Behaviorism And Its Momentum

Happy Sunday everyone!

Unfortunately, I haven’t had much time to work on a fleshed out post this week, but I have an interesting one in the pipeline (hint: it involves the branding behind Drake and the human amygdala).

In the meantime, I figured I’d take a look at the momentum of a passion topic of mine: behavioral economics.

I’ve written a bit about behavioral economics on my blog, but I thought it’d be interesting to take a step back and look at interest for the topic at hand.

Interestingly enough, the queries for the term “Behaviorism” look to be cyclical when looking at the trend line on a global scale, with most of the queries coming from the African continent. The peaks happen from February to May and September to December, while the dips occur in late July and late December. The peak in the trend line for “Behavioral Economics” occurred around the time that the Noble Prize was awarded to Richard Thaler for his work on the topic. I wonder if the increase in terms have to do with psychology students in school that have to look up the term.

When looking at the trend lines focusing on USA, we see a similar seasonal trend for the term “Behaviorism”, with the peaks occurring in late August/early September and the dips around mid-December. Being that the school year usually starts around late August/early September, Being that some of the top related queries for the term “Behaviorism” are related to pet behaviorists in the vicinity, could it be that most people are looking up for a pet behaviorist around this time? Or is the start of the school year (which coincidentally happens around late August/early September) have to do with the peaks we’re seeing? Last theory: could it be that investors are conducting research on behaviorism leading up to the dreaded month of October? Some food for thought until next time… Would love to hear any thoughts on the subject though!

Creatures of Habit

Tweet by Chris Ciovacco

I tend to reflect on the idea of habits pretty often.

Last week, I came across a tweet by Chris Ciovacco, Founder & CEO Ciovacco Capital Management, that touched on the idea of bad habits. With behavioral economics becoming an increasingly popular topic of discussion in the finance world, I’ve found the social chatter on behavioral finance to be quite constructive. Habits are pretty powerful and in most cases a subconscious process in people. Just think, this is why companies want to have consumers form habits with their products/services (increased retention).

We, as humans, have a tendency to use habits as mental shortcuts. While habits can start off as deliberate behavior, through repetition they become automatic. In understanding the power of habits through my interest in consumer psychology, I’ve come to consciously form some good ones - whether that’s going to the gym, tracking my personal expenses, and taking time out of my week to write on here. That’s not to say I don’t have bad habits. At the end of the day, I’m aware that I’m a creature of habits - both good and bad.

How Do Habits Work?

According to Britannica.com, a habit is “any regularly repeated behaviour that requires little or no thought and is learned rather than innate”.

habit-loop.jpg

The habit loop is a cyclical process in which behaviors become automatic. In the first step of the habit loop, we have a trigger that serves as a reminder of our routine. Triggers can be external, in which the information for what to do next is within the trigger itself, or internal, in which we decide what do to next through internally stored information formed through associations in our memory. For example, some internal triggers could be associating 6pm with dinner time or your personal office as a productive work space.

Following the trigger is the physical, mental, emotional behavior that’s part of the routine. Finally, the reward is the feedback that tells you whether the routine is good or bad. Through the associative learning and repetition (conditioning), we create direct links in our memory between a trigger and response and make an association between a particular behavior and a consequence. The more we repeat the process, the stronger the association and more automative the behavior becomes.

A lot of our purchase decisions are based on habits. Heck, just last night I purchased my usual pre-workout supplement off of Amazon because 1) I didn’t want to invest the time to research a new and potentially better supplement and 2) it was after a long day of work and I felt mentally drained. One of the main focuses for a business is to have potential customers try their product/service to have them become repeat buyers. Having customers form habits with your product/service should be the ultimate goal, as it has the potential to benefit the businesses bottom line. Again, pretty power stuff.