Categories
Issue 3

Divorced from Reality: Why are we attracted to the Disinformation Ecosystem?

Is the Covid-19 virus an act of bioterrorism? Was Sushant Singh Rajput murdered by the entrenched “insider” Bollywood mafia? Is there a paedophilic deep state about to take over the world (QAnon)? Was the moon landing faked? Do vaccines cause autism? Is global warming a hoax? Was there a second shooter on that grassy knoll on 22nd November, 1963? Was 9/11 engineered by the US government? 

No matter how many times scientific evidence refutes these new and old claims/conspiracy theories and fake news, legions of people continue to believe in them. Before we examine the primary reasons for continued belief in fake news, conspiracy theories, disinformation, misinformation etc. let us first pin down the widely accepted definitions of these various terms in the ‘information pollution ecosystem’. According to a report by the State Department of the United States, ‘The Weapons of Mass Distraction’,

misinformation is generally understood as the inadvertent sharing of false information that is not intended to cause harm, just as disinformation or fake news is widely defined as the purposeful dissemination of false information. Conspiracy theories are narratives about events or situations, that allege there are secret plans to carry out sinister deeds.”

What makes this false information ecosystem so pervasive and appealing in an age of instant access to legitimate news sources? 

Despite claims that all of these forms of “information pollution” have multiplied manifolds due to the technology now available, it is important to remember that all of these “pollutants” have thrived throughout known human history. So, for all the technological changes which have inarguably turbocharged the breadth and depth of the dissemination, possibly the single most important element for fake news and conspiracies to thrive has remained unchanged i.e.  the inherent human biases and behaviours which are exploited to feed the engine of this false information ecosystem.

There is a vast amount of empirical evidence emanating from psychology, sociology and communication to show that human beings are not always rational in their beliefs and behaviours, including the kind and sources of information they choose to consume and believe. Research shows that many of us buy into alternative explanations because the world is a big, scary, chaotic place and we crave a sense of belonging and identity and prefer immediate, comforting answers. There are several explanations for why a lot of us are attracted to fake news and conspiracy theories.

Neuroscience has shown that our limbic system is kickstarted into looking for patterns and explanations for threat recognition, evaluation and solutions when confronted with difficult, uncontrollable situations like a disease outbreak or earthquake. This is called illusory pattern perception – our propensity to detect patterns where none exist – and this is pretty much hardwired into our brains. Researchers posit that this tendency evolved as a defence mechanism for our hunter-gatherer ancestors to detect and avoid danger. This tendency to see patterns or conspiracies when dealing with an unfathomable phenomenon spawns any number of theories such as what we are witnessing with the Covid-19 crisis – from 5G towers to bioterrorism to Bill Gates spreading the infection to market a world conquering vaccine. 

Second, there is the principle of confirmation bias, which refers to our tendency to search for information that is congruent with our existing beliefs. Conceding that we are mistaken about something is a tough thing for most of us to do and it is especially so for beliefs and ideas that are fundamental to our worldview. Therefore, we cling even harder to ideas, evidence and information which confirm our worldview and ignore any contradictory information. Cue the now familiar concepts of “echo chambers” and “filter bubbles” of our algorithm led newsfeeds which keep us comfortably ensconced in our comfort zone of like-minded people, facts and opinions on social media – the subject of so much policy debates. And the more the same material is repeated the more we believe it to be true, also called the illusory truth effect. A related concept which lends credence to oft repeated information (true or false) by those in our circle or important others is that of social proof (if my social group believes it, it must be true).

Third, humans are cognitively lazy. Our brains work in a dual processing mode where for most of the time we are on autopilot (System 1), take in information on face value and make intuitive decisions which are good enough (satisficing) without critically appraising it for veracity. We conserve our cognitive energy for more “important tasks” which require us to take a more rational, well-thought, informed, and reflective approach (System 2).  Research shows that over 90% of the time in the entire lives, our information processing and decision-making happens in the system 1 mode and this may result in choosing to believe the fake news report rather than digging deeper to verify it. 

