We are all Homo Illogicus
“Stop being so irrational! Please think before you act! Why do these people act so illogical all the time? Can’t they think?” Ever heard other people say this? Or even said it yourself? I know I have, and I am certain others have said it about me.
It is widely understood that human beings are not infallible creatures of logic. Through the discoveries of Behavioral Economics and Psychology, we have realized that perhaps up to 90% of our decisions are actually made almost fully irrationally. Some authors have even convincingly argued that there is no such thing as “free will” to make decisions. All we can do is use willpower to override decisions that our minds have already made for us. All we have is “free wont”. Maybe we should stop telling people to “make up their minds.” Their minds are already made up for them, but it is their willpower (or the lack thereof) that is blocking their action. We just can’t help being irrational.
Even though we have discovered that we are predictably irrational creatures, most of our social-economic policies are still based on the assumption that people are rational actors. They presume that mankind is Homo Economicus, a species that can carefully weigh its options and make the best possible decision based on the outcome of this analysis. If only that would be true.
The consequences of this persisting myth of the Homo Economicus are often quite sad for those at the receiving end of criticism for their (completely normal) irrational behavior. Poor people who make bad economic decisions are seen as stupid and ignorant: “See? You became poor because you are stupid, and because you are stupid you will stay poor!” In the same vein, stressed people also make a lot of mistakes, making them look more stupid: “No wonder she is stressed. She is stupid so she makes a lot of mistakes!”.
But aren’t we applying inverse logic here?
I am going to argue that it is not stupidity but scarcity (whether lack of money, life options or stress) is what causes people to commit so many mistakes. So what is scarcity? And why does it lead to so much destructive, illogical behavior? Let’s look at it through an Octalysis lens and find out!
Octalysis Core Drive 6: Scarcity & Impatience
Feelings of scarcity occur when we want something that is exclusive or in low supply. That wantful thinking causes more people to fight for that already-scarce resource, even though there may be more abundant alternatives out there. “But of course!”, you might say, “when the supply of an item becomes low, the price goes up. That’s common sense!”
Well, how about the fact that people buy bags with price tags of $900 USD? Or mobile phones that costs $25,000 USD (yes the Vertu mobile phone can set you back for the price of a car…). Is this because there are not enough Louis Vuitton outlets? Is it difficult to get a Vertu phone? Not at all! They are actually very easy to buy. The only reason we want to buy these products is because they are expensive. And the more expensive they are, the more we want them.
Traditional economic pricing models say that demand will go down if prices go up. It looks something like this:
The higher the price the lower the demand and vice versa. Easy right?
But have a look at how the demand curve actually differs from the tradition typical demand and supply picture when we take into account what happens on an individual level:
Now we see that demand decreases when prices go up (in line with traditional economic wisdom), but then actually INCREASES when prices go WAY up!
This is because of scarcity. Because people see that a product is really expensive, we value it more and want more of it. Scientists believe that human beings have evolved to have a keen eye for scarce things. In the old days, high value things like fructose were very hard to come by. So whenever we found honey, it made good evolutional sense to collect/eat it immediately (even if we had already eaten enough that day). The extra intake leads to fat build up that we can then use at a later stage when food is not abundant (this is why people often joke that we have a second stomach for dessert). Humans that were good at taking advantage of such opportunities, survived better, leading to the continuation of their genetic make up.
OK, all clear, but what has this to do with poor people or stressed people?
Scarcity: The Poor Man’s Trap
So we can see that scarcity can have irrational effects on people when they encounter valuable goods. But what if you don’t have any money and you don’t really encounter many valuable things. What happens to poor people’s scarcity for example?
Many poor people are continuously faced with scarcity. They often have barely enough to live on a monthly or weekly basis. They live in a state of constant scarcity. Remember that Core Drive 6: Scarcity & Impatience is a Black Hat motivator. This means that we are very much motivated by it, but don’t feel in control. It is also a Left Brain (mainly extrinsic, short term) motivator. When we have this combination, it often means that we make impulsive, short term decisions. A big sale in a shopping mall, for example, makes people buy a lot more than they had planned (or even had budgeted for).
