant when chatting over video are behaviors like sitting too close to the camera, chewing gum, and eating food, as opposed to, say, one’s physical appearance.3 In the aftermath of moments that you feel are exceptionally embarrassing, reflect on the moment as if you were a bystander. Doing so helps you recognize the non-importance of moments you may find stressful or embarrassing. 

2. Think carefully if video calling is required for a situation. Given the reasons suggested, making a case for video conferencing is difficult unless it is absolutely necessary. In most regular scenarios, video isn’t very helpful. Video conferencing can be overly invasive, intimate, and not entirely useful.6 In fact, most benefits of video conferencing come from remote engagement and have little to do with the visual benefits.9,10 So, in future situations, question the need for cameras. In some cases, video conferencing can help build trust and intimacy — but the costs of zoom fatigue may outweigh the benefits.

3. Keep things visual — but not on people. Thanks to screen sharing and other capabilities, leaders can continue to use technology to create visually engaging meetings that don’t rely on staring at the faces of others. 

Distance bias: how “out of sight, out of mind” thwarts our decision making

Distance bias is the tendency to favour what is closest to us.11 The bias occurs not just with physical space, but also with time, as we tend to see approaching deadlines as more important than further ones. This bias mostly impacts our ability to prioritize tasks and assess value in resources or employees. For example, in a study of Socially Responsible Investment (SRI) funds, researchers discovered that fund managers unconsciously preferred local firms for their portfolios as opposed to firms in other cities.12 So, proximity is clearly important in decision making across several subjects, but isn’t necessarily an optimal decision criterion.

Indeed, this bias has significant implications for how we work from home. The effect is impactful in two ways: how we perceive others and how we perceive our own work.

Distance bias and employee evaluations

First, managers should be aware of how this bias impacts employee evaluations. Naturally, individuals trust and give attention to people, projects, or items that are more visibly prevalent. But, distance bias can lead managers to rely on employees that are simply more visible even if these employees aren’t necessarily the best choice for a given situation.13 Productive employees who are “out of sight out, of mind” may get fewer opportunities because they tend to keep to themselves.

Distance bias and work prioritization

Distance bias also plays out in how we perceive our work. As most of us shift to working far from our offices, we might feel differently about the work we have to complete. Tasks can get placed on the back burner, as we may feel less motivated to work on specific projects — or work at all.14

It’s hard to not let distance bias impact our work and lives in a world where we need to distance ourselves from others physically; however, these tips can help lessen the effect:

1. Use long term data to make evaluations. We tend to better remember information that happened recently, which may cause flawed decisions about employee evaluations. Information about an employee’s performance from the previous month does not necessarily provide an accurate picture of that employee’s productivity over the long term. So, begin recording or journalling information over a longer period and use this long-term data to make more concrete decisions.11 

2. Ensure all employees get a seat at the table. One benefit of being remote is that we have some control over who we run into at work. Without being physically present in the office, we aren’t influenced by those who work near us, or who we happen to see in the breakroom often. On the flip side, employees should recognize that distance bias may get in the way of promotions. They may have to counter this by taking a more active approach to remain on the minds of their managers. 

3. Work with your team to properly prioritize work tasks. Be wary of relying on time or physical distance as a measure. Keep in mind that far-away deadlines may require a considerable amount of planning and reap a greater reward than closer deadlines. Collaborating with your team often and continually checking in on all projects will ensure you aren’t prioritizing anything incorrectly.

So, as working from home becomes a reality, it’s essential to recognize that cognitive biases may be holding us back from doing better work.

First, the spotlight effect reminds us that we likely overestimate how people perceive us — whether video chatting or in-person. Although challenging, becoming aware of this effect can help reduce anxiety and help us make better contributions to our teams. Second, distance bias may alter our ability to prioritize value in our projects and coworkers. With the shift to working from home, we gain a new sense of control over what we keep distant, allowing us to evaluate and prioritize what we consider important.

As we make daily adjustments to this evolving working life, we can strategically combat cognitive biases to strengthen our team and ourselves.

