#2 Human Behavior ; Personal Finance
Content Curation from a Stanford HumBio course and one of 2020's top rated Finance/Psychology book
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The Second Post!
(Please click here to check out the first post, if you haven’t already)
What I learnt at MOOCs : #SchoolTime
Recently, I stumbled upon a Stanford’s Human Behavioral Biology course taken by Dr. Robert Sapolsky . This course is about the interaction between physiology and human behavior and it debunks a lot of myths that we subscribe to, related to genetics, evolution, categorical thinking, game theory etc.
Though the use of the words ‘behavior, emotions and genetics’ in close proximity was enough to draw me into this, but the fact that all lectures are available for free as a ‘YouTube Playlist’ , made it even harder to resist. On top of that, Dr. Robert’s way of teaching is enjoyable and he makes the content relatable and very easy to follow.
Let me summarize the key takeaways from first introduction lecture -
Introduction to Human Behavior Biology
Interconnection between physiology and behavior, emotions (stress), memories :
He starts the course by asking -
What is common between “having a period”, “having a brain tumor”, “eating a lot of junk food” and “taking anabolic steroids”?
Ans: All have been successfully used in courts as a defense for a murderer.
So, what happens in your body can have a significant effect on your brain and similarly, the happenings in your brain can significantly impact your body.
Concept of ‘
Buckets
’ : Robert alerts the viewers about the tendency of the brain to think in categories in order to simplify complex human behavior and how such categorical thinking can actually distort or limit the bigger picture. He mentions few quotes by eminent scientists to illustrate how even top notch thinkers got it wrong by thinking within a bucket."The selection for toughness, heroism, social utility...must be accomplished by some human institution if mankind, in default of selective factors, is not to be ruined by domestication-induced degeneracy." - Konrad Lorenz
This guy was one of the founding fathers of ethology and also discovered imprinting in birds(process by which bird infants identify and learn about their species). But at the same time, he was an unrepentant Nazi propagandist. He chose to live within his own boundary of thinking and propagated genocidal slaughter of 9 million people .
“There are no real buckets, but only our assumption of boundaries separating one category from another.”
Remember, how the world got divided in decoding the color of the dress sometime back - well, that was also an example of our brain categorizing and filling the missing stuff own its own.
Refresh your memories here:
Side Note : In case, you are interested in digging deeper into the impact of categorical thinking in the business world, there is quite a detailed article from HBR, filled with multiple use-cases. The article sheds light on Segmentation/Clustering pitfalls, amplified treatment of certain labels (Facebook’s approach to assigning of political labels before 2016 US elections), NPS (Net Promoter Score), hard binary cut-off points for decision making and the magic 5% alpha value for p-value based strategies.
“You have $10,000 to spend on digital ads, and you’re considering three plans: (1) No targeting. The ad is served with equal probability to all Facebook users and will cost 40 cents per click. (2) Full targeting. The ad is served only to your target segment and will cost 60 cents per click. (3) Partial targeting. You invest half your budget in marketing to your target segment and the other half in mass marketing, which will cost 48 cents per click.
Which plan should you choose?”
An engaging read, indeed. Access it here.
As I will go deeper into the HumBio course, I will keep sharing various useful nuggets from each of the 25 lectures.
What I learnt at Podcasts : #WalkTime
I usually plug my ears with various Podcasts on my morning walks. This week, I delved into a podcast called - 'notoverthinking', which is a casual talk by two young talkative (with weird high-pitched laughs) brothers who discuss and strip a topic in a very nonchalant way.
The episode discussed the recent book - The Psychology of Money by Morgan Housel which is scoring great reviews this year and combines the field of personal finance with psychology.
I will share few of the principles that I liked and leave it to you give this a listen/read -
Importance of Luck
Some people are born into families that encourage education; others are against it. Some are born into flourishing economies encouraging of entrepreneurship; others are born into war and destitution. Realize that not all success is due to hard work, and not all poverty is due to laziness. Keep this in mind when judging people, including yourself.
Importance of frugality, humility and patience
“There’s only one way to stay wealthy: some combination of frugality and paranoia.”
Warren Buffett’s net worth is $84.5 billion. Of that, $84.2 billion was accumulated after his 50th birthday. #patience
Importance of long tails
It is not important to be right all the time. You just have to stay in the game and wait for the moment when you will get it right. (Current pandemic is a big tail event which goes on to prove - The majority of what’s happening at any given moment in the global economy can be tied back to a handful of past events that were nearly impossible to predict)
J.P. Morgan found that the Russell 3000’s overall returns were driven by just 7% of the component companies.
No Free Lunch
Sometimes, its hard to attribute the cost to certain things/events/strategies in practice. Market volatility is one such cost/fee to be paid while investing.
Man in the car Paradox
You see a Ferrari on the street. You just want to be that driver. There’s a common desire to be wealthy and own expensive things. But people just want the respect and admiration they think comes with it. But expensive items won’t bring respect and admiration. Especially from the people who you want it from most.
On reading this, I was reminded of a beautiful video by Alain De Botton that referenced this same ideology and makes the case about this constant pressure to be extraordinary.
Material Accumulation has become the gateway to the respect and love we all crave. (1:06)
Certainly, some food for thought.
Side Note: I occasionally read through this blog : Mr. Money Mustache. It offers practical wisdom on personal finance and future planning. This article on early retirement principles can be a good place to start.
An interesting Minutiae : #productinnovation
Ever wondered the reason behind the interesting shape of Pringles?
The saddle shape of the chips is known as Hyperbolic Paraboloid.
This was designed by P&G’s (Original owners, before being sold to Kellogg’s in 2012) chemists in 1950s-60s using the advanced technology of the time to ensure the chips remain "uniform in size, shape, color, color, and in all other characteristics".
Why go to so much trouble - you ask? Well, the key reasons were -
The chips could be easily stacked in cylindrical cans and it considerably reduced breakage of chips during logistical handling. (A problem till date with most of the brands of chips packaged in bags full of air)
It also led to a weird satisfaction amongst consumers while consuming it since there was no easy way of breaking it, making it crunchy and crisp. (As marketers would say : It increased the ‘trips to mouth * satisfaction per trip’ metric! )
It also led to a very efficiently designed automated manufacturing process. Here is a 2-minute video - watch and marvel at the efficiency of the process)
However, even after so many innovations, it took a young Brad Pitt and 1980s to finally make them a hit as we see them to be today. Your innovation is only as good as your marketing!
Great Innovation needs great marketing. The bigger the innovation, the bigger the risk of failure. Because marketing can reduce those risks, it matters as much as innovation — perhaps even more. - Denise Lee Yohn
But, here is the real reason why I called this section as “Interesting”. The creator of the Pringles can was actually buried in one. His sons even debated about which flavor to use for the burial - “Look, we need to use the original.”!
So, next time, you are popping them Pringles in your mouth while watching another re-run of Friends, Think about this! and if you are still bored - try this at home.
So, that’s it folks for this week. I hope the content was enriching and enjoyable. If you liked it, please hit the ‘Like ❤ ‘ button at the top.
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