In tough economic times, many people will be faced with a difficult choice of whether to spend or save. On the one hand, pending provides an immediate ‘buzz’ of excitement and you are often left with something nice to show for your money.
But on the other hand, saving for a rainy day is a sensible thing to do, which could help you pay for emergency repairs or possibly buy something even bigger in the long run. How do people resolve dilemmas such as these?
Professor Ken Manktelow is a member of the Department of Psychology at the University of Wolverhampton, specialising in thinking and reasoning. He has researched how people resolve dilemmas, which seem even more relevant in the days of tightening purse strings.
“A dilemma is not the same as a choice - should I buy a BMW or a Mercedes is not a dilemma, it’s a choice. But should I save my money or buy a car is a dilemma.
“You are faced with conflicting goals – one action is going to take you towards one goal and away from another that is equally valuable to you,” Ken explains.
He goes on to say that with a choice, people can produce an objective answer, for example by comparing one car’s carbon emissions with another. But dilemmas are harder to solve, as there is no objective answer to whether it is better for you tospend or save.
“People are not stuck in dilemmas all the time – we do resolve them, generally by turning one way or another. The way people turn depends on their personality traits, generational differences and their culture. The resolution of dilemmas is about values.”
Professor Manktelow, who has worked at the University for 17 years, saw the end of the credit bubble coming by analysing human behaviour. He argues that since the deregulation of consumer credit in the 1980s, and particularly in the last 15 years, the British economy has offered people the opportunity to spend without real, hard cash. People were able to pay with a credit card and feel no immediate cost.
“Buying stuff is really nice – you get a surge of endorphins which gives you a buzz.
“People have been able to rack up enormous debt, and houses have been turned into cash machines as you are able to use your home to get further credit. A 125% mortgage is like taking a bet on the future value of a house. People are not asked to pay it back, other than the minimum amount, and that is the bubble. I didn’t see the banking collapse coming – but I did predict the end of the credit bubble.
“People are like other animals – if you put something nice in front of them, they will take it,” Ken says.
Theories of decision making suggest that rational people always act in a way to maximise personal gain, and some economic policy is based on that idea. But in fact, people don’t always act in a way that will simply maximise their own pleasure and success. Ken says a good example of this ‘collectivism’ is the voter’s dilemma, which focuses on why anyone should vote.
“You do not get anything specific for voting and you could argue that one vote is not going to make a difference. If everybody felt like that, no-one would vote at all. But people do as it provides a nicer and more democratic society. Similarly, why don’t people steal? Is it because it is wrong or they might get found out? For some the deterrent is being found out, but for mostit is because they have had a moral education.”
Psychology is a popular course at the University’s School of Applied Sciences, with a good employment rate for graduates. Some students go on to become psychologists, with some focusing on educational, occupational, clinical or counselling psychology, in which the University offers a doctorate. But students also go into other people related professions, as the course offers a very broad education, from what Ken terms ‘white coated science’ through to philosophical debate and statistics.
Ken is currently working on research with his colleague Niall Galbraith about paranormal beliefs. They will be looking at belief bias, which involves giving someone an argument that leads to a certain conclusion and asking if people think the argument is valid. For example – All the athletes are healthy; some healthy people are wealthy; therefore some of the athletes are wealthy.
This sounds like a good argument, because the conclusion is believable, but it is logically invalid, as you can see if you change the terms but not the structure of the argument: All the men are healthy; some healthy people are women; therefore some of the men are women. They will investigate if people who have paranormal beliefs are more susceptible to belief bias in general, or just when it is concerning issues surrounding the paranormal such as crop circles, ghosts or fortune telling. Ken is open-minded about what the new research will show.
Professor Manktelow sees the continuing appeal of Psychology to University students as stemming from the fact that it is one of the few academic subjects that really can be a matter of life and death. Psychology focuses on the study of human behaviour and most of the significant issues of the day can be traced to human behaviour, such as the credit crunch, religious wars and even climate change and pandemics. It is perhaps the relevance to today’s most pressing issues that makes Psychology such a fascinating and illuminating subject to study.
Find out more about Psychology at the University of Wolverhampton