Fourth, let’s look at proportionality bias which is our tendency to believe that large events have large causes. The idea that just one guy with a gun (Lee Harvey Oswald) could murder one of the most powerful people in the world (President John F Kennedy) is unsatisfying, and we intuitively search for bigger forces at work. That is why multiple conspiracy theories of government, mafia and foreign involvement seem more reasonable despite the evidence otherwise.

Fifth, we have the exact opposite of cognitive laziness i.e.  motivated reasoning or the tendency to apply higher scrutiny to ideas that are inconsistent with our beliefs.  We use motivated reasoning to further our quest for social identity and belonging. Further, research shows that naïve realism plays an important role during the consumption and evaluation of information. Naïve realism results in our belief that only our perception of social reality is accurate and based in facts and that those who disagree are simply ignorant or unreasonable. 

Interestingly, an important predictor of belief in conspiracy theories is past belief in another one. So once you believe a sinister cabal engineered one event, it becomes much more likely that you’ll look for shadowy cabals at every opportunity. And that is another problem: sometimes conspiracy theories turn out to be right. Watergate did happen, the CIA did conspire to topple governments, scientists did visit unimaginable horrors on human subjects during “medical experiments”.  Proven conspiracies unveiled after much investigation open the door to conjecture about other events with alternate plausible explanations. 

Another reason for believing in disinformation is our own sense of morality as a proxy for that of other people. So, people who think they themselves might create a deadly disease (for whatever reason) are likely to believe that scientists created AIDS or Covid-19 in a lab. Political extremism also leads people to question the narrative of the establishment. Being less educated or having less money is also associated with a tendency to believe fake news, although this could be partly because belonging to lower socio-economic categories is also associated with greater feelings of disenfranchisement, less control over one’s life and greater uncertainty, which in turn makes conspiracy theories more appealing. And last but not the least there is a certain sexiness to fake news – it is very “novel” and mostly negative – two features that attract human attention much more than cold, hard, verified facts.

The internet facilitates the spread of disinformation faster than ever before and this ecosystem of false information can have a powerful effect on our behaviour. Studies have shown that fake news and conspiracy theories can lead to lower participation in politics, lower vaccination rates, disregard of scientific or medical advice, reduction in environment friendly behaviours, even incite murders and killing sprees. So, it’s imperative to understand why people continue to believe disinformation despite factual, verifiable evidence to the contrary. What it is in our own minds that can make any person vulnerable to believing in this disinformation is also important to locate, is the place to begin.

Purnima Mehrotra is the Associate Director – Research and Capacity Building at the Centre for Social and Behavioural Change, Ashoka University. She has experience across industries – education, research, advertising and non-profit.

We publish all articles under a Creative Commons Attribution-Noderivatives license. This means any news organisation, blog, website, newspaper or newsletter can republish our pieces for free, provided they attribute the original source (OpenAxis). 

Categories
Issue 3

Stoned, Shamed, Depressed – A Conversation with author Jyotsna Mohan Bhargava

Stone, Shamed, Depressed: An Explosive Account of the Secret Lives of India’s Teens is a book that examines the lives of urban teens. Children as young as middle schoolers have started engaging in activities like social media usage, substance abuse, body-shaming, video gaming, sexual bullying and online-bullying. The author, journalist Jyotsna Mohan Bhargava, highlights the urgency of these matters. How does one deal with impressionable teenagers being exposed to virtues and vices that even adults have difficulty navigating? Why do these children, who have all possible resources and comforts at their disposal, engage in these activities? Here, I talk to the author about her observations and why she is worried.

Isha (I) – Starting with the topic of drugs, I always assumed that increased usage is a result of increasing freedom with age? Is that true or is there something else at play here? 

Jyotsna (J) – I have heard lots of stories about college and there being choices available for every budget, but I find it fascinating the easy and casual usage in very young children, even in middle school. The difference in how they use it is that it isn’t recreational, it is an effort to fit in with their peers. It isn’t even a choice for many with the enormous pressure they are under to achieve ridiculous 100% cut-offs and very often you aren’t that student. As a society, we haven’t reexamined what we keep pushing our kids into. So kids are saying look, we’ll do it but doesn’t mean we’ll do it the right way. So many of them fall back on drugs to help stay awake and study constantly. A student told me that he started having marijuana at 13 and used it as an “experience enhancer” for movies. Why do you need that, why isn’t a movie enough for you? He said we’re all trying to fill a void, fill something. So there is a lot going on and it isn’t recreational for these kids.

