Important futilities

Sometimes what we do seems to be unduly influenced by what appears to be utterly futile. Is that as unwise as it seems?

Last Saturday was Luka’s 6th birthday. We had some balloons to decorate the house, and for just £1 my wife had bought a self-assembly garland with cardboard flags spelling “Happy Birthday”. But when we opened the pack, all it contained was just enough letters to make the word “pitday”. Return it to the shop and ask for a replacement?

The item was clearly not suitable for purpose, but the idea of returning a faulty product bought for the futile sum of £1 felt, well, a bit petty. What if we made up the missing flags ourselves with cardboard, markers, and a pair of scissors? That sounded even crazier, so I set off to the nearby shop anyway to purchase another, hopefully complete, garland, with no mention of the faulty one. It would surely look better than anything we’d concoct ourselves, and well worth the cost of just a pound – a no brainer, really.

Not all futilities are perceived equal

Earlier that morning I had popped into the local fishmongers on my way back from the baker’s shop in the next town (they sell the kind of bread for which I am quite happy to drive the extra mile). Now, the fishmonger’s street is one where you need to pay to park, as a friendly traffic warden reminded me a couple of months ago. I had always known this, of course, but that day I had, as always before, betted that it would be exceedingly unlikely for a traffic warden to turn up in the five minutes it’d take me to collect the order I’d phoned in earlier. I was, very much, the rational criminal that the late, great economist Gary Becker describes in Crime and Punishment.

Thankfully, the traffic warden on duty that day was a benevolent man, who advised me to put just 5 or 10 pence (about 4-8 euro- or dollar cents) in the meter and avoid a pricey fine. At 5p for three minutes’ worth of parking, it makes sense, even for a rational criminal. Our local fishmonger’s does not only supply excellent seafood, they are also very efficient at serving customers, so since then a 10p parking fee has been the norm for me. If I see there is nobody in the shop before parking up, I can even get away with 5p. (Reader, if you are wondering why on Earth I am going on about such a futility, remember the title. Also, we are not quite done yet.)

What has this got to do with the price of fish? (image: DCRC-UWE/Flickr CC BY-NC 2.0)

Back to last Saturday. I noticed the smallest coin I had on me was 20 pence (small change is scarce these days: since the start of the pandemic everyone, me included, is paying contactless). I could not possibly contemplate paying twice as much as normal – what a waste! I was ready to start the car and drive home, to come back later on foot, when – thankfully – my more rational self woke up.

“Imagine”, it argued, “that someone offers you 1 penny a minute for wasting 20 minutes of your time (roughly the time it takes to walk to the fishmonger’s and back). Would you do it?” Even on a Saturday morning, or perhaps especially on a Saturday morning, that felt like a gross underpayment for my precious time, so no, I wouldn’t do it. “So, it must be worth at least 20p to avoid wasting 20 minutes then, yes?”, my rational self suggested – but I had already got out of the car with my 20p coin, on my way to feed the parking meter.

These two anecdotes illustrate two apparently rather different perspectives on relatively insignificant amounts of money. In the first one, a materialist course of action (getting a refund for a faulty purchase) was rejected for one that took into account emotional motives (not appearing miserly). In the second one the opposite happened: the initial emotional response (I am not paying twice the amount needed!) was displaced by a more reasoned one (make a good time/money trade-off). How can we (or at least I) be so inconsistent?

Ruled by rules and emotions

Perhaps it is not so inconsistent after all. The idea that we act either rationally, or irrationally – perpetuated by a simplistic interpretation of Daniel Kahneman’s bestseller Thinking, Fast and Slow – does not fit reality. Many of our decisions are driven by diverse motives, even if they are made with little or no deliberate, explicit reasoning.

All but the most trivial trade-offs are complex, and would require comparing not just apples with proverbial pears, but with cherries, bananas, celery, yoghurt and washing up liquid. There is no way we can make such comparisons in an consistently analytical manner. Instead, we mainly use rules of thumb that we are taught, that we learn, or that we develop ourselves – sometimes called heuristics.

The first anecdote features at least two such rules. One is “if you are sold a piece of junk, ask for redress”, the other is “if you demand that someone pays you a trifling amount of money, even if it is legitimately owed, you come across as a miser”. Arguably there is even a third rule at play: “if it makes little difference either way, take the course of least resistance/cost/inconvenience etc.”.

In the second anecdote, “If you have to pay more for something than it is worth, walk away” or “Don’t pay more than you need to” would be a good stab at the first one. A second rule might be something like “If you are about to act impulsively, consider the consequences first”.

Many more rules could be playing a role here, for example, “Do what you have always done in situations like this”, “Do what others would do”, “Don’t waste time”, or “Ignore small amounts”. Naturally, your rules may (and probably will) be different from mine – and even if some are the same, we will give different weights to them.

No decision without emotion (image: Wayhomestudio/Freepik)

But some of these simple rules inevitably contradict each other, like “demand a refund” and “don’t come across as a miser” in the first situation. To solve that kind of conflict and get to a decision, our emotions get involved. Antonio Damasio, a Portuguese-American neuroscientist, established that superior intellect is not sufficient to make good decisions. After surgery to remove a brain tumour, one of his patients, pseudonymously named Elliot, had no apparent impairment to his cognitive abilities (his IQ continued to be in the top-3%). Nevertheless, he appeared incapable of making the simplest decisions, such as how to categorize his documents at work – by date, by size, by topic? What Elliot lacked was not intelligence, but emotion: the tumour and its removal had led to permanent damage to his frontal lobe – a part of the brain that is highly important in our emotional processing. Damasio realized that, without emotion, Elliot was no longer able to determine which option was better (or worse) when faced with a choice, and had become profoundly indecisive.

Each rule triggers either positive or negative emotions to some degree, and our amazing brain manages to integrate all this and come up with the option that feels the best. In one situation, that can be the more materialist option, in another it might be the less materialist one. Homo economicus fans may well consider the former as the superior solution in all circumstances, but ultimately it is our emotions decide how important futilities are to us.

(I have since decided to adopt another mental accounting rule: “treat small amounts as part of a larger one”. When I consider the parking fee as part of the price I pay for the fish – 10 pence is less than 1% of my typical order – it gets lost in the noise. Problem solved!)

Epilogue

And sometimes the right decision unexpectedly turns out to be very much the right decision. As I tried to verify that the “Happy Birthday” garlands in the shop actually contained all the necessary flags, I began to suspect there was in fact nothing wrong with the one at home. I did buy a “replacement”, but as I got back, a quick inspection revealed that my hypothesis had been correct. Had I tried to return the original garland, coming across as a cheapskate would have been the least of my worries as the shop assistant pulled apart the flags that were stuck together to show me that the pack was indeed complete. I would have saved myself £1, but at what emotional cost…

About koenfucius

Wisdom or koenfusion? Maybe the difference is not that big.
This entry was posted in Behavioural economics, Cognitive biases and fallacies, Economics, Emotions, Psychology and tagged . Bookmark the permalink.

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