Using ‘psycho-logic’ to get people to give up gold for ironApril 10, 2021 2023-01-04 18:59
Using ‘psycho-logic’ to get people to give up gold for iron
Using ‘psycho-logic’ to get people to give up gold for iron
It’s time for my content recommendations for Apr-21: a book, a podcast, articles and a couple of videos.
Let’s get started
Alchemy is the ancient and long-discredited art of converting base metals to gold. Surely it is not possible, you’d think.
Ah, it may not be physically possible. But, as illustrated so amply and vividly in this book by Rory Sutherland (the Vice-Chairman of the Ogilvy and Mather advertising group), it is possible ‘psycho-logically’.
‘Psycho-logical’ decisions, according to Rory are those which do not seem ‘rational’ or ‘logical’ but work perfectly well for most humans.
For instance, will you ever exchange your gold ornaments for similar ones made of iron? Willingly?
Here’s a fascinating story where that happened:
In the 19th century, the king of Prussia needed money to fund the war effort against France. To do so, “Princess Marianne appealed in 1813 to all wealthy and aristocratic women there to swap their gold ornaments for base metal… In return, they were given iron replicas of the gold items of jewellery they had donated, stamped with the words ‘Gold gab ich für Eisen’, (‘I gave gold for iron’). At social events thereafter, wearing and displaying the iron replica jewellery and ornaments became a far better indication of status than wearing gold itself. Gold jewellery merely proved that your family was rich, while iron jewellery proved that your family was not only rich but also generous and patriotic.”
“Thinking what is gold jewellery is actually for reveals it to be an extremely wasteful way of signalling status. But it was perfectly possible, with the right psychological ingredients, to allow iron to do this job just as well. Psychology 1, Chemistry 0.”
Filled with utterly striking stories and examples like above, ‘Alchemy’ is an almighty takedown of humankind’s over-dependence on “logic” and rational thinking. It’s a book that is required reading for all of us ‘left-brain types’.
What really helps is Rory’s writing style – conversational, snarky and full of British wit – which keeps you engaged throughout.
Here are some of the storytelling techniques Rory uses in crafting this bestseller:
1. Analogies: Rory is a master at analogical thinking. For instance:
- He uses a ton of botanical references and some are hilarious! For instance –“How can the flower, at a distance, convince the bee of the existence of a reward which it cannot verify until it has already exerted time and effort? The answer is that they use ‘advertising and branding’ – they produce distinctive, hard-to-copy scents and large, brightly coloured petals”.
- He then continues: “Why don’t flowers cheat, by devising an alluring advertisement of huge petals, and then delivering no costly nectar? Well, sometimes they do – false advertising is common in orchids, which often seem to be the scam artists of the plant kingdom. At least one orchid species mimics the appearance (and smell) of female insect genitalia; many mimic food sources and some mimic other plants. But this can only work on a small scale – play that trick too often and insects will just learn to avoid you…orchids are the tourist restaurants of the floral world – they rely on people visiting only once so are less worried about ripping off visitors, because they know they are never going to come back anyway.”
- About how bee-hives have an R&D function: “Although they have an efficient way of communicating about the direction of reliable food sources, the waggle dance, a significant proportion of the hive seems to ignore it altogether and journeys off at random. In the short term, the hive would be better off if all bees slavishly followed the waggle dance, and for a time this random behaviour baffled scientists, who wondered why 20 million years of bee evolution had not enforced a greater level of behavioural compliance. However, what they discovered was fascinating: without these rogue bees, the hive would get stuck in what complexity theorists call ‘a local maximum’; they would be so efficient at collecting food from known sources that, once these existing sources of food dried up, they wouldn’t know where to go next and the hive would starve to death. So the rogue bees are, in a sense, the hive’s research and development function, and their inefficiency pays off handsomely when they discover a fresh source of food. It is precisely because they do not concentrate exclusively on short-term efficiency that bees have survived so many million years.”
2. Human stories: Apart from the iron-for-gold story, here are a few more:
- How ‘repositioning’ a course helped in quadrupling the female intake: “In 2006, Maria Klawe, a computer scientist and mathematician, was appointed president of Harvey Mudd College in California. At the time, only 10% of the college’s computer science majors were women. The department devised a plan, aimed at luring in female students and making sure they actually enjoyed their computer science initiation, in the hopes of converting them to majors. A course previously entitled ‘Introduction to programming in Java’ was renamed ‘Creative approaches to problem solving in science and engineering using Python’. The professors further divided the class into groups – Gold for those with no coding experience and Black, for those with some coding experience.” Apart from these, the department also showcased successful women in tech, and got the female students to apply their tech knowledge to solve problems they cared about. Finally, “After the first four-year experiment, the college had quadrupled its female computer science majors in a short space of time, from 10% to 40%. Notice that there were no quotas involved – everything was voluntary”
- How branding helps build trust (something I had written about here) and improves the overall customer experience: “In Eastern Bloc countries under communism; brands were considered un-Marxist, so bread was simply labelled ‘bread’. Customers had no idea who had made it or whom to blame if it arrived full of maggots, and couldn’t avoid that make in future if it did, because all bread packaging looked the same. Unhappy customers had no threat of sanction; happy customers had no prospect of rewarding producers through repeat custom. And so the bread was rubbish.”
