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Optimism Bias and Loss Aversion. Risk Perception and The Fiscal Cliff.
Optimism Bias – “Things will work out okay” or “things will work out better for me than the next guy” or, simply, “It won’t happen to ME!” – is one the mental games we play in order to do the things we want to do even when those choices come with costs or danger.
Let’s say you are told that somewhere ahead, in the direction you are walking, is a cliff. If you keep walking, you will get there fairly soon. Scared? Probably not. After all, you know you can stop before you get too close to the edge.
Let’s say you are also told that when you get to the cliff, if you have the courage to look down, you will see a terrifying fall of 1,000 feet. Scared now? Maybe, but still, probably not too much. The broad firm path you are traveling stretches to the horizon, and the idea of that fatal fall is abstract, not real.
Welcome to Optimism Bias, one of the many subjective components of risk perception that often get us into serious trouble. Optimism Bias – “Things will work out okay” or “things will work out better for me than the next guy” or, simply, “It won’t happen to ME!” – is one the mental games we play in order to do the things we want to do even when those choices come with costs or danger. Optimism Bias is what lets us drive when we’ve had too much to drink, bask in carcinogenic solar radiation to develop ‘that nice HEALTHY tan’, or pig out on another huge fatty meal when we already weigh far too much. “It won’t happen to ME!”, we tell ourselves.
And it is Optimism Bias that has brought the United States to the edge of the ‘fiscal cliff’ of tax increases and spending cuts scheduled to take effect at the turn of the year that could throw the U.S. economy into recession. (Indeed, governments around the world face similar predicaments for the same basic reason.) Optimism Bias has allowed us to continue spending on all the things we want, but can’t completely afford, by playing down the risks of overspending in our minds with the deceit that “Things will work out okay.”
Other components of risk perception psychology enter in along the way. We tell ourselves we have control…over the car when we drive drunk (“I’m a good driver”), over the risk of skin cancer (“I’ll wear SPF 9,000”), over our weight (“I can start dieting and exercising…soon.) We pretend we can apply some reasonable prudence to our spending, whether it’s personal or governmental…when we need to. That reassuring feeling of control – false in all cases – allows us to be unduly Optimistic and go blithely on believing things will work out okay…even as the risk increases.
Fortunately, the psychology of risk perception is dynamic. How scary things feel can shift over time, depending on circumstances. If something makes the loss start to feel more real – a near miss for a drunken driver, a treatable case of basal cell skin cancer for the sun worshipper, a minor heart attack for someone who is overweight, the ‘fiscal cliff’ for the United States government - Optimism Bias fades and another subjective facet of risk perception takes over. Loss Aversion. When the evidence of the danger gets strong enough and it feels like health and safety are really on the line, Optimism Bias and a sense of control give way to the powerful imperative of self-protection. The RISK side in the ‘Risk versus Benefit’ equation starts to carry more emotional weight, and we finally start taking the evidence of danger – the prospect of Loss - more seriously.
We are witnessing just this psychological risk perception shift in the United States at the moment. The end-of-the-year deadline that would trigger dramatic tax increases and budget cuts, imposed by The Budget Control Act of 2011 in a deal between the President and Congress that allowed our leaders to avoid these hard decisions a year and a half ago, has put the cliff in sight, just as it was designed to do. It was intended to make the evidence of harm real, and imminent, to deny us the blinders of Optimism Bias that have allowed business-as-usual, and shift us into Loss Aversion, the more worried state that makes us readier to act.
The deadline was also designed to force the warring political camps to compromise, to make the threat to the U.S. economy so serious that ideological purity would have to give way to the greater common good. That is what both sides acknowledged when the ‘fiscal cliff’ first hit the public’s radar screen just after the election. Liberals say they are ready to make billions in spending cuts and changes to entitlement programs, and conservatives are willing to leave Grover Nordquist’s absolutist ‘no new taxes of any kind ever’ pledge in the dust and accept the need for revenue increases. The political posturing of the last few days notwithstanding, Loss Aversion has kept everyone clear-eyed about the imminent danger and more in a mood to find solutions and compromise than when the cliff was further down the road, still far off enough to ignore.
Too bad we aren’t more dispassionately rational about risk and able to make the wisest, safest, most informed and intelligent choices about health and safety all the time. Optimism Bias leads us do all sorts of dumb and risky things, or to wait so long to take a threat seriously that by the time we decide to act our options are limited and solving the problem imposes painfully serious consequences of its own, as will be the case with solving the fiscal crises facing so many governments, and as surely will be the case with climate change.
