A sideways look at economics

Given my track record for candour on this blog, let me admit to one slightly odd pleasure: agony columns. I have no statistics on this, but given their prevalence, I cannot be alone. Not that I care, frankly. My fascination started as a teenager eagerly scoffing the most salacious tales on the back pages of dubious glossy magazines at barber shops, but grew into a slightly more wholesome pastime rummaging through my wife’s holiday readings when half bored lying on a beach.

You might be happy to know that my interest in these columns is not really because of the content which tends to be a variation of: I am happily in a relationship, but I recently got close to a colleague/old friend/stranger. We clicked, things happened, I feel guilty, but not so much, what’s wrong with me, what do I do next? Nor am I generally interested in the replies from the agony aunts. What interests me is the fact that someone actually wrote a letter to a total stranger knowing it had a chance of being published. More importantly I enjoy scrutinising and double guessing the mood and feelings of the writer. There are subtle differences to be picked up. Is the person using more adjectives and spending longer describing the old partner or the new one? Are they more concerned with the internal conflict or ways to resolve it? Based on these clues I then put my Amélie Poulain hat on and try to imagine how this internal conflict may be resolved.

What I’m actually doing is preying on other people’s cognitive dissonance. The basic premise behind cognitive dissonance is that people feel uncomfortable when experiencing conflicts in beliefs or experiences and this unpleasant feeling drives them to resolve and manage these conflicts. How you resolve the conflict matters. In Leon Festinger’s formulation of the theory in the late 1950s, he stated that a person can reduce dissonance by adding new beliefs, changing existing ones or altering the importance of existing beliefs.

Paraphrasing one of Festinger’s examples and adapting it to current events may elucidate how the theory works. The tension between the fear of COVID-19 and the pleasure derived from the social interactions that we have had to curtail because of it has posed a very uncomfortable dilemma for many. Some will have changed their behaviour and, perhaps, refocused their efforts on enjoying a bit of time by themselves by picking up a new hobby. Others will have chosen to eliminate the fear by convincing themselves that COVID is perhaps an elaborate hoax. Some people might have added new beliefs, such as embracing the idea of herd immunity, that help rationalise continuing social interactions instead. Others might trivialise the dissonance by lowering the importance of fear from COVID and convince themselves that COVID risks are comparable to a normal flu. Another group may choose to overstate the importance of social interactions for their wellbeing and adopt a more flexible approach to new COVID rules.

I find the route chosen by different people to deal with cognitive dissonance particularly fascinating, and this is a topic with a wide variety of applications in economics and politics as well as everyday life. For example, in behavioural economics the reflection effect highlighted by Daniel Kahneman and Amos Tversky in their prospect theory can be thought of as arising from cognitively dissonant behaviour.[1]

Cognitive dissonance research can be more mundanely applied to letters to agony aunts, too, particularly when trying to guess ‘what will happen next’ based on the type of emotions betrayed by the letter. A strand of cognitive dissonance research has an interesting template for this.[2]

People that can change their attitudes (e.g. break up with the old or new partner) as a result of the dissonant situation, tend to experience strong negative emotions prior to the change in attitude, but positive ones afterwards (e.g. I’m happy I made that choice). People that instead choose the trivialising or suppressing route (e.g. it was just a one-off, it meant nothing, etc.) may be able to minimise the initial negative feeling stemming from the dissonant situation, but are less likely to experience a positive emotion after (e.g. they may still feel guilty). Those that cannot resolve the dissonant situation (e.g. keep the love triangle going or they get found out) are more likely to continue to experience negative feelings.

Interestingly, another piece of research also found that acknowledging one’s negative feelings during a dissonant situation lowers the likelihood of ever changing one’s attitudes. With respect to agony columns this is particularly fascinating since the agony aunts tend to nudge the writer towards a clear resolution of the problem in their answers. This theory would suggest that this outcome is actually made less likely by the very act of writing the letter and acknowledging one’s feelings in the process.

One thing I’ve always found surprising about agony columns is the contrast between letters and replies. Letters tend to be very formulaic but with a wide range of displayed emotions, while replies tend to have a very wide range of formats, but an extremely narrow emotional spectrum. I always thought this was a missed opportunity and somewhat lazy. A paper[3] I recently came across, for example, suggests that not all emotions are created equal and eliciting the right emotional response encourages better decision-making and alleviates conflict. The authors performed an experiment where they asked people how they would react if they thought their partner in a romantic or professional relationship was about to quit. The prevailing sentiment among those who would choose to pre-emptively quit the relationship was a lack of hope in the future of the relationship, not fear, as previously widely assumed, nor anger. In other experiments, they also found evidence that increasing hope lowered the incidence of pre-emptive strikes.

More broadly, I wish the idea of encouraging positive sentiments such as hope and happiness rather than trying to eliminate or block negative ones such as fear, anger or an obsessive desire for control, was more widely pursued. For a start, it’s easier to implement and I also think will lead to better outcomes and decisions. I certainly try to respond to my own dilemmas as positively as possible. For example, I once turned a work trip gone bad because of chickenpox into a road trip up the East Coast of North America with Kevin.

But it was certainly COVID lockdowns that offered the most trying test for this theory. As people at work well know, I quickly lost interest in understanding or even discussing a virus and an epidemic on which I could have very little influence. Instead, I tried to focus my energy on those little pleasures that were certain sources of happiness and hope and were unaffected by the continuous shifting of goalposts. For example, I chose not to be deterred by having to perform about 20 extortionately expensive COVID tests and had a blast at my brother’s wedding in Italy. I took immense pleasure in going to the Euro 2020 matches to witness Italy’s triumphs and making long-lasting memories in the process. My nightlife was curtailed and BBQs with friends and colleagues became a rare event for almost two years, but I got creative. I found solace in bulk-buying wine at auctions and experimenting with different types of wines I was less familiar with. I also held virtual ‘jerk-offs’ with neighbours to find the perfect Jamaican jerk marinade (no, not what you were thinking). I also took the opportunity to broaden my immediate circle of friends by trying to actively rekindle friendships which had been put on ice by distance and circumstances. My success rate in this last endeavour varied perhaps precisely because different people may have resorted to different cognitive coping mechanisms, or my ‘reappearance’ may have created more negative feelings such as fear or anxiety, and not enough positive ones like hope and happiness. Perhaps I’ll send a bottle of wine to try and tip the balance towards the positive feelings (though gifts have tended to backfire in the past, too).

All the above worked relatively well for me during this strange period, partly thanks to my weird fascination with agony columns, partly due to my enduring passion about why people behave in different ways. I may have even learnt enough to set up an agony column here at Fathom. If you think so send your letters to aunty.fathom@fathom-consulting.com. I’ll be happy to reply.

 

[1] The reflection effect is the discovery in a series of experiments that people seem to prefer a safe outcome when facing gains (for example preferring a certain £50 gain over a 50% chance of winning £100), but a riskier outcome when facing losses (for example a 50% chance of losing £100 relative to a certain loss of £50). This seemingly contradictory behaviour is actually a cognitive dissonance coping mechanism in play, used to alleviate the uncomfortable experience of a loss or a bad investment through a more uncertain outcome. For more on this, see one of our earlier blogs: ‘Reasons to be cheerful’.

[2] See this paper: https://www.ncbi.nlm.nih.gov/pmc/articles/PMC6296533/

[3] See here: https://pubmed.ncbi.nlm.nih.gov/27684362/