I – In today’s environment where drugs have been vilified so much, I feel like this book could be used by someone to back their anti-drug stance. So how do you think this book fits into that whole conversation?

J – I have been very careful to not judge any of the stakeholders in the book and let others hopefully read between the lines and judge for themselves. Because it is not at all normal for 13 and 15-year-olds to be consuming marijuana and laced drugs.  My attempt is to bring a mirror to our society because very often we don’t want to acknowledge that things happen, and if we don’t acknowledge if we don’t accept we’re never going to able to realize that some stuff is more important. We don’t really have a very cohesive drug policy or we’re not really looking at mental health when it comes to the young ones, so I think my book has been an attempt to actually bring issues out in the open so that we can accept and deal with them. If there is no acceptance there will never be any conversations and change. 

I- So regarding policy, how do you think legalising marijuana or changing legal drinking age and such will affect this issue?

J- With everything, I think the buck stops with the family. Banning has never been the solution and I think really it all comes down to where you’re coming from. I could say that schools need better policies and sex education but the truth is we need to talk about it at home. I think there is an enormous amount of wealth being substituted for parents’ time and it is doing a lot of harm in the long run. Giving devices to these kids at the age of 6 and 7 and taking them back at the age of 13, it’s not working. It’s leading to aggression. Social media is a new toy for everyone and I think parents need to figure it out first and help kids harness it in a better way. We need to teach kids about cyber safety, or about how just because everyone is having drugs, doesn’t mean you should too. We need to normalise the existence of things that happen around us and say that this is no longer a western concept that everyone is smoking, drinking. One of the first people who reacted to the book was a gentleman on Twitter who said: “This is western bullshit”. This is precisely the reason I’ve written this book we’re still caught up in what should happen versus what is happening. If a child is using drugs, they need counselling and de-addiction centres, which is so against our values. So many children only have one question for me “How do we talk to our parents?” If someone is genuinely going through an issue whether it is mental health or sexual bullying, we need to deal with it accordingly and figure out what is and isn’t a mistake. If we aren’t willing to accept that a teenager hitting his parents or talking gangrape isn’t a mistake and other things are a mistake, we won’t realise that some issues do need deeper intervention. It all depends on how we acknowledge these issues.

I- Were a majority of your interviews based in Delhi NCR or how were they located?

J- No actually I have a lot from Bombay, Bangalore, Chennai, and Hyderabad. Each of these has its own problems. I think NCR is rocking it when it comes to drugs while there is more gadget addiction in Bangalore, gaming in Chennai. A college student in Delhi told me there is a difference in how drugs are used in Delhi versus in Bombay. In Bombay it’s something done by the older lot, you hear about celebs and substance abuse but it’s done and over with. In Delhi, it’s a production. All of these kids who were already on drugs in school, they are going into harder stuff in college and I don’t think there’s anybody who’s stopped them or had a conversation to tell them that you know when you’re lacing marijuana with something else, you’re reaching another level. They’ve never had these conversations and always had money.

I- So how would you say this works in Tier 2 And 3 cities?

J- The issues are different in Tier 2 cities. But anybody today who has a smartphone, even in rural and semi-rural areas is vulnerable. The genesis of it all is that smartphone. We’re pretty much the biggest market, I think some 839 million smartphone users by 2022, and a bulk of our population is young. You can do anything on that phone. I demarcated it as an urban book simply because in the very rural the issues are very different, the addiction is very different, it comes from the frustration of having to make ends meet, versus this society where everything is on a platter By that I also mean Tier 2 towns, they have a lot of money and are giving smartphones to kids. I don’t think you can demarcate too much because that vulgar language of gangrape in Mumbai you can also possibly hear it in Patna. In Tier 3, there’s a lot of gaming going on. As a country we’re aspirational and social media has opened up everybody to it. So kids who are getting botox at 15 are no different than the 9 or 10-year-old kid who has gone on the reality dance show on TV because the parents may be from Ludhiana or wherever, they’re equally aspirational. Many parents I spoke with find no issue when it comes to privacy, They say it’s part and parcel of the game. I am talking to you about cyber safety, but in a tier 3 city where you’ve given your child a phone and he’s gone to study in a school where you’ve never been perhaps, you’re not even equipped to deal with the knowledge he has.

