Understanding Behavioral Economics

Understanding Behavioral Economics

Behavioral economics uses an understanding of human psychology to account for why people deviate from rational action when they’re making decisions. Traditional economics takes for granted that people have unlimited resources and time and always end up making the rational choice. American economist and cognitive psychologist Herbert A. Simon came up with the theory of bounded rationality, which explains how people’s rationality is limited by the timeframe, by their cognitive resources, and by the difficulty level of the decision. Simon said that decision-makers frequently act as satisficers, seeking a satisfactory solution instead of an optimal one.

Nobel Prize-winning cognitive psychologist Daniel Kahneman (who also came up with fast and slow thinking systems) and Amos Tversky developed prospect theory, which shows how irrational decision-making is informed by clinical psychology. Prospect theory has two stages: an editing stage, where heuristics or mental shortcuts are applied in risky situations, and an evaluation stage, where psychological principles like loss aversion and reference dependence are used to analyze risky alternatives.

These theories and a better understanding of irrational decision-making inspired further developments in behavioral economics. American economist and Nobel laureate Richard Thaler outlined mental accounting as the process by which people code, categorize, and weigh economic outcomes. Thaler also developed nudge theory to explore how people’s choices can be influenced (aka “nudged”) by individuals and organizations taking advantage of framing and heuristics.

Traditional economics explains how people make decisions when they have all available information and can take the time to think rationally about their options. However, real-world choices are often limited by deadlines, uncertainty, and risk, leading to behavior that may seem irrational out of context. Behavioral economics offers insights on how people can make better decisions given these constraints.

Besides providing deeper insight into what motivates human behavior, understanding behavioral economics can help people exercise greater self-control and develop healthy habits (e.g., exercising more or drinking less). Often, thinking more about their future self and long-term goals can help people make better decisions and not give in to harmful impulses and addictions.

Irrationality and Behavioral Economics

Instead of making optimal choices, people often behave in ways that seem irrational and even against their own interests. Behavioral economics explains why individuals may make irrational choices by demonstrating how their decision-making is influenced by:

  • Biases (such as future discounting)
  • Heightened emotions
  • Faulty heuristics
  • Mental fatigue
  • Loss aversion
  • Choice overload
  • Perceived social norms
  • Situational framing
  • Context

What’s more, many decisions must be made under conditions of great uncertainty, where not much is known about all the risks and benefits of a choice or where those features are constantly shifting. Behavioral economics aims to understand the effects of uncertainty on decision-making in such realms as consumer purchasing, financial savings, and lifestyle changes.

A knee-jerk bias involves making fast, instinctive decisions instead of taking time to deliberate. With Occam’s razor bias, a person assumes that the most obvious solution is the best. A silo effect takes a too-narrow approach to making decisions. Confirmation bias focuses on information that affirms a given set of beliefs and assumptions. Individuals may also succumb to inertia bias—thinking and acting in ways that are familiar and predictable—or myopia bias—interpreting the world through the narrow lens of their personal history and emotional baggage.

To preserve cognitive resources, people may use heuristics to inform their decision-making. However, these mental shortcuts, often based on generalizations and subjective experience, may be limited or faulty. As a result, people make decisions based on imperfect information and lazy thinking that are just as likely to be wrong as they are to be right.

How Can You Influence People’s Behavior?

Many people are inclined to choose an option that brings instant pleasure, rather than the one which will beget long-term satisfaction at the expense of short-term gratification. Using behavioral economics, individuals and institutions can take advantage of this to manipulate people into a specific course of action or purchase.

Who doesn’t procrastinate?

  • I am too busy.
  • I am too tired.
  • I don’t have the energy.
  • I am too scared.
  • I don’t know where to start.

These are the most common excuses people use when they procrastinate—delay doing what they need to do. How many of these have you personally used?

According to the American Psychological Association, almost 80% of the people surveyed admit to lying to themselves about the reasons they put off doing things.