Why We See Gambles As Certainties

As someone who had worked for a bookmaker for a couple of years, I have seen countless examples of individuals following their reasoning into financially damaging betting strategies. It always comes across as absurd when an average sports fan truly believes they can pick a good bet from a bad one, knowing well that the industry takes enough money to form markets so efficient that only select few individuals can consistently beat them. And this absurdity has fuelled the growth of online gambling into a billion-dollar industry over the past decade.1

Why people mistakenly think they’re skilled gamblers

The question I have always wondered as a bookmaker is simple: What makes people so sure they’re right? Most customers are aware that these companies are wildly profitable, so why do they view themselves as an exception? Recent work2 argues for a simple conclusion — gamblers intuitively form biased interpretations of how gambling works and can use their experiences and motivations in a self-serving manner to align with their decision-making. In other words, we’re good at convincing ourselves that we’re more skilled than we really are. 

The product is the so-called ‘mother of all psychological biases’: overconfidence. Bettors believe themselves to be more skilled and informed than they truly are, and they underestimate the extent to which the odds are stacked against them with any commercial sportsbook. And bookmakers use this to their advantage.

Some firms want to teach customers to gamble better

While most online firms would much rather exacerbate this bias instead of helping individuals acknowledge their limitations, the ‘sharp’ bookie Pinnacle has become an anomaly by producing genuinely useful guides on how to apply insights from mathematics, economics, and psychology to gambling behavior. In recent times, Pinnacle has published articles on the effects of confirmation bias, heuristics, the halo effect, the hot hand phenomenon as well as the illusion of control, all noted facets in behavioral science. This has occurred alongside a successful business model of both running less juice (i.e. margin) than competitors and offering customers the highest betting limits one can find.

This doesn’t entirely add up, does it? Pinnacle has no problem in allowing sharp customers to stay around — and they even try to teach you skills that will make you more effective in playing against them — yet their business has reportedly only become even more successful over the past couple of decades. 

There is one clear insight here. Pinnacle can afford to inform gamblers of their limitations because simply informing them isn’t enough to deter them from loss-making strategies. The age of cognitive psychology research that led to the birth of behavioral economics was heavily built on the notion that humans are not good statisticians, and that when offered an opportunity to display effective probabilistic reasoning, they often fall short. The profitability of sportsbooks is a grand illustration of this. 

The future of gambling

Following a 2018 Supreme Court ruling overturning a long-held prohibition on sports betting, online gambling is nearing an explosion in the US market. Meanwhile in Europe, several mergers and acquisitions have left the industry creeping towards a powerful oligopoly. As neither of these evolving situations face any sort of intense regulation, it is a pressing question to policymakers as to whether this is a problem or not.

From a behavioral perspective, we cannot dismiss the act of engaging in loss-making gambling strategies as irrational.

Most bettors gamble in the company of friends, with the purpose of making the sporting experience more enjoyable. For most of them, that is a price they are willing to pay. The issue is that in deciding to dismiss the application of more rationality-based economic models to gambling behavior, we don’t have enough research to put forward anything better. 

Two years ago, Nature ran an editorial titled ‘Science Has a Gambling Problem’, in which it is argued that neither governments nor academia pay enough attention to the problem of gambling, and that research is sparse and underfunded. It’s concerning that two years later — while online gambling has skyrocketed even further — this position has barely changed.

A paper from Livingstone & Adams3 set out some key principles for the practice of effective gambling research, but this is an ideal that still feels a long way from fruition. In fact, the only major published report on the potential for behavioral science in gambling4 falls rather short. While this report notes that small interventions prove effective in reducing excessively risky play, it’s a very small first step. 

Working with SkyBet and Bet365, the interventions aimed at reducing friction in accessing responsible gambling information showed a fairly small level of practical significance. They were also relevant to only the small percentage of customers that the bookmakers in question had decided had already crossed into ‘at-risk’ territory. 

Opportunities to nudge gamblers

So, what about the numerous opportunities for nudge style interventions in the actual act of placing bets? Why should we wait until someone is dealing with the serious mental costs of gambling before trying to help them consider their actions?

Research forays such as this are mirrored by comprehensive evidence that bookmakers themselves have been taking advantage of behavioral factors in their marketing campaigns for quite a while now. In a survey of bookmakers’ advertisements from the 2014 World Cup,5 evidence suggested that ads which incited the representativeness heuristic, such as the odds that a team’s star player scores the first goal, helped move customers toward bets with the highest expected loss. Additionally, papers from Lopez-Gonzalez and colleagues6,7 highlight the power of gambling advertisements in playing into the illusion of control, as well as the perception of ‘normal’ gambling behavior.