This all makes the ‘fiscal cliff’ crisis just one more great teaching moment about how human risk perception really works, and about the need to understand the flaws in a system we rely on to keep us safe that combines intellect and instinct, reason and gut reaction, facts and feelings, in ways that don’t always keep us as safe as we’d like to be.
Welcome to the world's newest motorsport: manned multicopter races that exceed speeds of 100 mph.
- Airspeeder is a company that aims to put on high-speed races featuring electric flying vehicles.
- The so-called Speeders are able to fly at speeds of up to 120 mph.
- The motorsport aims to help advance the electric vertical take-off and landing (eVTOL) sector, which could usher in the age of air taxis.
Airspeeder, the world's newest motorsport, is set to debut its first race in 2021.
What can you expect to see? Something like a mix between Red Bull's air racing and the pod-racing scenes from "Star Wars: The Phantom Menace" — manned electric cars flying close together in the desert at 120 mph, nose-diving off cliffs, and racing over lakes, all while hopefully avoiding collisions.
Airspeeder calls its vehicles flying electric cars, but it's probably easier to think of the wheelless multicopters as car-sized drones. Powered by electric batteries, the carbon-fiber craft use eight propellers to fly, and the tiltable motors are designed to allow pilots to navigate through the course's pylons at high speeds.
To prevent crashes, Airspeeder is working with the companies Acronis and Teknov8 to develop "high-speed collision avoidance" systems for its Speeders.
"As they compete, Speeders will utilise cutting-edge LiDAR and Machine Vision technology to ensure close but safe racing, with defined and digitally governed no-fly areas surrounding spectators and officials," Airspeeder wrote in a blog post.
Beyond motorsports, Airspeeder hopes to help advance the electric vertical take-off and landing (eVTOL) sector. This sector is where companies like Uber, Hyundai, and Airbus are working to develop air taxis, which could someday take the ridesharing industry into the skies. By 2040, the autonomous urban aircraft industry could be worth $1.5 trillion, according to a 2019 report from Morgan Stanley.
Still, many technical and regulatory hurdles remain. Matt Pearson, Airspeeder's founder and CEO, thinks the futuristic motorsport will help to not only speed up that process, but also pave the way for self-driving cars.
"Even with autonomous vehicles on the ground, it's a difficult thing to get right because computers have to make decisions very fast," Airspeeder's founder and CEO, Matt Pearson, told GQ." But in a racing environment, you have a pretty controlled course and you have the ability to make all the vehicles cooperate with each other. You have a whole load of vehicles talking to each other, so if there's an incident or a pilot slows down or there's a traffic jam on the course they're all aware of each other. This is something we think will revolutionise autonomous vehicles on the ground. It's technology that will make flying cars a reality in our cities in the future."
Airspeeder has yet to announce a date for the first race, but Pearson said he hopes to put on three races over the first season. The company is developing two courses: one in California's Mojave Desert, and one near Coober Pedy in South Australia.
The way you speak might reveal a lot about you, such as your willingness to engage in casual sex.
- A new study finds a deeper voice is associated with self-reported extraversion, dominance, and casual sex.
- It was the first study on the topic to objectively measure voice pitch.
- The authors suggest that hormones like testosterone might explain their findings.
We make snap decisions about other people based on information that we can gather quickly. One of the many ways that we do this is by making bold conclusions about other people's personalities based on their voices alone. Various studies demonstrate that people associate a deep voice with dominance, but those with higher pitched voices are perceived as nervous or neurotic. Popular culture seems to agree with and reinforce these stereotypes.
Are these perceptions accurate? Maybe. A new study by an international team of researchers with the goal of more accurately determining what our voices reveal about us has demonstrated that there is some connection between how we sound and who we think we are.
The voice-personality connection
Lead author Dr. Julia Stern of the University of Göttingen explained:
"Even if we just hear someone's voice without any visual clues — for instance on the phone — we know pretty soon whether we're talking to a man, a woman, a child, or an older person. We can pick up on whether the person sounds interested, friendly, sad, nervous, or whether they have an attractive voice. We also start to make assumptions about trust and dominance. The first step was to investigate whether voices are, indeed, related to people's personality."
