Sentient Insight: the business blog for consumer psychology and consumer marketing

With the unemployment rate approximately ten percent, companies are forcing workers to take unpaid time off—a furlough. Having employees take vacation without pay allows the company to wait out the storm. Essentially, costs are cut while the number of employees remains the same—in a way. According to the U.S. Department of Labor Statistics, 2.3 million individuals above the age of 16 who were previously full time workers have been forced to take part time positions (Ortiz). Companies such as British Airways are asking workers to take “voluntary” unpaid time off, while other businesses have announced mandatory furloughs.

Usain Bolt is unequivocally the fastest man on the planet. In fact, he is the fastest man in the recorded history of the planet. At the track and field world championships this week in Berlin, the Jamaican sprinter shattered his own world records in the 100 meter and 200 meter dash pushing the sport to new heights with previously unconscionable times. 9.58 seconds in the 100 meters. 9.58. For track and field enthuisiasts that number is “insane.” 9.58? I can remember when breaking 10 seconds in the 100 was a feat. And 19.19 seconds in the 200 meters? Insane.

Society revolves around an endless parade of enviable goods—Rolex watches, Prada handbags, cars flaunting the Ferrari logo, and artwork by Rembrandt, Monet, or Warhol. After depositing a paycheck, we race to the shopping mall to snatch up the latest and greatest items, never pausing to consider the true reasons behind our “need” for these products. So why do we buy? Geoffrey Miller, an evolutionary psychologist from the University of New Mexico, dives headfirst into this question in his new book Spent: Sex, Evolution, and Consumer Behavior. He provides a comprehensive account of how our purchases function primarily as signals that advertise our underlying personality traits, and only secondarily as objects with material value.

Richard Thaler and Cass Sunstein wrote Nudge with optimism and dedication as primary tools while arguing for ways which we could improve our world. And there’s no government policy shift necessary – we only need to pay closer consideration to how we present decisions to individuals.

The advent of the digital age and the ease of data storage and collection have been a true blessing for the market research industry. It’s easier than ever to get a glimpse of what consumers are doing simply by looking at web traffic statistics for different sites. The success of an online ad is at least partly visible in the number of clicks it gets. And to answer questions that cannot be resolved by direct observation, online survey distribution has allowed for cheaper and faster data collection than ever before.

Dan Ariely, the James B. Duke Professor of Behavioral Economics at Duke University and author of Predictably Irrational, recently published an insightful article in the Harvard Business Review titled “The End of Rational Economics.” Following the global economic crisis, it has become painfully apparent that individuals do not always make rational decisions and the invisible hand is in fact fallible.

Imagine the following scenario for a moment. You have been dating Brian for some time. He has been with you through thick and thin; your strong emotional connection can weather any storm. He is completely loyal and faithful to you. However, one day, you realize that his wealthy friend, Ryan, is pretty darn attractive. You change your look and attitude in order to more successfully woo Ryan with the aim of keeping Brian on the side. You win Ryan. Yet, by sending mixed messages, you confuse and lose Brian, thereby losing that emotional connection and loyalty. What is the lesson of this story?