All of this and more is highlighted in Newell’s paper on ‘Dark Nudges in Gambling,8 which further emphasizes one key point: Gamblers are being influenced into playing a highly unfair game, and regulators are not doing much about it. Bookmakers publicly claim to value responsible gambling, but the pitiful offering of such resources on their online platforms suggests otherwise. In any case, attempts at nudging gamblers towards these resources are outweighed by the attempts to nudge them towards the bets that got them in trouble in the first place. 

What can be done

As the world emerges from quarantine in the coming months and professional leagues resume, many people will be influenced into losing more by betting online, and behavioral science has the tools to try and help them. While the path from here to better research (and eventually to better policy) will be complex and time-consuming, I thought I would end with some low-hanging fruit that forms a foundation to be built on:

  • Remove the ability for bookmakers to place pending periods on cash withdrawals from accounts. On most sites, customers can deposit money to bet instantly but must sit through a waiting period to take out their winnings, allowing them to cancel their withdrawal when they’ve been enticed into another bet or have changed their emotional state. In behavioral science, this is called ‘sludge’.9 
  • Increase salience of overrounds/juice. Most customers will not be aware of the margin placed on the ‘true odds’ of bet outcomes. Increasing its visibility makes it clear how much of an edge the customer needs to be profitable. This would also discourage bookmakers from pushing their margins too high and promoting bets that maximize the customer’s expected loss.
  • Decrease friction in seeing one’s lifetime P/L ratio. Most betting customers will not know how to see their total net profit/loss with a firm. This should be accessible within one click from the bookmaker’s homepage. Seeing one’s past losses may help them question their current prospects.

Gamblers are being influenced to play an unfair game crafted by firms that use the irrationalities of gamblers against them. Through easy changes such as these, the 2020s can be the decade in which gambling becomes fairer. 

How To Fight Fake News With Behavioral Science

There has not been a time in recent history when the truth has mattered more than today. As governments, the medical system, and global citizens grapple with misinformation surrounding the economic and health costs of COVID-19, knowing what information to trust is now a matter of life and death, and helping people separate fact from fiction is critical.

False beliefs can be stubborn, and popular fact correction strategies such as the myth-versus- fact format may actually backfire.1 Take for example the flesh-eating bananas hoax of the year 2000. Stories of bananas causing a flesh-eating disease spread like wildfire via emails, text messages, and word of mouth. The Centre for Disease Control and Prevention (CDC) set up a hotline to counter misinformation and to assure worried Americans that bananas were perfectly safe. While clearly a hoax, the CDC’s efforts, in fact, lent credibility to this crazy story and even increased some people’s acceptance of it, so much so that similar stories were doing rounds even a decade later.2,3

The cognitive sciences suggest that we have information processing blind spots that make us susceptible to believing false information. When we encounter a claim, we evaluate its truth by focusing on a limited number of criteria. We ask ourselves at least one of the following five questions: 3,4

1. Do Others Believe It?

We tend to turn to social consensus to evaluate what is likely to be correct. Research shows that we are more confident in our beliefs if others share them, and we trust our memories more if others remember events the same way.5 In order to gauge consensus, we turn to external resources, or we simply ask ourselves how often we have heard this belief. Chances are that we are more frequently exposed to widely shared beliefs than to beliefs that are held by few people.6 The popularity of a belief is actually quite a poor measure of veracity, and, to complicate this, we tend to do a poor job at tracking how often we have heard something and from whom. So, we end up relying on messages that feel familiar. Small but vocal groups can take great advantage of this situation by employing the illusory truth effect: the more they repeat their message, the more familiar it feels, giving the impression that there is wide social acceptance — when really there isn’t any at all.