I- Moving on to another topic you write about which is bullying, homophobia and body-shaming. These kids exist on social media where body-positivity and pro-LGBTQ+ stances are quite prominent. How do these kids exist in that space and still manage to act this way?

J- Again this comes back to the conditioning of our society. I can actually see that with 90% of people if a child goes up to their mother and father and says that I’ve been body shamed, I can actually see that the reaction is going to be, it’s okay, it’s a part of life, you’ll get over it. As a society, we don’t deal with anything that isn’t tangible. Even with the Sushant Singh Rajput incident, we circled around the issue for months. Finally, when we did come to mental health, we were talking about older people. We haven’t touched children. It’s enormous in the 15-20-year-olds. All kind of positivity starts with a society that says we may be traditional but that doesn’t mean it’s always correct that we need to move with the times and unfortunately I think that’s a long way from now.

I- A third topic you address is teenagers exploring their sexuality and having sex. How does one deal with this, at what age is it necessary to have a conversation about this?

J- My dilemma has been, how do you deal with consent by minors, when they have consensual intimate relationships and then have been asked to leave their schools and such. A lot of children are really sexually empowered and these conversations need to start very young, at 7 or 8 years according to some counsellors. Consent to me is a very big word with not adequate importance given to it by society. A lot of mothers have come up after some of these cases and said we’re teaching our boys respect but I think that’s tokenism. We need to go beyond it. A doctor made a lot of sense when he told me that in the last few years, we have been talking about how our girls are changing, how they are driving and working late doing everything. But we forgot to tell our boys to change as well. If they still remain where they were while girls are changing, we’re going to have this clash. There’s frustration in teenage girls as to why the onus is on them and we have done this to ourselves as a society. So consent is a very important word that we need to teach them.

I- In addition to body-positivity, social media is also urging women to embrace our sexuality. I am guessing that it’s targeting slightly older women but the narrative is also being embraced by younger girls. Since increasingly younger girls are trying to fit into this narrative of let me embrace my sexuality, how do you deal with that? 

J- To be one of the girls, you have to let go of your virginity or you aren’t cool enough. Getting rid of it is like a badge of honour and very casual for 15, 16-year-olds. It really does come down to how comfortable a child is in their skin to be able to take this enormous onslaught of peer pressure. And knowledge is important when you’re, say, trying to date a boy and you send nudes over Snapchat and you think they will disappear after being seen, but somebody else has recorded it it’s in circulation. When no one speaking to them, they’re listening to their peers and going ahead so I think it boils down to really what those conversations you’re having at home, that communication channel has to always be open. 

I find that even six months make a difference. If you keep pushing social media, say a child who gets in at 13 versus at 15 or at 8 versus at 12, I find that the child is evolving and learning more things. You can’t push beyond a point but that little bit of experience keeps adding up, that ability to scope things out react accordingly adds up.

I- How do you see these phenomena of drug usage and social media and such play out as these kids enter college and parents lose even more control. You have said that drug usage tends to increase in such cases, but what else changes?

J- I find that again it all depends on how solid your base is. Some things do change, for instance, people in their 20s are using social media for activism in unimaginable ways. Drugs may become a recreational activity more than before, but then mental health is escalating in the 20s. With the whole sex thing, I think kids are taking control of their lives you’re adults, so in that sense, it’s your life. Your parents have to make sure they’re around to hold hands be there if you want to talk. 

In my interviews, this kept coming up about social media anonymity, how do you trust the world with bearing your body and soul? But we’ve all had our rebellion, unfortunately, it’s a lot to be on social media and living a public life. So the pressure to be somebody is more for your generation. We went to school and got bullied, got home and forgot about it until the next day. You go to school and get bullied and you come home you’re still getting bullied so its 24×7 now.

Isha is a student of Psychology, English and Media Studies at Ashoka University.

We publish all articles under a Creative Commons Attribution-Noderivatives license. This means any news organisation, blog, website, newspaper or newsletter can republish our pieces for free, provided they attribute the original source (OpenAxis). 