The study included data from 2,000 people from four countries involved in eleven previous independent studies focused on other questions. Each of these studies involved some kind of self-reporting of personality traits and vocal recordings. The recordings were analyzed with Praat, software that determined the frequencies of the participants' speaking voices.
The study is the largest ever conducted on the topic and the first to use an objective measure of pitch rather than subjective rankings such as "high pitched" or "deep." Each participant's vocal pitch was then compared to the self-reported personality data they provided.
The findings associated self-reported levels of dominant tendencies, extroversion, and increased interest in and acceptance of sociosexuality (casual sex or sex outside of a relationship) with a lower pitched voice. This was true for men and women of any age. The findings were in line with the previous, less robust studies on the subject.
Other stereotypes, like if a higher pitched voice hints at neuroticism, openness to new experiences, or agreeableness, were impossible to determine with the data at hand.
Voice isn't everything
It should be remembered that the personality traits that this study associates with vocal pitch are self-reported, so there are some serious limitations. For instance, it is entirely possible that vocal pitch is associated with thinking you're extroverted when you actually aren't. Furthermore, all four countries in the study are WEIRD, so the findings probably cannot be universalized.
Additionally, there are plenty of examples of people for whom the voice-personality link doesn't apply. For example, Teddy Roosevelt, an extremely extroverted, dominating man, had a fairly high pitched voice.
The authors do speculate that there could be a connection between testosterone levels in men, their vocal pitch, and their perceived level of dominance that would be supported by previous studies. However, they have no hypothesis explaining why that same relationship exists for women.
The authors suggest that further studies in this area could focus on finding a possible physical connection between these traits and vocal pitch and to determine if they hold for traits which are not self-reported.
Who needs steroids when you have the placebo effect?
- A study suggests that the effectiveness of sports drinks may depend in part on their color.
- Runners who rinsed with a pink liquid ran better than those who consumed the same but colorless drink.
- Improvement in their performance is likely due to a placebo effect.
The "placebo effect" is real. It's the name for a strange phenomenon that most notably occurs during clinical trials. People who are given an inactive substance, like a sugar pill, often experience the same therapeutic benefit as those who are given actual medicine. It's not their imagination — it really happens. (Even better, recent research suggests that therapeutic benefits occur even when the person knows that they were given a placebo.)
Now, a new study from the University of Westminster (UOW) Centre for Nutraceuticals in London and published in Frontiers in Nutrition suggests that the placebo effect may explain yet another phenomenon: Athletic performance.
The research showed that treadmill runners who rinsed their mouths with a pink liquid increased their performance over runners who swished with exactly the same liquid but without the coloring. Why pink? The color is generally linked to sweetness, and the researchers wondered if that association would subconsciously trick the runners into an expectation of more carbohydrates and thus energy.
Author Sanjoy Deb explains:
"The influence of color on athletic performance has received interest previously, from its effect on a sportsperson's kit to its impact on testosterone and muscular power. Similarly, the role of color in gastronomy has received widespread interest, with research published on how visual cues or color can affect subsequent flavor perception when eating and drinking."
Running for science
Credit: Ryan De Hamer / Unsplash
For the study, the researchers recruited ten healthy adults — six men, four women. All were regular exercisers, with an average age of 30. The participants were told that they would be testing the relative benefits of two commercial sports drinks after watching a brief video explaining the value of such beverages. Previous research found that mid-exercise rinsing with such drinks can reduce the perceived intensity of exercise.
The drinks consisted of 0.12 grams of sucralose dissolved in 500 mL of plain water — an artificially sweetened rinse low in calories. The liquids contained no other additives common to sports drinks such as caffeine. The pink version had non-caloric coloring added but was otherwise identical.
After a 12-minute warmup phase of jogging followed by running, the athletes ran at a difficult pace for 30 minutes, rinsing with their drinks as they ran. Following a brief cool-down, they were interviewed to capture their impressions of the exercise session. (Each runner tested both drinks.)
The researchers found that when the volunteers used the pink rinse, they ran an average of 212 meters farther and 4.4 percent faster. They also enjoyed the exercise more.
Deb said, "The findings from our study combine the art of gastronomy with performance nutrition, as adding a pink colorant to an artificially sweetened solution not only enhanced the perception of sweetness, but also enhanced feelings of pleasure, self-selected running speed, and distance covered during a run."
The researchers also plan to dig deeper into the phenomenon by investigating the possibility that the pinkness of the beverage is somehow directly activating the brain's reward areas.