I have been an avid reader of behavioural science (finance, economics, psychology etc.). Some of my favourite writers are Daniel Kahneman, Dan Ariely, Dan Gilbert, Jonah Lehrer, James Montier, Richard Thaler, Robert Schiller, William Bernstein, Geoff Colvin, Chip & Dan Heath. These books make great reading and could be of great help if one could use these. Here are a few things that I have tried and are working well for me.
Food and wine:
Research suggests that, when we are hungry we tend to order more than what we can possibly eat.
We have started to order the main course only after finishing the starters. We no longer carry food back in doggie bags (most of the time!).
Research says that our estimate of the amount of alcohol we are going to consume changes after consuming a bit. So it is best to decide in advance how much one plans to consume and shut out the option of getting more.
When I pour myself a drink, I do it once and don’t go for any refills. This has helped me be more disciplined. I still have to figure out handling this when I go out for a couple of drinks with friends.
Research says that, at restaurants people eat more depending on how many people they are dining with. People eating alone eat least. People eating with one other person eat 35 percent more than they do at home. People dining in a party of four eat 75 percent more, and people dining with seven or more eat 96 percent more.
I try and be more conscious when I am eating in a group. I also tell my friends that I am trying to stick to my diet so that I have to live up to my words (public commitment etc).
Research suggests that – People usually forget 90 percent of what they learn in a class within 30 days. Majority of this forgetting occurs within the first few hours after class but one could increase the life span of a memory simply by repeating the information in timed intervals. The more repetition cycles a given memory experienced, the more likely it was to persist in the mind.
I teach valuation is some B-schools, and I also help my daughter with her studies. In the B-school, I start a class with a formal quiz on the contents of the previous class, thus encouraging the students to revise. I also start the class with a quick summary of the previous classes and a discussion of the quiz – using these as opportunities to review topics that were covered. I am trying to make it a habit for my daughter to revise the topics covered in her school every evening.
Research suggests that when you praise a student for working hard, it reinforces his identity as an industrious soul. A student in this frame of mind is willing to take on challenging tasks, and to view mistakes as part of the working process. When you praise a student for being smart, on the other hand, it conveys the impression that achievement is an inborn trait. Students in that frame of mind want to continue to appear smart. They’re less likely to try challenging things because they don’t want to make mistakes and appear stupid.
This has helped us be more conscious of feedback we give our daughter.
Research suggests that, losses cause twice the anguish compared to pleasure felt by a similar gain – this is called loss aversion. Individual investors can avoid the pain of loss aversion, achieving the emotional benefits, by reducing the frequency with which they check how well their investments are doing. Closely following daily fluctuations is a losing proposition, because the pain of the frequent small losses exceeds the pleasure of the equally frequent small gains. Deliberate avoidance of exposure to short-term outcomes improves the quality of both decisions and outcomes.
I don’t look daily fluctuations and review the portfolio performance on a monthly basis only. This has helped me take a longer term view of the investments. At work, we send quarterly performance reports to our clients so that they are also looking at investments with a longer time horizon.
Life in general
Research suggests that we derive a great deal of enjoyment from any new form of positive experience. However, when we have the same wonderful experience time and again and we quickly become familiar with the new source of joy and so cease to derive anywhere near as much pleasure from it. This is called hedonistic habituation. Intentional changes tend to avoid hedonistic habituation by creating a constantly changing psychological landscape.
I have been trying to pick up a new hobby – my plan is to pick up a new hobby every 3 years and try to do reasonably well in it. I have started creating mini projects every month to have a fresh perspective of the things at work and I am consciously trying to increase my social circle. Writing regular blogs is also one of my mini projects.