Categories
Issue 2

Sitting inside the black mirror and peeking at the world beyond

Social media is all around us. One can argue that the very way in which we communicate today and conceptualize interactions with the world at large, has been fundamentally altered by social media. Television shows such as Black Mirror or the Netflix Documentary Social Dilemma have drawn public attention to the ramifications of human-computer interactions.  While there is no denying that social media has made staying in touch with friends and family, no matter where they are a breeze, as well as aided technological progress, there is unfortunately, a flipside. The problem is twofold —  one, we often believe our social media feeds an accurate representation of reality. And second, we spend too much time on our devices, which makes problem one worse.

To understand why we keep spending increasing amounts of time with our smart devices is tied to how internet companies such as Google, Facebook, Instagram etc. make money while providing services for free.   

A company, by definition, exists to generate a profit. That holds true for internet companies as well. While we are not charged for Facebook, Instagram and the likes, they monetise through ad revenues. This, therefore, makes them depend on their algorithms to detect patterns in our browsing behaviour, so that they can match us to the best possible advertisers, and if we look at an ad long enough, we might be prompted to spend money.

Two corollaries further follow: 

First, better accuracy of the algorithm in predicting our patterns of behaviour on the internet allows the company to better tailor its content for our feed. 

Second, the longer time we spend on our screen, the more ads we see, the more money the company makes by charging the vendors. 

To achieve the first goal, one of the main strategies companies use is AI based smart algorithms. Machine learning means you give the algorithm a goal and then it’ll figure out how to achieve it by itself. AI is also only as good as the data that it’s trained it on. Companies like Google and Facebook have huge data sets at their disposal, because of the vast number of their users from different countries spending lots of time online. This amounts to an unfathomable quantity of data. Modern algorithms accurately tailor social media feeds based on these patterns. By showing content we like frequently, they ensure we stay on the devices longer. Knowing this is very important, because this prevents us from believing that our social media feed is an accurate representation of the world. Once the false belief system takes hold, it makes us more partisan — to the level we cannot even consider having a discussion with people harbouring contrarian viewpoints. The lack of will to engage rationally with the other side is dangerous for public discourse. This is at the centre of exclusion, discrimination, hate speech and hate crimes based on gender, class and caste, ethnic and religious minorities. 

Additionally, most of the social media apps are designed based on the psychology of persuasion and more dangerously, addiction. In the 1930s, B.F. Skinner showed what we describe today as “operant learning”- animals repeat behaviours and learn a task when given a reward.  They don’t do this when the reward is taken away. However, when Skinner started to change the schedule of reward delivery, he found something striking.  When reward delivery follows a varied ratio interval (food pellet delivered after an uncertain number of lever presses), i.e. when the animals expect without knowing when they will be rewarded, they learn to repeat the task behaviour fastest. More importantly, even if the rewards are stopped entirely, they keep on pushing the lever. It showed that this type of learned behaviour is extremely difficult to extinguish. This is exactly the principle on which gambling and slot machines work: they keep the gambler on tenterhooks of expecting a win and in the process, they keep them playing and continue betting.

Both the brain pathways and the neurotransmitters that underlie such addictive behavior have been characterized in detail over the years.  Deep in our midbrain and brain stem sits a group of neurons that release dopamine, the pleasure chemical. This area is the Ventral Tegmental Area (VTA). VTA neurons talk to another set of neurons hidden under the cerebral cortex- the nucleus accumbens, which in turn talks to the frontal part of the brain, where most important executive controls and decision making reside. Any natural rewards, such as food, pleasurable sex, or satiety, result in dopamine release at the Nucleus Accumbens, which through the cortex, causes the sensation of pleasure and reward. This is why we like to repeat what makes us feel good. Addiction hijacks this pathway, whether it is a chemical addiction such as cocaine or a physical addiction like gambling. These behaviors cause a massive upsurge in dopamine, much larger than physiological dopamine release. In seasoned addicts, the anticipation of reward releases twice as much dopamine than the actual reward. This biological phenomenon makes it hard to successfully abstain from addiction. 