2. Is There Much Evidence to Substantiate It?

It is not surprising that we are more likely to believe something when there is evidence to support it. Often, we look for evidence in peer-reviewed scientific articles, news reports, and other sources we trust. More often though, we take a far less taxing and speedier approach by making a judgment on the basis of how easy it is to retrieve or obtain some pieces of evidence. For example, when recalling evidence feels difficult, we often conclude that there is less of it, regardless of how much evidence is actually out there.8 This is an example of the availability heuristic bias, which can have a profound impact on human decision making.5

3. Is It Compatible with What I Believe?7

We are inclined to believe things that are consistent with our own beliefs and knowledge. When something is inconsistent with our existing beliefs, we stumble. This shows up even in simple tasks — we take longer to read a text that we disagree with, and experience negative feelings while doing so. So, it is possible that we believe in false facts simply because they are more compatible with what we already believe.9,10 This is a particular case of cognitive dissonance, where we might try to rationalize our belief of what is known to be false by changing our other beliefs and cognitions.

4. Does It Tell a Good Story?

Who doesn’t like a coherent story? When details are presented as part of a narrative, and individual elements fit together in a coherent frame, we are more likely to think that they are true.8  Research suggests that we react positively to efforts that help improve the coherence of the information we get.11

5. Does It Come from a Credible Source?

Indeed, we are more likely to accept information from what we believe to be a more credible source.12 People evaluate credibility by looking at the source’s expertise, past statements, and likely motives. And as expected, the ‘familiarity’ of the source matters. Even repeatedly seeing a face is enough to significantly increase perceptions of honesty, sincerity, and general agreement with what that person says. What is more surprising is that even the ease of pronouncing the speaker’s name influences credibility. A study in 2010 demonstrated that people are more likely to believe statements when they are made in a familiar and easy-to-understand accent compared to one that is difficult-to-understand.13

How fake news takes hold

We know that we humans process information imperfectly, so it isn’t a surprise that fake news takes hold so easily. The myth-versus-fact format we most often adopt to combat fake news isn’t working. A growing number of studies show that this strategy can have unintended consequences, namely increasing the acceptance of false beliefs, spreading them to new segments of the population, and creating the perception that these false beliefs are widely shared.14 As seen in the case of the terror bananas, just knowing that there might be some controversy about a fact seems to undermine people’s beliefs about the truth. 

The perfect example of this is the debate on the efficacy of vaccines.15 The anti-vaccine movement owes much of its origin to a paper published in The Lancet, a highly prestigious peer-reviewed general medical journal. This paper, which linked the Measles Mumps Rubella (MMR) vaccine to autism, managed to ignite fierce debate about the supposed relationship between vaccines and autism, all despite the eventual retraction of the paper in 2010. Even though several scientists have since debunked the study — in addition to the author being charged with misconduct and barred from practicing medicine in the UK — some still subscribe to the belief that vaccines cause autism to this day.16

Takeaways

How then can we fight the uptake of false information? Recent research suggests that some simple ploys can be effective:17

  • Ideally, ignore false information, and repeat the correct information.
  • Remove anecdotes and photos from communication on false information, as they only further serve to capture attention, boost comprehension, and enhance the acceptance of the false claim.
  • Make communication as clear and as simple as possible.
  • Make information accessible through clear, step-by-step exposition and avoidance of jargon.
  • Keep the public informed — one of the most powerful strategies for avoiding misinformation is knowing that it is coming.

It is true that our era is not the first age of widespread falsehoods. These are early days in the war against fake news and false information; and we will find effective ways to fight them — such as the use of technology and artificial intelligence. While we may never fully quash the scourge of false information and fake news, we will surely find new ways to put up a solid fight.

The Key To Effective Teammates Isn’t Them. It’s You.

With society’s high pressures to achieve, it’s understandable that individuals prefer to hide their flaws — but doing so comes at a cost.

I learned that lesson when I ventured on a multi-day hiking expedition in Kananaskis, Canada. As a new hiker, I struggled. The trip consisted of continuous steep inclines, which would’ve been difficult even without needing to carry our heavy camping packs. I was slowed down by one particularly challenging climb, yet I refused to tell my teammates in hopes that I would seem perseverant. To my delight (and surprise), one of the more active members requested that we stop for a break. I quickly realized I wasn’t the only one hiding my weaknesses after noticing the rest of the team’s apparent relief.