Poor people are stuck in a scarcity trap: they constantly focus on short term decisions and seem to react rather impulsively. A family I know in Italy is quite poor. Once they received an unexpected sum of $50,000 USD. They did not save even a penny of it. Instead they spent it all in one go on luxury items. Because of their short term focus throughout the years, it did not occur to them to save it, invest it or use it for longer term goals. It is not that they are dumb. It is the scarcity trap of being poor, that keeps them poor by making irrational decisions!
So that’s the problem with poor people right? Well, most wealthy people (who laugh at the poor) fall into the scarcity trap too, primarily because a majority of wealthy people go through a lot of stress.
The Stress Trap
Not only the poor live in a scarcity trap. Many stressed people are also caged in this way. They are not necessarily poor (many have very successful careers), but their stress leads them to commit to more irrational actions that others do.
A growing number of people are now classified as being permanently stressed. Many are labeled impulsive, hyper-active or even disturbed. And more and more people are effected every year. In a stunning finding from a 2013 study, researchers found that 83% of Americans are often stressed at work (up from 73% the year before).
A consequence: mankind is now taking huge quantities of medication to calm down and get rid of stress. But obviously we are not tackling the real cause of stress here. Humans have not suddenly become mentally unstable in large numbers. What has changed is the fact that more and more people feel that they have no control over their lives.
In Octalysis language: we are increasingly victims of an onslaught of Black Hat motivational pressures from our environments. Because of Black Hat motivation, we are very motivated to act and participate in the societal rat race, but we never feel in control and always feel that time is running out. We live in unpredictable times where we feel the pressures of never-ending scarcity.
And indeed, many people feel that life is like running a race. That there is never enough time for anything and options are always running out. A new house. I need it now! A promotion, you say? Get it quickly before it is too late. So many wishes and wants, but never enough salary. We are constantly feeling the effects of scarcity.
When you are stressed, you feel that there is not enough time to do what has to be done. You become anxious as your perception of the timed challenges ahead are much greater than the skills you possess. Just like people who are poor, this leads you to tunnel vision. You focus mainly on short-term, non-analytical choices in front of you. No time (no rest) to focus on longer term rational analyses.
Stress is a self fulfilling vicious circle. Because you are caught in a scarcity trap, you don’t finish the things that need to be done. People don’t open important mail; don’t pay bills and don’t go to the doctor when they need to. And because they don’t tackle these issues, even larger issues will present themselves, leading to even more stress. Maybe now you have to confront bill collectors, fines and illnesses…”dumb” behavior? Yes. But this is what scarcity does to people.
Next time you see a less fortunate person than yourself, try to be kind. Creating more stress or insulting people is not going to make them act smarter. Remember, these people are not dumb, just tunnel focused!
How to Design for Positive Scarcity
OK, so you know now what the negative aspects of scarcity are. But can we use scarcity for beneficial purposes as well? Yes, we can. Most people intrinsically want to do something healthy, like going to the gym, but they lack the urgency to do it. In this case creating scarcity is a great way to get people to move. Offer people a discount that has a countdown timer associated with it for example. Get 20% off if you sign up before tomorrow!
As you can see, this doesn’t mean that Black hat motivation is necessarily bad. It can be used for good causes too! Often people need a bit of Black Hat motivation to act on their intrinsic desires. Moreover, you often need such a trigger to develop what we call intrinsic interest in an activity. You never “know” that you like an activity, and often you need an external motivator to even realize that you are interested in something. This external factor can be a friend introduction (Core Drive 5: Social Influence and Relatedness); a bad health checkup (Core Drive 8: Loss and Avoidance); a chance to win a prize if you join the gym (Core Drive 7: Unpredictability and Curiosity) or, yes, scarcity!
We often use Core Drive 6: Scarcity and Impatience design in our Octalysis Gamification Designs. But we always remind ourselves that it is Black Hat, Extrinsic motivation. When used in large quantities, it will lead to unhappy users who don’t feel in control. No need to add to the growing number of stressed people in the world!
Always make sure to balance Octalysis design with White Hat, Intrinsic motivation elements. This is design that makes people feel good about themselves and appeals to our innate needs. Give users a believable higher purpose, meaningful choices, and feelings of accomplishment. When well balanced, scarcity design can become part of an amazing Octalysis journey!
For more information on how we use scarcity design in Octalysis to create awesome experiences, contact Joris Beerda at: