Most of us like to think that we make decisions in a rational, sensible way. We prefer to believe that when it comes to making choices, whether to get out of bed, buy a Powerball ticket, turn left at the next set of lights, or even buy that house, the choices we make typically reflect our desires; we choose what, all things considered, we want. The process by which we make choices is pretty straightforward. We consider the pros and cons of a particular choice, or perhaps even do a more formal cost-benefit analysis. After weighing up our options, we choose the product we want the most. For the most part, it is a process that is carried out in the conscious mind. Pretty straightforward.
Lots, but there are some very scary similarities.
Okay, I’m not really qualified to write about flu epidemics, but the increased incidence of swine flu reports, made me return to an article that I read a little while ago.
The link between success and luck is stronger than most people think, writes Economist Robert Frank of Cornell University in The New York Times. The difficulty that some have with his argument is that it challenges everything about the American dream. But, sadly for all those people who like to think that they are fully responsible for "pulling themselves up by their boot strings", "brushing themselves off", and "thinking about tomorrow", it is very much the truth.
Since 1990, household debt has risen from around 80 per cent of income to around 130 per cent. So household finances were badly stretched leading up to the middle of 2008. There has been very little change in ratio of total household net worth from post-war to 1990. But after 1990, there was a significant increase in household wealth in proportion to disposable income, i.e., we have more money to spend, and products cost less. This is then coupled with the fact that economy has been more stable since 1985, than in prior postwar recessions – recessions have been less frequent and also shorter and smaller. As our wealth has increased, we have saved less, because we don’t feel the need to save for a rainy day (because we believe that we will always have money). The optimism bias tells us that if times are good, we assume that times will continue to be good.
Consumer Action commissioned Dr Paul Harrison, Deakin Business School, Deakin University and Marta Massi, School of Marketing and Communication, Lumsa University (Rome), to study the psychological aspects of one form of credit marketing - unsolicited credit card limit-increase offers (UCCLIOs).