Perspective Is Everything (And It’s Cheap!)

behavioral economics

Many problems in society can be solved psychologically in far more effective ways than they can be solved by throwing more money at them.  Why spend billions of dollars trying to fix things in our educational systems and transportation systems structurally, when we can have en equally powerful impact by simply changing people’s perspectives of themselves within those systems.  

This simple idea behind behavioral economics is what advertising genius Rory Sutherland hopes to convey to you and to the world.

“The power of reframing things cannot be overstated.”

“Reality isn’t a particularly good guide to human happiness… Why, for example, are pensioners much happier than the young unemployed? Both of them, after all, are in exactly the same stage of life. You both have too much time on your hands and not much money. But pensioners are reportedly very, very happy, whereas the unemployed are extraordinarily unhappy and depressed. The reason, I think, is that the pensioners believe they’ve chosen to be pensioners, whereas the young unemployed feel it’s been thrust upon them.”

“What we have is exactly the same thing, the same activity, but one of them makes you feel great and the other one, with just a small change of posture, makes you feel terrible.”

fate vs control

THE LESSON: “The circumstances of our lives may actually matter less to our happiness than the sense of control we feel over our lives.” 

“We should spend far less time looking into humanity’s hidden depths and spend much more time exploring the hidden shallows.”

“We’ve probably given too much priority to what I call technical engineering solutions, Newtonian solutions, and not nearly enough to the psychological ones…we, artificially I think, prioritize what I’d call mechanistic ideas over psychological ideas.”

Look at the example of the subway system:

The greatest impact ever had for the consumer in the subway was not a billion dollar expansion or a million dollar makeover of the trains, but the simple addition of a clock that shows exactly how long it will be until your train arrives.

Simple changes that allow us to accept our circumstances and deal with them more easily psychologically are more powerful than any physical or structural change that could occur.

“One of the great mistakes, I think, of economics is it fails to understand that what something is, whether it’s retirement, unemployment, cost, is a function, not only of its amount, but also of its meaning… Where economists make the fundamental mistake is they think that money is money. Actually my pain experienced in paying five pounds is not just proportionate to the amount, but where I think that money is going. And I think understanding that could revolutionize tax policy. It could revolutionize the public services. It could really change things quite significantly…Choose your frame of reference and the perceived value, and therefore the actual value, is completely transformed.”

Sutherland suggests that we have a behavioral economist or psychologist oversee decisions for all major institutions.  Taking these ideas into consideration can help businesses and governments succeed in ways they never thought possible.  Education, transportation, taxation, and many other areas of life can drastically, and CHEAPLY, be improved with a bit of common, and uncommon, sense.

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