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Archive for June 2009

Behavioral Economics – The ruse for government intervention?

There has been a lot of talk lately about behavioral economics – BE. Specifically in regards to the Obama Administrations economic stimulus and overall economic plans. For those who are unfamiliar with behavioral economics, it is simply this:

Behavioral economics and behavioral finance are closely related fields that have evolved to be a separate branch of economic and financial analysis which applies scientific research on human and social, cognitive and emotional factors to better understand economic decisions by consumers, borrowers, investors, and how they affect market prices, returns and the allocation of resources.

The field is primarily concerned with the bounds of rationality (selfishness, self-control) of economic agents. Behavioral models typically integrate insights from psychology with neo-classical economic theory. Behavioral Finance has become the theoretical basis for technical analysis. Behavioral analysts are mostly concerned with the effects of market decisions, but also those of public choice, another source of economic decisions with some similar biases towards promoting self-interest.

Why is this interesting in today’s economy and the current planning of the Obama Administration? Well, from my perspective I believe in behavioral economics as a solid method or predictive economic analysis. Unlike typical clinical analysis based on static data, the behavioral economic model takes in the human factor. After all, we are all humans and have a brain and emotions. As far as I can tell. So this model makes sense for the real world versus just a statistical approach. However, like all good things, it only takes a few bad apples to spoil the lot. Enter the Obama Administration.

It has been recently reported and discussed by the Administration that it’s crack financial team has been exploring ways in which to apply BE methodology. Ok, so far so good. But the intent of the Administration is to use this methodology to profile the populace based on the data and direct who, what, when, where and how the populace will be served through government services and socialist policies. Essentially, use this data to rule. Now, using all sorts or predictive modeling, analytics, etc are all tools in which policy makers use to make decisions. The difference is that prior, the decision making was on probability, statistics, analysis of static data. Now the move to BE is smart, combined with the static economic models, this should theoretical provide a better insight into the populace. But when BE is used to justify the end results for profiling the popular, it becomes a very slippery slope. And, like all things can be used to justify just about anything. Including validating your actions and point of view.

Finally, using BE in the manner that the Administration is exploring is not being used for true economic behavioral modeling in conjunction with other models to create a solid data set, it is being used to justify wealth redistribution, spending policy, taxation, benefiting one group over another, and more. This from the mouth of the Administration itself.

Its interesting how when certain elements in the U.S. Government, political parties and even friends and allies lambasted the U.S. for “manipulating” or “misleading” the “people” on intelligence data leading up to Operation Enduring Freedom (Invasion of Iraq), but when data, intelligence, methodologies i.e. BE, and statistics are being specifically manipulated to present a specific picture in order to enact and execute the greatest spending spree in the entire history of the United States without any quantifiable data to support the beneficial effects it was intended to provide. Worse, the data that is being put out, is being proven to be false and way short of the mark.

What do you think?


Written by David Frederick

June 10, 2009 at 5:32 PM

Pavlovian Hell

I have come to the personal conclusion that my life and that of many other “connected” people, by which I mean cell phones, Black Berrys, iPhones, lap tops, desk tops, IM, etc. you get the gist, are suffering from something I call Pavlovian Hell – PVH.

For those of you who don’t remember learning about Ivan Pavlov in high school or early colleage, let me briefly refresh your memory. Classical conditioning (also Pavlovian or respondent conditioning) is a form of associative learning that was first demonstrated by Ivan Pavlov.[1] The typical procedure for inducing classical conditioning involves presentations of a neutral stimulus along with a stimulus of some significance. The neutral stimulus could be any event that does not result in an overt behavioral response from the organism under investigation. Pavlov referred to this as a conditioned stimulus (CS). Conversely, presentation of the significant stimulus necessarily evokes an innate, often reflexive, response. Pavlov called these the unconditioned stimulus (US) and unconditioned response (UR), respectively. If the CS and the US are repeatedly paired, eventually the two stimuli become associated and the organism begins to produce a behavioral response to the CS. Pavlov called this the conditioned response (CR).

Make sense? Remember? Good. Now here is where the hell part comes in. I have noticed that its not just me, but everyone, has a conditioned response that if their Black Berry or iPhone, Cell Phone i.e. digital device beeps, vibrates, squeaks or even utters the tiniest of sounds, people instantly grab their “device” (conditioned response) and peers at it with a look of complex bliss, expectation, disappointment or elation. Which is subsequently followed immediately by one of two secondary conditioned responses. 1: A fury of rapid finger manipulations to immediately reply or 2: a re holstering of their device. Mind you this all happens within a breath of a nano-second or less.