Image Courtesy: drugabuse.gov

This is the mechanism that has been targeted by most tech companies. As the time spent with the devices is directly proportional to the ad revenues the companies earn, it favours the companies’ interests to make social media usage addictive. Hence, most elements of app design now use endless notifications, personalizing our feeds better everyday, and building in features like the answering bubble with moving dots when someone is replying. Most apps did not have this before. This is a classic example where the dopamine upsurge of anticipation is utilized. If this is a person of romantic interest or a recruitment manager, the anticipation of the reward can be more addictive than the reward itself. 

The fact that you pick up your phone and 25 minutes whoosh past isn’t random; it isn’t you. The anticipation of receiving curated content is arguably similar to a dopamine rush a gambling addict would get.

If this sounds far-fetched, take a simple test. Go device free for 24-48 hours. Lock them away. Track your mood changes, craving and general wellbeing and distress in this time. How irritable or uneasy are you? How much do you fear you are missing out or crave your device? Once you are able to get your device back, chart how long you have used it every day (all smartphones/tablets can tell you how much screen time you have had in a day). Now compare the usage from the 48 hours after abstinence to your regular usage. The mood charting shows how bad your social media habits are. 

 We survived fine till 2007 when smartphones were introduced. While our brains have evolved little over the past millennia, our environment has exploded over the past decades, especially in the online space. Biological evolution cannot keep up with the exponential evolution of technology. Therefore, spending too long on your devices makes you vulnerable to a range of health problems: poor eyesight, postural pains, lack of exercise etc. Also, engaging constantly with deeply disturbing content, even if they are on social justice issues, will inevitably start affecting your mental health and wellbeing. The world around is brutal and unfair. It is rife with discrimination and atrocities. While we should be aware of such inequalities, engaging with news all day can lead to a sense of loss of control over your life. All of these are good reasons to give yourself a periodic detox from social media. 

Given how all-pervasive social media is, where and how do we draw the line? Here are a few tips:

  1. Know that this is a world of your own creation. 

If you subscribe to viewpoint A, the apps curate your feeds with everything that reinforce A and negate all other viewpoints. You gravitate towards atrocities committed by members of anyone who does not subscribe to A and you behave as if the only reality in the world is understood by those who subscribe to A, and all others cannot be debated or even conversed with. Ultimately this makes the society more polarized. Arguably, this world is far more polarized than the world 40 years ago. Falling prey to believing the version of reality on your screens as absolute reality, you open yourself up to be easily manipulated to now indulge in hate speech, insensitivity, and sometimes, physical violence towards people whose views contradict yours. Listen to the contrarian view-points. Don’t allow one ideology to wholly dictate what you trust.

  1. Give yourself a digital detox every now and then. 

 When you’re not busy with work, limit your screen time.  When you go out with your friends for a much sought-after coffee, engage in conversations. Mutually agree to restrict mobile usage to 3-5 photos for the entire duration of the meet. Write physically in a journal every day. Exchange letters. Indulge in hobbies and activities that do not involve screens.  When you are on vacation, switch off your phone entirely. Activate an automatic email reply with the dates when you will return to work and the name of an interim person who can be reached out to if urgent. 

  1. Resist the temptation to document each moment of your life on social media. 

Besides adding to your digital footprint, this leads to unhealthy comparisons. Most people put their best foot forward on social media. Everyone posts pictures where they are doing something fun. Very few people post unhappy pictures on Instagram or write when they have a bad day at work on Facebook, yet negative things happen to all humans, every day. If we believe everything we see on feeds to be a true reflection of their lives, we buy into this idea that everyone has a perfect life, except, well, ourselves. This is not true. No one has a perfect life, and what people project on social media is often different from their real lives. So do not compare yourself to anyone on social media. Live your life as you want, without telling everyone about every moment of it. The “likes” only activate those short dopamine loops that provide instant gratification and are addictive. No amount of likes determine self-worth. So actively stop tying notions of self-worth with the likes and followers on social media. 

  1. Be a conscious consumer and not a prey to the influencer phenomenon. 

Social media can be used constructively. Collaborations, products and partnerships have evolved to its credit. If you are curating your own feed, use this awareness and the powerful AI behind apps to curate a feed that is good for you —  pages and channels that deliver creative content, help amplify positive messaging, promote mindfulness and healthy living. 

