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The Brainy Business | Understanding the Psychology of Why People Buy | Behavioral Economics

Mar 13, 2020

Coronavirus (or COVID-19) is everywhere on the news, and everyone's talking about it. The statistics and status of outbreaks are changing rapidly, and there is uncertainty around the virus. I can't answer all of the questions surrounding this issue…(no one can at this point) but I  hope this episode will help you understand a little bit more about how the human brain responds to pandemics. I'm going to talk about how the way our brains work affects our reactions in situations like this. 

We'll start with an example of framing. What do you think of when you hear a “state of emergency” is declared? I live in Washington where we had the first coronavirus death and the first state of emergency declared in the US. California is the second state to have declared a state of emergency. “State of emergency” is a name that doesn’t help contain public fear. I understand why it's called this and why it's important to declare it…but…talk about a framing issue. 

I also talk about the focusing illusion and how focusing on something makes it seem more significant. I'll cover several other concepts that apply to what goes through our minds in times of uncertainty, danger, fear, and panic. I'll also cover opportunities to make the most of things and lots and lots of informative links to help you educate yourself about the current situation. 

It is important to note that the information about coronavirus specifically is changing rapidly – what I put in my notes and record today will not be accurate by the time this goes live on March 13 and after. Also, there is no judgment or criticism of choices any person or country or entity has made. The intention of this episode is to explain how our brains are wired to work during times of uncertainty, like the coronavirus pandemic. 

Show Notes:

  • [02:54] I've been reading a lot about coronavirus lately, and it's a big deal. I live in Washington state where we had the first recorded coronavirus death in the US.
  • [03:32] Declaring a state of emergency is definitely a framing issue. When the brain hears this, it doesn't take it lightly. It wonders what the emergency means and creates more panic than is helpful.
  • [03:58] The human brain has a lot of capacity to process information: when given something new and unknown it will run rampant.
  • [04:15] Our brains will over analyze and freak out a little bit. Focusing on something will make it feel more important or significant. This is the focusing illusion.
  • [04:36] Our counterfactual and prefactual thinking will also ramp up and go into overdrive.
  • [04:59] A lack of control is a breeding ground for fear and a brain bonanza.
  • [05:19] New or unknown things are scary, because we can't categorize them using the concept of relativity. We have nothing to compare it to.
  • [06:17] Probability neglect is where we drastically overestimate our own personal risk in a situation.
  • [07:21] We also have a zero risk bias where we would rather eliminate all the risk we can.
  • [08:37] Our inability to properly understand probabilities and aversion to risk AND need for control AND penchant for the status quo all combine in the worst possible way when we are confronted with an unknown, highly contagious disease.
  • [09:05] Availability bias is when our brains believe what we hear most often to be true.
  • [10:47] I want to make sure everyone knows that I know we are talking about real humans – each of those numbers represents a person: mother, father, sister, brother, friend. I do not take this lightly as I share the details throughout the episode.
  • [13:20] Why don't we hear about (or get as scared by) the flu-related deaths that happen every year? It's because we've all had the flu, and it's a known entity. 
  • [14:02] Our availability bias says that flu is annoying, but it's not that big of a deal.
  • [14:37] The recommendations to stop the threat of coronavirus are the exact same recommendations to stop influenza.
  • [15:18] Availability bias is a huge culprit in the reaction to the coronavirus. The focus is on the scary stuff.
  • [16:32] The unknown variables of the coronavirus are what make it really scary to the brain.
  • [17:47] We need to maintain these better habits that will keep us healthier and happier well into the future.
  • [18:02] Why is it so difficult to change habits? We are used to habits. We have subconscious rules stuck in our brain. 
  • [20:30] Changing habits takes diligence at the beginning, and continued effort to maintain. Conscious processing can only do so much work at the same time. 
  • [21:44] Before you react, stop and ask if your behavior is rational or if you need this. Take a moment to breathe and focus.
  • [22:36] One other problem we have when it comes to changing behavior, is our brain’s natural risk thermostat. Essentially, when we do one thing good, we feel justified slacking on something else.
  • [23:52] If we can all do only one thing well to fight the spread of viruses, because that one thing has a bunch of hidden steps, we should be focusing on the one thing that is proven to be most effective.
  • [24:20] No one wants to be diagnosed with coronavirus. The mentality of staying home and not getting tested for fear of what others will think is a combination of herding and an ostrich or head in the sand type of response.
  • [26:11] If people don't self-quarantine or get tested when they get sick, there will be more outbreaks. It's our brains natural reaction to avoid risk, but it's best to get tested.
  • [27:47] One person making a rash and extreme decision can cause a huge chain reaction that is difficult to stop.
  • [30:13] When we feel a lack of control, of uncertainty, like we do when a novel virus is spreading around the world, we get scared and the brain looks for something to do and control.
  • [31:29] This is an opportunity to revisit the way you have always done things.
  • [32:59] What can you be doing today, while people aren’t traveling and the status quo is already disrupted, to look at your offering and find opportunities to make your company better?


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