So, who doesn’t procrastinate?    The short answer is–nobody.  You’re human, and nobody is productive 100% of the time. But some people have allowed procrastination to thoroughly pervade their lives so much that they don’t realize how much of this non-renewable resource they’re losing.  Whatever kind of future, lifestyle, quest you seek, you need time to achieve mastery and time to make it stick.   

Procrastination is often confused with laziness or plain lack of self-discipline. The truth is that people who procrastinate frequently do so because they are perfectionists who fear making mistakes.  When we face difficult or unpleasant tasks, our brains may choose to ignore our long term interests and goal for immediate pleasure. This can lead to a vicious cycle of poor performance and low self-esteem.

So, what are you to do? Procrastinate effectively! But if we make small changes in our environment, this can help us overcome our negative feelings and increase productivity.

Simplify Your House, Simplify Your Life

Organize your house! Sometimes it’s hard for us to focus on important tasks because we have too many other little stressors creep up on us and accumulate. Physical clutter is a form of sensory overload–a stressor, can lead to mental chaos.  So use your procrastinated time to organize around your house. Take out the trash, wash the dishes, vacuum the floor, get rid of things you haven’t seen or touched for the last 24 months and probably won’t ever again 😉

The key to staying organized is focusing on one shelf or drawer at a time, tackling each one as efficiently as possible so that every part of your home stays tidy.

This “mental” state of clutter has been associated with depression and anxiety, among other conditions. Once you have removed your physical clutter, you’ll gain mental clarity and will have some space in your head to tackle the real work.

p.s. Once you’re done with the physical clutter, you might want to do a digital decluttering of your devices.

Offload Your Mental Tabs

No wonder you can’t concentrate on work!  Your mind is constantly going through all the calls you need to make, keeping track of to do list, and basically trying to make sure you survive well. Help yourself right now by making those important calls and writing down all your to do’s.  You’ve got a lot going on inside the brain, and when you can write down your appointments and to do’s, why stress your brain out by keeping them only in your mind?  If your brain were a browser, you don’t want to open up 100 different tabs at the same time.  Even Einstein’s brain would start to process slower with the strain!

Real Connections

You feel guilty–you’ve been meaning to check in on some very important people in your life and return those calls and emails, but your schedule has been hectic. Well, what are you doing now, procrastinating? No time is better than now. There are people who are important to you, right? So, use that non-working time on them.

Humans are social creatures, we need human connections in order to be emotionally and mentally healthy.  Meaningful relationships where you’ll get these real connections can only be sustained if they are bilateral.  We can’t have strong relationship if we’re not there for the people who matter.

Discover Yourself

Take the time to unlock what’s truly within you through curaFUN’s guided journals and fun quizzes that help build emotional wellness, confidence, resilience and discipline. Download the Quest Depot app now to learn more! Spend your procrastination time in a more meaningful way to appreciate who you are as a person, learn and grow, and develop within. You’ll come out of this ready to take on any work project put in front of you.

Circulate

We all have those days where we just sit at our desk and nothing comes out of our brains.  If so, why not move around a bit to get your circulation going.  Countless research tells us that exercise not only help reduce stress levels and provide energy, but it also improves moods and can improve cognitive performance.

So go outside and take a walk around the block or a local park. Even 6 minutes of exercise can make a big difference. 

Some physical activity may be just what you need to get back to your focused, productive self. You’ll become better able to handle that project, and your body will thank you too.

.True Rest

This is probably what you’ve been needing all along. Modern life drags us in a zillion different directions—work, family, social media, fitness, finances, school, friends….and the list goes on.  If you find yourself more distracted and procrastinating more, your body may begging you for some true rest.

Rest

noun
the refreshing quiet or repose of sleep:a good night’s rest.
refreshing ease or inactivity after exertion or labor:to allow an hour for rest.
relief or freedom, especially from anything that wearies, troubles, or disturbs.
a period or interval of inactivity, repose, solitude, or tranquillity:to go away for a rest.
mental or spiritual calm; tranquillity.

I’ve included the dictionary definition of rest here because so many of us stay on our devices to take a break when we’ve been working online all day long.  True rest means giving yourself a break from what you’ve been doing–some elements of inactivity is necessary to achieve this. 

Without proper rest, it’s hard to show up and shine, especially when you face challenges. Clear your mind and incorporate meditation in that rest period, do some breathing exercises. Sometimes just closing your eyes and listening to some good music puts us right where we need to be.  

The next time you find yourself endlessly “looking for inspirations” on Instagram, Pinterest, Deviantart, TikTok…., try one of the tips in this article, you may find the genius is within yourself.

When we procrastinate, we almost always doom our futures and create more stress. Time is not a commodity. We can never get it back and we should always be aware of that. When we waste time, we are wasting our most valuable resource. The key to beating procrastination is finding the right balance between short-term mood repairs and longer-term goals.

This is why Quest Depot is invaluable to people who procrastinate.  Quest Depot is an unconventional personal growth system that replaces goal setting guides, progress trackers, guided journals, reward charts, and automatically applies the right motivation methods for you and proven productivity proven tools and techniques, so you achieve and live life to the fullest!

It’s time to get things done. If you’re going to procrastinate, do it effectively and still achieve all of your goals every time. Give yourself a chance. There’s nothing to lose. Take your power back at Quest Depot today!

Write The Soundtrack of Your Life

When you’re sad, mad, frustrated…, it can be hard to tell what will make you feel better. Maybe you want someone who will just listen without being too nosy, or you might tell yourself distractions like ice cream or TV will soothe, but sometimes, what we really need is time alone to write. This article gives you some tips on how to use writing as a self-care tool.

Throughout my life, I have often used writing as a tool to work through difficulties, make better decisions, and express myself more fully and honestly than I could talking in person.

Shrek was right! People are like onions, covered under layers of expectations, fears, past traumas, pretenses… The act of writing thoughts down is beneficial for a few reasons beyond just getting our thoughts out. When we write our thoughts and feelings down on paper, it gives us a chance to pause and creates the necessary distance to uncover what we are actually feeling, making it easier to identify the root of issues. Logical fallacies and hurried conclusions reveal themselves as we put ink to them.

Many think of writing as a chore—something they struggle to do for school/work—but when you journal-write for yourself, it’s therapeutic, rewarding and insightful. Journaling is a way to get in touch with your thoughts, feelings, and struggles without the fear of judgement.

There is an old saying that says, “you cannot see the world for what it is, only for what you are.” It means that our actions are responses to how we perceive the world. The stories we tell ourselves every day have a huge impact on our lives. These internal dialogues are like what soundtracks are for movies. You might just overlook the soundtracks as unimportant background noises until you find that It’s hard to laugh in even the best comedies when you pair them with suspenseful horror movie soundtracks. When we write, we explore these stories, discover blindspots, and are given the opportunity to start re-writing past wrongs and planning for a different life outcome. What soundtrack does the movie of your life play?

It’s important to pay attention to what is happening in your life and not just keep it all in. Writing about what happened can help you process it better, which is why many psychologists have started recommending journaling as an effective stress relief technique for patients who don’t want to take medication or participate in talk therapy. Journaling demands that you think deeply about your life and experiences. For some, journaling is a way to talk about their anxiety or depression, while for others it is a way to process trauma or abuse they have had in their past. 

The psychological benefits of writing include self-exploration, emotional release, stress reduction, pain distraction, physical healing and much more.  A study was done at Stanford University on patients who were admitted into the hospital for cancer treatments. The studies found that those who wrote every day for two or more hours had better outcomes than those who did not write anything at all. Other research found that writing about traumatic events can lessen the intensity of negative thoughts and feelings about the event in the long term. 

Writing therapy is not only a great way to express your thoughts and feelings, it can also help pinpoint things that you need to work on. Sometimes it can be used as an emotional outlet for memories or feelings too difficult to talk about. People often feel safer when they write about their thoughts and feelings in private, which can make it easier for them to explore their deepest emotions without fear that someone will reject them or judge them negatively.