So what is it that illicits this condition response? Are we simply no better off than Pavlov’s dogs? Is it the intoxicating simple beep, buzz, super grooving ring tone? Is it the deep desire to be “connected” to friends, colleagues and family? Remember, its not always a pleasant message or call? Yet, we still grab for our device as if our very life depends on it. And what about those nay sayers who tell us, they put theirs on silent or vibrate so as not to be distracted? They have complete control of their digital world. Hogwash!

Don’t believe me? Watch the next time one of these masters of the universe has their device go off. Their eye’s will dart to the device, there muscles will strain with imposed self control, they will look with a fleeting glimmer to see who, what, why, and when and then pretend like the whole event didn’t happen. In most cases, if you were not an astute viewer of behavior, you would have thought nothing happened……..except for that little bead of sweat in the corner of their forehead and the deep breadth. But its not over, when the timing is right, still imposing self control, this master will go to the bathroom, or hall way and IMMEDIATELY look to see what was so important! And after this epic event, this person will summon all of the grammatical and language prose they poses to reply with profound word’s of wisdom, this is where you gasp in anticipation, the profound words……….. OMG! For those of you who don’t understand text, that means Oh My God! The circle of communication begins anew.

But hell is not a lonely place. There are many of us stuck here. Just watch on your next flight when within 4.2 nano-seconds precisely after the aircraft has touched down, the smoke not even clearing from the burnt rubber of the touch down landing, 99.922479% of every passenger and flight attendant has whipped open their device and has connected to the world again. As if they were locked in a time warp or stasis during the flight. And then it happens. A cacophony of beeps, buzzes, and ring tones drowns out any sound of humanity, technical engineering or connecting flights for that matter. The vicious cycle of Pavlovian Hell begins anew. What is so important?! Who do you have to talk to that very nano-second of touch down?

I wish I could say that I am much different. But I am not. I too suffer in the burning depths a Pavlovian Hell. However, unlike my other brethren in the human world, I know I am here. I have even take steps to mitigate this effect. I have chosen soothing sounds. A soft gong to alert me to my email and more. But alas, to no avail do they offer relief. They are more like the bells at dinner time for Pavlov’s dogs than an oasis of soothing sounds.

So what is one to do? Well, those from the radical camp just shut theirs off and check their device at certain time intervals. But don’t be fooled. They to crave the message, they just have more self control then the rest of us mortals. Then there is rest of us, who during church, at the office, driving, at your child’s event or class play, in the cab, on the train, on the plane, at the beach, on vacation and even at the doctors, can not help themselves in resisting the conditioned response. Those who say they can are heretics and liars. I know.

My only advice for escaping this world of digital zombies is to follow this exactly. Don’t skip a step or you will be instantly transported back to PV hell.

1: Put your device on vibrate or silence. Preferably vibrate. Sometimes you really need to see who is calling you like your going in to labor wife, or sick child or sometimes, in extreme cases, your boss.

2: Putting your phone on vibrate has enormous benefits for you and society. For you, when your out of your office, or desk at home, or outside, you cant hear it and thus suffer the attack of PVH (Pavlovian Hell). Yes, you may still hear the buzz, but that’s a maybe. Secondly, you would spare all of us from sharing in your PVH AND spare us the annoyance of your cheesy ring tone or obnoxious ring and subsequent loud conversation or cataleptic fit inducing fingers of fury typing.

3: When your device does notify you, take a deep breadth and wait at least 10 seconds before grabbing for it.

4: Finally, chances are, who ever or what ever is pinging you is not an emergency. Do yourself the favor of simply ignore it. Responsibly of course. But you will be doing yourself a huge favor. Less stress and frantic behavior, it will appear as though you are really busy and working hard, you contribute to the silence and harmony on airplanes, restaurants, school plays, trains, cabs, etc. and ultimately, you will appear to, and maybe even in fact, value your neighbors, children’s, spouse or significant others time. Best of all, you will be the master of your own world and not some conditioned responding pooch.

PVH is not terminal and if you practice the simple awareness exercises herein, you may, may, just be delivered from the gripping bonds of PVH.


Written by David Frederick

June 8, 2009 at 3:40 PM