For many of us, authenticity, or behaving as one’s “true” self in daily life, is quite challenging. Even the idea of it goes against our nature. As social beings, we’ve learned to adapt and blend into our environment, making it challenging to display who we are at times. Yet, the advantages of vulnerability and authenticity are evident, driving its recent popularity among thought leaders.¹ Authenticity even improved my hiking experience — the moment my group admitted to our shortcomings was when we started working better as a team. So, can being ourselves not only help us work better, but help those who work around us?

The truth is, it can.

Researchers in Germany found that not only do authentic workers have higher work engagement and lower work exhaustion, but their teammates had the same results, regardless of whether they were authentic themselves. The effect occurs in reverse — employees with authentic teammates had higher work engagement, even if the employees lacked authenticity themselves. The results suggest that the benefits of authenticity go beyond the individual, and spillover to teammates as well. So, we can improve our teammates’ work behavior by merely being ourselves.²

Why authenticity boosts our teammates

Social penetration theory can help explain this idea. The theory states that our disclosure of personal information helps strengthen the relationships with those we share that information with.³ So, the most productive relationships are those in which information is freely and comfortably shared. By disclosing information in the realm of authenticity, we can help our teammates feel safe enough to do the same.

So what is it about “authentic teammates” that makes them have such a positive impact? First and foremost, authentic teammates do not prioritize protecting their ego at the cost of their work or relationships. Authentic teammates recognize the interests of both themselves and others when making decisions, which allows those they work with to feel safe while being themselves at work. As a result, authentic teammates are more connected to their work, less exhausted by work, and influence their teammates in the same way. By focusing less on appearing hard-working in hopes to get ahead — and more on trying to be better all-around individuals — authentic teammates can make a tremendous impact on their work environment.²

How to incorporate authenticity at work

Authenticity is useful in the workplace at all levels of seniority and can be achieved in several ways. For starters, one doesn’t necessarily need to “be” authentic to experience the benefits. Employees can surround themselves with more authentic individuals in their work environment, thereby benefiting from spillover effects. For managers, including authenticity as a hiring criterion may be the most efficient way to see the advantages.

Of course, employees who don’t want to rely on their teammates can try to improve their expression of authenticity, and managers can encourage authenticity among existing teams.

So how can we spot authenticity in ourselves and others? Two researchers from the University of Georgia and Clayton State University define the four main components⁴ of authenticity to look for:

  • Awareness – acknowledging our motives, desires, strengths, and weaknesses. 
  • Unbiased processing – remaining honest in how we associate our achievements and shortcomings. 
  • Behavior – acting in accordance with our beliefs. 
  • Relational orientation – recognizing the extent to which our friends and family see our “true selves.”

However, these aspects describe the ideal authentic individual, which may not be realistic for most people. To start, here are some simple questions you can ask yourself to gauge where you stand in each category, including:

  • Why do I do what I do?
  • What are the causes of my successes and failures?
  • Do I pretend to enjoy situations (or agree to things that I really don’t agree with)?
  • Do my friends, family, and co-workers understand who I am?

Answering these questions and putting them into action will increase your connectivity to your work.⁴ Better yet, sharing these answers assures that your teammates can be authentic at work. Try this: the next idea you share something at a meeting, explain why the idea has personal meaning to you. Then, encourage your teammates for honest feedback about what you shared. You will instantly feel more connected to your work, and your teammates may feel comfortable doing the same at a later point.

Authenticity: is it risky?

It’s important to recognize that sharing information, especially at the workplace, can put individuals in a position of vulnerability that they may not wish for. This issue is especially tricky in firms that have a strong organizational identity and groom their employees to perform and behave in a manner that best portrays the firm’s reputation. As long as employees believe that they can trust their teammates, the benefits of authenticity are significant compared to the potential costs of breaking the status quo. Organizations that prioritize identity will soon realize the value in promoting authenticity in their culture, inspiring a shift across various industries.² ⁵ ⁶

With how we work changing seemingly everyday, workplace engagement and exhaustion are evolving challenges. If we as employees can overcome the initial vulnerability that living authentically entails, we can become more connected to our work and our co-workers. In many instances, we cannot control who is on our team, but we can choose how we behave with our teams. This insight can help leaders and employees use their time to work better and happier together.

Thanks to practice, I find hiking easier now than I did several years ago. But these days, when I am on the trail, I am comfortable stopping for a rest—and I always tell my fellow hikers why. Somehow, the more I make my challenges known, the better those around me become.