Journaling is a way to shape your life the way you want it. It gives you a chance to rewrite your life’s story and make it better.  It can help us express ourselves better, process what has happened in our lives more clearly, find inspiration for the future, or unburden ourselves from the things that weigh us down.Journaling is also an opportunity to shift perspective by stepping outside of ourselves. The guided journal prompts from curaFUN help you gain a broader perspective on things you have experienced and open up new ways of thinking about them. It can also help you identify patterns in your life which might not be readily apparent otherwise.

Writing therapy has been clinically proven to improve one’s mental wellbeing. curaFUN’s Quest Depot integrates guided journal, emotional awareness, goal setting, progress tracking and reward/motivation system all in one visual interface that leverages positive social influence, gamification and psychology.  In place of the daunting blank journal page, users selects their current mood emoji and then write or speak (speech to text) their responses to journal prompts.

If you want to start journaling on your own, below are some ideas to get you started.

 The WDEP model

A four-step process that can help you think about what you want to achieve, and how to go about it.

●  Wants. What do you want?

This might be something like “I’d like to start my own business” or “I need more time for myself”.

●  Doing. What are you doing to get what you want?

You can also make a list of things that might help you get closer to your goal. For example, these might include taking on extra work, finding a new job, or hiring an assistant.

●  Evaluate. Is what you are doing helping you get to what you want?

●  Plan. Can you make a more effective plan to get what you want?

Evaluate how successful you are after trying this method and plan accordingly for future obstacles.

ABC model

This is the basis of behavior therapy. It replicates the natural process of learning and understanding of human behavior, which starts with an event or antecedent that leads to a behavior or belief, which in turn leads to a consequence.A: Activating event or antecedent

B: Beliefs and thoughts about this event; what we tell ourselves about it

C: Emotions and subsequent actions that result from this belief system

Though the therapeutic benefits of writing are undeniable, it is important to note that it is not always a replacement for therapy. Journaling can, however, help us become more emotionally aware and process negative events which have happened in our lives. For many, it is a way to help them feel safe in this scary world. 

Writing is always free, private and available.  So start journaling to take care of yourself!

6 Secrets to Goal Setting with ADHD

6 Secrets to Goal Setting with ADHD

ADHD has no “cure” — nor should it. Managing ADHD is not about fitting in or calming down; it is about standing out — identifying your competitive advantages and developing those strengths into skills that will help you achieve your personal goals.

Over 15 years of treating adults with ADHD, I have identified six interventions that are reported to be the most helpful in managing ADHD symptoms and challenges. I have found that mastering these six “super skills” empowers people to make progress in their lives with – not in spite of – ADHD.

Skill #1. Name Your Strengths

Many individuals with ADHD suffer from low self-esteem and poor self-concept – often due to years of negative messaging about their abilities compared to individuals without ADHD 1 . These negative beliefs can sabotage quality of life and contribute to the development of mood disorders, anxiety, and other complex psychiatric issues over time.

For all of these reasons, cultivating the skill of identifying your strengths — or “finding your gifts,” as I like to say — is powerful and essential to well-being.

To get you started, here are five ADHD gifts I’ve repeatedly observed and noted:

Creativity – some studies suggest that individuals with ADHD are better at divergent thinking than their neurotypical counterparts. 2

Empathy — people with ADHD know that life’s biggest struggles are sometimes invisible to others and their care can increase positive social connections.

Emotional sensitivity – intense emotions can help us see parts of the world that need to be fixed as this intensity can make people more sensitive to life and therefore be motivated to repair the world. Their passion can become a source of motivation for unleashing focused attention and action, another way to view hyperactivity

Nature smart – the ADHD brain blossoms in green outdoor settings 3

How to Find Your Strengths

  • How did you succeed this week?
  • What are the three biggest successes in your life?
  • When did you feel most appreciated?
  • What are five things that interest you?

Skill #2. Set Meaningful Goals

Life is but a series of personal goals – daily or long-term, big or small. Goals span education and personal enrichment, health and fitness, interpersonal relationships, career, hobbies, bucket list activities, and much more.

Setting and achieving goals increases our well-being – a fact supported by research4. But ADHD symptoms like poor working memory, inattention, disorganization, and overall executive dysfunction often derail efforts to set personal goals — and obtain results.

Knowing how to set reasonable, attainable goals is an important skill that helps narrow down what it is you really want and, eventually, the means to get there.

What is Quest Depot?

Quest Depot is an incentive-tied, science-based gamified experience for personal growth that helps people as young as elementary school to set goals, track progress, review performance, think positively and live out their dreams.  

Personal goals are turned into quests at Quest Depot, and users benefit from all proven effective productivity and success methods automatically applied to their goal in a simple and visual way.  Parents, grandparents, families and friends can sponsor adventurers on their quests with cash prizes that are only released upon verified completion of quests.

Quest Depot replaces:

  • Reward charts
  • Diary/journal
  • To do list, Project management tools
  • Progress tracking charts
  • Behavior contracts
  • Mood monitoring apps
  • Consequences / punishments

Uses for Quest Depot:

  • Change habits
  • Record progress
  • Goal setting
  • Guided journal
  • Emotions check-in
  • Manage allowances and reward for behavior
  • Involve extended family and friends in what’s important to you

Benefits of Quest Depot:

  • More confident. Develop a growth mindset.
  • Self discovery. Become more self-aware.
  • Better mood, happier, calmer.
  • Stronger relationships. Allies share your successes and setbacks and become better connected.
  • More successful.  Increase likelihood of achieving goals.
  • Earn rewards–money for achieving your goals.
  • Self-discipline.  Committed to what you set out to do.
Need More Self-Control? Try a Simple Ritual

Need More Self-Control? Try a Simple Ritual

Many of our most vexing problems, from overeating to not saving enough for retirement to not working out enough have something in common: lack of self-control. Self-control is what gives us the capacity to say no to choices that are immediately gratifying but costly in the long term—that piece of chocolate cake (instead of an apple), that afternoon in front of the couch (instead of a visit to the gym). Despite our best intentions, we often fail to meet our lofty goals.

The problem of self-control has puzzled psychologists and behavioral scientists for decades. A great deal of research has identified situations in which self-control failures are likely to happen and tools to help people exercise better control. For instance, research has found that people persist for longer on tasks that require self-control when they know they’ll be paid for their efforts, or when they are told that their work will benefit others (such as helping find a cure for Alzheimer’s disease). These motivating incentives can increase our self-control, at least up to a point.

Entrepreneurs have also become interested in self-control, as is evident from the many diet and exercise apps and gadgets on the market. To take one notable example, on the commitment contract website stickK.com, users put down some money (say, $200) and state a goal they want to achieve (such as to lose ten pounds in a month). They also need to state what will happen to the money if they don’t stick to their commitments (eg, it’ll go to a friend or to a charity they do not like). If they meet their goal, they earn their money back. If they don’t, they lose the money.

Tools like stickK.com can be effective, but they are often difficult to implement; you may need to enlist someone to help monitor your efforts. New research my colleagues and I conducted point to a different solution that may be easier to implement: using rituals.

A ritual is a series of steps we take while attaching some kind of symbolic meaning. Players in all sorts of sports have rituals that involve actions such as eating the same foods in exactly the same order before a game or listening to the same pre-ordered playlist a given number of times. From the way some prepare their coffee to the way people celebrate important life events, like weddings or graduations, rituals are a part of our daily life. And though they may seem useless, or even silly, research has found that rituals are powerful.

In the past, my colleagues and I have found that rituals reduce anxiety before stressful tasks, and improve performance. They allow us to enjoy our family holidays more. And they also give us a greater sense of control after experiencing a loss, whether a loved one or in a lottery. Given the power of rituals, we thought we might test their effectiveness in resisting temptation.