Behavioral Experts Behaving Badly

Rory Sutherland is Vice Chairman at Ogilvy & Mather, an international advertising agency whose founder, David Ogilvy, is said to be the inspiration for the Don Draper character on Mad Men.

Sutherland is an expert on behavioral economics and human psychology. Sales and marketing departments were utilizing behavioral psychology on unsuspecting customers decades before it became mainstream in the world of behavioral finance.

Sutherland appeared on a recent episode of the Freakonomics podcast to discuss his research and findings on such things as loss aversion, social norming and choice architecture. His insights as to how ad agencies have been utilizing an understanding of people’s natural biases for the past 50-60 years were incredible. These firms are experts at getting people to pay attention and subconsciously take action.

But what I found most interesting about the discussion was at the very end when Stephen Dubner, the Freakonomics podcast host, asked Sutherland a personal question. For some background, here’s Sutherland’s Twitter bio:

imageDubner asked Sutherland why, if he is a foremost expert in changing people’s behavior, he is still a self-proclaimed, “fat bloke?” Why hasn’t he changed his own behavior and lost weight? Sutherland was a good sport and joked, “The pathetic defense, which isn’t really true, is that I’m a kind of method copywriter that to actually tackle the growing obesity problem I have to experience obesity myself.”

I find the psychology of behavioral change to be fascinating. The Sutherland story reminded me of a passage from one of my favorite behavioral investing books, The Little Book of Behavioral Investing: How to Not Be Your Own Worst Enemy, by James Montier. In the book’s conclusion, after going over nearly every investor blind spot and cognitive bias you can imagine, Montier made an admission:

It is confession time. As anyone who knows me can attest, I am overweight (although I prefer to think of myself as simply too short for my weight). In fact, according to the body mass index which compares height to weight (designed by size fascists, I’m sure) I am on the borderline between overweight and obese.

I know how to correct this problem. I should simply eat less. However, I find this incredibly hard to actually do. So despite the fact I know how to change, I don’t change, so my knowledge doesn’t translate into better behavior. Rather I file the information in the category of “things I know and choose to ignore.”

I don’t know if these stories should make ordinary people who aren’t experts in the field of psychology feel better or worse about their ability to make changes in their own behavior. I find it interesting how people can be so disciplined in one area of their life, but undisciplined in others. But it’s not so uncommon. I know plenty of people that are in excellent health, eat right and workout religiously who are terrible with their spending habits. On the other hand, I know others who are diligent savers and conscientious spenders but cannot for the life of them bring themselves to go to the gym or change their diet.

Everyone has their personal kryptonite. Knowledge alone can’t change your behavior, even if you are an expert in the field of behavioral psychology. This fact should either give everyone else hope or it proves that we’re all doomed.

Sources:
The Little Book of Behavioral Investing
The Maddest Men of All (Freakonomics Podcast)

Further Reading:
Losing Weight, Saving and Decision Fatigue
Why Will Power Alone Isn’t Enough to Change Your Behavior
James Montier’s Laws on Investing

 

This content, which contains security-related opinions and/or information, is provided for informational purposes only and should not be relied upon in any manner as professional advice, or an endorsement of any practices, products or services. There can be no guarantees or assurances that the views expressed here will be applicable for any particular facts or circumstances, and should not be relied upon in any manner. You should consult your own advisers as to legal, business, tax, and other related matters concerning any investment.

The commentary in this “post” (including any related blog, podcasts, videos, and social media) reflects the personal opinions, viewpoints, and analyses of the Ritholtz Wealth Management employees providing such comments, and should not be regarded the views of Ritholtz Wealth Management LLC. or its respective affiliates or as a description of advisory services provided by Ritholtz Wealth Management or performance returns of any Ritholtz Wealth Management Investments client.

References to any securities or digital assets, or performance data, are for illustrative purposes only and do not constitute an investment recommendation or offer to provide investment advisory services. Charts and graphs provided within are for informational purposes solely and should not be relied upon when making any investment decision. Past performance is not indicative of future results. The content speaks only as of the date indicated. Any projections, estimates, forecasts, targets, prospects, and/or opinions expressed in these materials are subject to change without notice and may differ or be contrary to opinions expressed by others.

The Compound Media, Inc., an affiliate of Ritholtz Wealth Management, receives payment from various entities for advertisements in affiliated podcasts, blogs and emails. Inclusion of such advertisements does not constitute or imply endorsement, sponsorship or recommendation thereof, or any affiliation therewith, by the Content Creator or by Ritholtz Wealth Management or any of its employees. Investments in securities involve the risk of loss. For additional advertisement disclaimers see here: https://www.ritholtzwealth.com/advertising-disclaimers

Please see disclosures here.

What's been said:

Discussions found on the web
  1. Arushi commented on Mar 09

    Have you read the book called Mindwise by Nicholas Epley; I think it beautifully explains why we wouldn’t make any efforts when we already know what needs to be done!

    • Ben commented on Mar 09

      I have not. Thanks for the recommendation. I’ll add it to my reading list.