190 // Behavioral Design
Invest In Your Life
Movie-ticket example illustrates mental accounting
James uses a $15 ticket scenario to show how framing changes perceived cost despite identical outcomes.
James talks about behavioral design, also known as the architecture of choice. Sometimes this has been thought of as a way to control people, but it's a fascinating psychological area. It profoundly impacts how we make decisions in our purchasing and our spending. In general, it's how we frame our choices.
It turns out that the way we frame something will affect our decision even though the cost or outcome would be the same. Certain ways of framing are more appealing to our minds. Social incentives also seem to be one of the most potent motivators. Instead of falling for reframing marketing ploys, let's pay attention to our thoughts and behaviors and flip the script for our benefit.
Episode Highlights:
[03:59] James has been aware of how easily marketing agencies and advertisers can manipulate us. Companies make a huge effort to get people to take specific actions.
[04:59] The movie ticket example of behavioral design. Would you buy another ticket if you left your ticket at home? Would you use a credit card if you lost your ticket money? The cost is the same, but our brains process the choices differently.
[06:40] Marketing agencies are realizing that this is how our brains work. They are framing decisions in a way that takes advantage of this cognitive system that calls our attention to things differently.
[06:56] Mental accounting. We treat sources of money differently even though it's all money. The way we get resources changes the way we think about what they are for.
[08:09] One thing that is valuable to us is belonging or being part of the group. The hotel towel example.
[11:45] The financial power of decisions is not necessarily more powerful than the social incentive. It turns out social incentives are more important.
[12:52] It's hard to get people to save when the financial incentive is years or decades down the line. We might need to start looking at social incentives.
[14:18] The logic of creating a social incentive for things that add to our success. Successful people make these decisions. Is there a behavior that you are struggling with? Flip the script on it.
[16:37] Look at the things that you're struggling with. Where are you lacking discipline? What behavioral design are you being subject to? What messages are you hearing or telling yourself?
[17:48] How do you flip the message and create your own behavioral design? Choose which thoughts you want to keep thinking.
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