TRC

We had a notion here at TRC that by the middle of March most New Year’s Resolutions would have been tossed by the wayside, either in favor of giving up something meaningful for Lent, or the simple acknowledgement that this just isn’t the year to lose 25 pounds. Would folks who made a resolution at the beginning of the year still be keeping that resolution 3 months later?

We kicked around a few hypotheses, and then went about testing them using our online panel of consumers:

• Younger consumers would be more likely to make resolutions than older ones (we figured they hadn’t become jaded by their resolutions not working out over time)
•  People would be more focused on issues relating to their health (losing weight, exercising more) than other types of resolutions.
• Most folks who made a resolution would have dropped it by the 3-month mark

So how did our predictions fare?

Tags: Psychology, Consumer Behavior

The Outside View that Daniel Kahneman talks about in his book Thinking, Fast & Slow, is a specific remedy to a problem known as the planning fallacy (i.e.) the inability of people to make predictions. The planning fallacy is part of a larger problem of optimism bias. What is optimism bias? Simply put, people are generally more optimistic than they should be. For example, it is well known that most people think they are better than average drivers, an impossibility. It stems from a general dose of overconfidence not warranted by the situation on hand.

The best example of overconfidence is a study that Kahneman cites of CFOs of large corporations. They were asked to estimate the returns of the S&P Index over the following year. The data were collected over a number of years and hence there was ample opportunity to correlate it with the actual performance of the Index in the following year. Any guesses as to this correlation, given that the respondents should have been expected to have special insight in this matter? It was almost exactly zero, slightly less, in fact! And they seemed to have no idea their forecast was that bad.

Tags: Psychology

Yes, it is a rather important issue and can be approached in a variety of ways. My purpose with this post is not to provide a comprehensive answer, but look at one specific solution based on what I recently read. The book is Thinking, Fast and Slow, the Nobel Prize winner Daniel Kahneman's excellent summary of a lifetime of research. He is perhaps the most accomplished psychologist around and could (among other things) justifiably be called the intellectual godfather of behavioral economics. It is always worth listening to what he says and in this particular case, it seems to me there is a nugget that applies to making quantitative research more actionable.

Tags: Psychology, Behavioral Economics, Consumer Behavior

It is that time of year when many people's thoughts turn towards buying gifts for loved ones. More generally it is a time when thoughts related to money and happiness occupy our attention. When thinking of ways to spend money either on oneself, for loved ones or even for complete strangers wouldn't it be nice if there was some actual research to provide data-based guidance on the topic? As it happens, there is. Researchers Elizabeth Dunn of the University of British Columbia, Daniel Gilbert of Harvard and Timothy Wilson of the University of Virginia have identified, through their research, eight principles designed to help consumers get more happiness for their money. Follow them as you will to enhance your life.

Tags: Psychology

I was shopping for groceries with my 12-year old son the other day -a quick trip to the store that qualified us for the express check-out line. On the way out he said to me:

"It must be more fun to work the express line, because you can really learn things about people."

Well spoken young researcher.

Look into full shopping carts and you'll see a lot of the same things - milk; eggs; orange juice; the ever-popular banana. With our shared national culture, neighborhoods built around people from similar socio-economic backgrounds, and good old fashioned peer pressure we're all alike in many ways. Except for where we're not, and that (to paraphrase my son) is the fun part.

If you had the time to dig through a person's cart (and if she LET you look through her cart) you'd come...

Tags: Consumer Behavior, Insights

A recent Time Magazine article talks about the Optimism Bias -- the phenomenon of people being eternally optimistic about the future. This can be shown in various ways including how people wildly overestimate things like personal life expectancy, marriage solvency, career prospects, etc. In this context "bias" doesn't mean something inherently bad. There is good reason to have an Optimism Bias as it leads to concrete positive outcomes like better health and longer life, not to mention inspiring us and making life generally better.

Tags: Consumer Behavior