Beware of socks and tights by Crawford Hollingworth
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Crawford Hollingworth founder of The Behavioural Architects, discusses` the availability bias’.
Which would you say was the more dangerous? Putting on your socks or plugging in your toaster?
Incredibly, around 10,000 Brits a year are injured in incidents involving socks and tights in their homes. Yet there are only around 3,000 incidents involving electrocution in the home each year.[1]
And in the US, only 100 people on average, are abducted by a stranger every year, half of whom are eventually murdered, but it is something that can give us all nightmares. In fact, the statistical probability of being killed through abduction is one in a million…. you are more likely to die falling over or from getting flu!
These are just a few examples of what is called the availability bias, one of our cognitive biases which can distort our memory and consequent conclusions. We predict the probability of an event based on how easily it can be brought to mind. Think of natural disasters and people will probably name tsunamis and earthquakes as top of their list, and the disaster involving the unfortunate Italian cruise liner Costa Concordia is likely to be making people think twice about going on a cruise!
Availability bias in insurance
The availability bias consequently heavily influences whether and how we insure things. People will only take out insurance for events which seem likely because they can visualise them, remember them or know of them happening to their friends. Otherwise, they often behave optimistically, as if these events “will not happen to me.”
This is why people often only take out insurance for an event after it has happened – they now have a vivid (and recent) memory of it occurring. It also follows that as time goes on and the memory of the event fades, people may let their policy lapse.[2]
So insurance against “named events” is sometimes more attractive than general insurance – because it is easier to imagine a bad event and to factor in the emotional attachment to the object being insured.
One famous study which illustrated this took a group consisting mostly of university-hospital employees who received one of three versions of a questionnaire related to purchasing a flight insurance policy. One third of the respondents were asked how much they would pay for $100,000 worth of life insurance in case of death from a plane crash due to any reason. Another group was asked how much they would pay for the same amount of insurance if death was due to any act of terrorism and a third group was asked how much they would pay if they were covered from death due to any non-terrorism related mechanical failure. The mean premiums paid by the second and third groups were $14.12 and $10.31 respectively while those who were covered for any reason had a mean premium of $12.03. In other words, the sum of the premiums for the two named events was more than twice the amount subjects were willing to pay for any type of plane crash.[3]
Availability bias can also be a reason why selling insurance over the internet is sometimes difficult. Sometimes it is difficult to get across the vividness of an event and its likelihood unless multimedia is employed on the site.
Incredibly, availability bias can also be a reason why people cancel their policies – if they have not been ill/flooded for a number of years etc they may believe the probability of a bad event has been reduced![4]
Less than 100 people typically die in commercial airline crashes in the US each year, while over 40,000 are killed in automobile accidents. Yet we all fear ‘dread risks’ – low probability, high consequence events – such as plane crashes and often avoid them – which, as behavioural expert Gerd Gigerenzer proved, can come at a cost. Gigerenzer, a psychologist at the Max Planck Institute in Berlin looked at traffic accident data in the months following the 9/11 attacks and estimates that the year after the 9-11 attacks, over 1,500 people died in car accidents because they chose to drive rather than fly.
“I only believe in global warming when it’s hot!”
Unbelievable as it seems, researchers have found that the statement above is true! So, why do we only believe in global warming when it’s hot? A recent study[5] has found that those who thought the current day was warmer than usual were more likely to believe in and feel concern about global warming than those who thought the day was unusually cold. This helps to explain why public belief in global warming can fluctuate, since people can base their thinking around the day’s temperature and is a great example of confirmation bias and availability bias – global warming seems more salient when temperatures are not the norm.
The research team surveyed around 1,200 people in the US and Australia in three different studies in order to determine their opinions about global warming and whether the temperature on the day of the study was warmer or cooler than usual. Respondents who thought the day was warmer than usual were more concerned about global warming than respondents who thought the day was colder than usual.
“Global warming is so complex, it appears some people are ready to be persuaded by whether their own day is warmer or cooler than usual, rather than think about whether the entire world is becoming warmer or cooler,” says lead author Ye Li. Eric Johnson comments “It is striking that society has spent so much money, time and effort educating people about this issue, yet people are still so easily influenced. It’s like assessing how the economy is doing by looking at the change in your pocket. It’s relevant, but not that relevant.”
“People are looking for evidence of any kind that validates or reinforces or justifies what they already believe.” said Anthony Leiserowitz, the director of the Project on Climate Change Communication at Yale University’s School of Forestry and Environmental Studies. [6]
So what do you all want to believe today and how much of that might just be influenced by the availability bias in your world!
[1] Source: http://bit.ly/yiqPGO
[2] Kunreuther et al., ‘A behavioral model of the adoption of protective activities’ , Journal of Economic Behavior and Organization, Volume 6, Issue 1, March 1985, Pages 1–15
[3] Johnson et al., ‘Framing, probability distortions, and insurance decisions’ 1993
[4] Kunreuther et al., 1985
[5] The study was carried out by Columbia Business School’s Professor Eric Johnson, co-director of the Center for Decision Sciences at Columbia Business School, Ye Li, a postdoctoral researcher at the Center for Decision Sciences, and Lisa Zaval, a Columbia graduate student in psychology.
[6] http://bit.ly/kBGanY
Posted: February 21st, 2012 | Author: Leah.Latimer | Filed under: Makes You Think | Tags: behavioural commitment, behavioural economics, Bias aversion, cognitive biases, Commitment mechanisms, consumer spending, crawford hollingworth, loss aversion, Marketing Blog, Marketing Society blog, the availability bias, the behavioural architects | Leave a Comment »
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