3. Thought-provoking insights: The book offers insights on why some actions which seem irrational from the outside, actually make logical sense. For example:
- Why do placebos (like homoeopathy) work: “The psychologist Nicholas Humphrey argues that placebos work by prompting the body to invest more resources in its recovery. He believes that evolution has calibrated our immune system to suit a harsher environment than the current one, so we need to convince our unconscious that the conditions for recovery are especially favourable in order for our immune system to work at full tilt.”
- How we are highly skilled at generating ‘rationalisations’ for our ‘psycho-logic’ behaviour: “Conventional wisdom about human decision-making has always held that our attitudes drive our behaviour, but evidence strongly suggests that the process mostly works in reverse: the behaviours we adopt shape our attitudes. Give people a reason and they may not supply the behaviour; but give people a behaviour and they’ll have no problem supplying the reasons themselves.”
4. Pithy one-liners: The book is filled with them – after all, we are dealing with one of the world’s best copywriters:
- “A flower is just a weed with an advertising budget”
- “Solving problems using rationality is like playing golf with only one club”
One criticism of the book might be that the ideas it discusses aren’t exactly new or pathbreaking. The concepts of human irrationality and biased thinking have been known for a long time since Kahnemann-Tversky, Thaler, Ariely etc.
But where ‘Alchemy’ dazzles is in offering a rich hoard of real-world examples from a wide array of contexts – including many from his own clients.
Just for that – and Rory’s hilarious footnotes – this book is worth a read.
I’ve been listening to podcasts for some time now. Pushkin Industries clearly leads the pack with the enviable roster of Malcolm Gladwell, Michael Lewis and Tim Harford.
I loved Season 1 of Cautionary Tales (by Tim Harford) and had recommended it on this newsletter too.
But, even with my high expectations for Season 2, this episode blew me away.
First of all, it deals with a topic close to my heart – public speaking. (So, technically it’s about improvisation in any performing art, including public speaking … but the two examples Tim cites are those of famous speeches).
But more than the topic, what’s incredible is Tim’s absolutely masterful control of the narrative. Listen to it to observe (and learn) how Tim withholds crucial information and releases it bit-by-nail-biting-bit to the hooked audience.
All he’s doing is following Chris Nolan’s advice (“The only useful definition of narrative is that it’s a controlled release of information. The way in which you release that information is all up to you”)!
Prof. Galloway is a man of many talents. He ‘gets’ such a wide variety of stuff. He gets business, he gets finance and numbers, he gets markets, he gets marketing… plus, plus he’s got a mean voice and is one helluva entertaining podcast host.
But this… this piece by him left me melancholy inside.
I’ve never had a dog or any pet… and yet this heartfelt, vulnerable story by the tough-talking Prof – about his pet which passed away recently – will warm the toughest of hearts.
Incidentally, to appreciate his oeuvre, you should also check out this other piece he wrote on the coming economic boom!
Morgan Housel is a master at finding patterns. In this short, impactful article, he draws some insightful lessons from the madness that was 2020. Here are his three key takeaways:
- Big risks are easy to underestimate because they come from small risks that multiply
- A lot of undue pessimism comes from underestimating how quickly and firmly people adapt
- History is only interesting because nothing is inevitable
Morgan Housel offers a clear point of view built on top of relevant data and evocative examples, backed with crisp writing – he’s the real deal.
James Clear – the bestselling author of Atomic Habits – has a neat strategy for how to become a better public speaker: Use more stories.
He says: “…stories help people remember what matters. Facts and numbers are boring. And, sadly, most people forget your important insights as soon as the talk ends. But stories? People remember stories. And that helps them remember the main point too.”
I found the conversations during the recent ‘ET India Economic Conclave’ quite striking. One of the most clutter-breaking videos was this one by geopolitical strategist, Peter Zeihan.
In his arresting presentation, he outlines the likely consequences of the inevitable American withdrawal from its role as global policeman (especially of the seas).
In the power vacuum that will result, he identifies two strong advantages for India: Demography and Geography… and one major potential stumbling block – our abysmal gender ratios and workforce participation numbers.
If you liked this video, also consider listening to the conversation between the iconic Nassim Nicholas Taleb and the multi-talented Sanjeev Sanyal on India’s Post COVID Opportunity (58:49).
In this atmosphere of Covid-second-wave gloom, these conversations offer much optimism for the future.
That’s it folks: my recommended reads, listens and views for the month.