Decision Making around the Holiday Season
Like bread and butter, neuroscience and economics go well together.
This week in Dr. Mary Boyle’s neuroeconomics class at UC San Diego, I feel grateful to have learned about a topic that has been on everyone’s mind lately: holiday shopping.
The US is known for its convenient consumerism, and holiday shopping is no exception. With Black Friday right around the corner, millions of Americans are getting ready to rush towards discounted items.
I began to wonder, why do people wait in long lines for discounted items? What’s the motivation behind impulsively buying everything on Black Friday? What’s everyone’s reasoning when shopping or investing?
Like Socrates, I began asking questions that eventually reminded me of The Marshmallow Test.
In this test, kids are given 1 marshmallow. Then, they are told by the experimenter that they can eat it right then (instant gratification) or wait until the experimenter comes back (delayed gratification). If they choose to eat it later, they will receive 2 marshmallows instead of 1.
According to The Atlantic’s article, “the capacity to hold out for a second marshmallow is shaped in large part by a child’s social and economic background”.
Does that mean that the way in which we make decisions is heavily influenced by the environment we were exposed to when we were growing up?
Yes, the environment plays a large role into how we make decisions, and we’ll dive more into mob mentality at the end of this article.
Before we dive into mob mentality, let’s not forget about our neuroscience!
Let’s do a deep dive into one of the neurotransmitters in our brains.
During class, we learned about dopamine. Now, what in the world is dopamine and how does it relate to money?
In order to answer that question, I set out to review some of the research experiments we’ve read throughout the quarter. One of the experiments that caught my eye mentions how substances can “generate, hijack, and amplify the dopamine reward signal and induce exaggerated, uncontrolled dopamine effects on neuronal plasticity”. Not only is dopamine the culprit behind happiness, but it is also responsible for every single one of the gamblers in Las Vegas and across the world.
Dopamine is the neurotransmitter in your brain responsible for both the rush you get once you receive likes on Instagram, the joy you get when you eat your favorite ice cream, and the exhilaration once you win the lottery. It is also responsible for the instant and immediate happiness you get once you make a purchase.
In the social media era we live in, we’re wired for instant gratification. In a way, phones have unveiled a whole new range of possibilities in the 21st century, but has also unlocked new responsibilities.
For example, on Cyber Monday, instant gratification is available for anyone with access to technology. Visual Capitalist shares how we do holiday spending.
One would think that despite everything going on, such as inflation and massive tech layoffs, that the CyberMonday deals would plummet, but consumers kept buying. This ties back to the concept we learned in class about the mob mentality and how the mass makes decisions based on what everyone else is doing in a moment of panic.
Not only are we unsure of what the right decision is in moments of panic, but we are constantly looking at others for direction. We are constantly trying to mirror others in our environment to make decisions (thanks mirror neurons).
I find it astonishing how we are able to make completely irrational decisions when we are in panic or in highly emotional situations. A little side story, but a great example happened to me today. I was studying in Geisel, UCSD’s library, and the fire alarm went off. I looked around and saw people with confused faces, unaware on what to do, and it seemed nobody was moving or standing up. I stood up and headed towards the staircase. As I walked downstairs, I ran into people joining from the floors below, and after a few moments I became aware of how people were walking downstairs and following the mob like a herd. I think that in that case, since everyone’s confused and you have nobody to consult and ask if the fire alarm was a drill or if there’s an actual fire going on, you have to make a quick decision and when you don’t know what to do and in a panic it’s easy to be influenced by others and try to follow their directions. In high-stress situations, our prefrontal cortex is hay-wired and we rely on our amygdala and our emotional part of the brain to make irrational, emotion-based decisions. I guess that’s what makes us human too!
Tying it all together, neurotransmitters like dopamine, and brain areas like the amygdala are responsible for the way in which we approach our decisions. Sometimes it’s difficult for us to make rational decisions because we seek instant gratification, and like the Marshmallow test, would rather have one marshmallow now than wait to have 2 marshmallows later. Yet sometimes the way that we approach instant gratification decisions is also influenced by our socio-economic background and environment. For example, if we grew up in an environment where people are not used to the highly consumerism environment, like in another country besides the United States, we might not be inclined to buy everything off of Amazon when Cyber Monday rolls around. We have mirror neurons that model the behavior of others around us, so if you notice everyone participating in holiday shopping dates like Cyber Monday, you’re more likely to make the decision to participate in it as well. Not only is holiday shopping a great example of mob mentality, it is also a great opportunity for us to learn about how we tend to follow the crowd when panic sets in. The need to buy a product before the deal is over at midnight, makes your amygdala go into panic mode. Similar to when you are in a fire-alarm situation, you tend to look at what other people are doing and tend to follow the crowd.
I am grateful to have learned about the way our mind and our emotions play a role in our decision-making process. I am now more aware of the way in which our socio-economic environment plays a large role in the way we participate in holiday shopping. A true cognitive metamorphosis, I feel empowered to navigate the world with the power to process multiple alternatives and assess situations from a new perspective.
Thank you for reading.
Sources:
Boyle, M. (2022). Habits. UCSD Department of Cognitive Science.
Calarco, Jessica McCrory. “Why Rich Kids Are so Good at the Marshmallow Test.” The Atlantic, Atlantic Media Company, 28 Apr. 2021, https://www.theatlantic.com/family/archive/2018/06/marshmallow-test/561779/.
IgniterMedia, director. The Marshmallow Test | Igniter Media | Church Video. YouTube, YouTube, 24 Sept. 2009, https://www.youtube.com/watch?v=QX_oy9614HQ. Accessed 3 Dec. 2022.
Jones, Katie. Visual Capitalist, 25 Nov. 2020, https://www.visualcapitalist.com/wp-content/uploads/2020/11/holidayspendingbyregion.html.
Sltrib, The Salt Lake Tribune, director. Shoppers Go Crazy on Black Friday. YouTube, YouTube, 26 Nov. 2010, https://www.youtube.com/watch?v=2zBWjlkKDpA. Accessed 3 Dec. 2022.