In that same vein, be picky about who you choose to follow as their content will make your curated feed, and likely only add similar content. We live in a country where influencers with millions of followers routinely promote misogyny, crass, classist, casteist, and majoritarian views. When you decide to follow an account,  try to determine the veracity of their claims. Do they cite data? What is the source? If you look at the data, does their conclusion make any sense? Never amplify something you have not fact checked before. There is a tremendous amount of misinformation in the post truth era. 

  1. General principles of sensible social media use

 Research has shown that constant social media usage leads to an inability to focus and restlessness. These directly affect professional or educational performance. A slew of productivity-based apps using the pomodoro technique (20 minutes for work followed by a 5-minute break) and restricting social media usage are available on all platforms and can be used for structuring the work day. The break can be used to do any activity that does not involve phones or computers. Outside work hours, make some rules for social media usage and stick to them. Turn notifications off for most apps except your calendar or reminders.  

Another effective rule is the “no phone at dinner and beyond” rule. Do not reach for your phone before sleep and as you open your eyes the next morning. Try holding off at least until after breakfast. These simple rules go a long way to ensure our internet usage stays under control.

While social media can foster a sense of community, it can also take away from face to face interactions which eventually raises a lot of concerns over your physical and mental health. Being conscious of that is relevant, simply because we cannot avoid it.

Simantini Ghosh is an Assistant Professor and PhD Coordinator for the Department of Psychology at Ashoka University.

We publish all articles under a Creative Commons Attribution-Noderivatives license. This means any news organisation, blog, website, newspaper or newsletter can republish our pieces for free, provided they attribute the original source (OpenAxis). 

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Uncategorized

What do stock market fluctuations in 2020 tell us about human behaviour?

By Srijita Ghosh

If I ask you what’s common between choosing the wrong major and not being able to lose the last 5 kgs that you thought you’d lose by summer, most of you would think there isn’t one. But if I ask you the same question for the stock market behaviour during the dot com bubble (most of you were probably not even born by then) and the same stock market behaviour during the recent pandemic, you can probably name a few. However, the common thread amongst all of them is that they are all driven by incorrect beliefs about future events. 

You were so sure that economics was the right major for you, but at the end of the second year, you realize you have gravely underestimated the technical skills required to finish it and now you wish you had chosen something else. It is natural and quite common to have a wrong belief or estimate about a future event since future events are fundamentally uncertain. 

Economists have been aware of incorrect beliefs and their impact on decision making but modelling them formally has started fairly recently. Taking motivation from psychology and neuroscience, economists have started modelling decision-making under the assumption that the agents are cognitively constrained. They can make mistakes while predicting some uncertain events about the future which can have severe consequences on their life and living. 

It’s the same cognitive constraints that drive the seemingly irrational behaviour in the stock market. But the mistakes that people make in the stock market or most economic context are not random. By studying the patterns of mistakes, we can design effective policies to improve welfare. 

In the context of the stock market, recent studies by Bordalo et al (2020) have found that people overreact to good news and overvalue them in the long run. If we overestimate the long-run valuation of stocks, then eventually we will be disappointed since our predicted value will not be materialized. This can lead to perverse behaviour in the market.

For example, during the current pandemic, the stock market remained more optimistic than what would be expected from the condition of the economy per se. It might be driven by the overestimation of the long-run fundamentals of the stock market. The problem, however, is that the pandemic initiates a “regime change”, which means we cannot be sure where the fundamentals of the stocks would lie in the post-pandemic period.

Another cognitive function that severely affects our belief is that of memory. Various puzzles in the stock market can be related to the nature of memory. There are different features of the memory that affect what we believe. The most obvious one would be the temporal nature of memory; we remember things with more clarity that have happened in the recent past than a distant past. This implies that while forming belief we put more weight on the recent phenomenon that is the underlying trend. This can lead to having an overreaction to bad news. 

The other, more complex feature of memory is representativeness, which implies that different cues about the same underlying object can lead to very different beliefs depending on what comes to mind. In a recent study by Wachter and Kahana (2020) has shown that we often associate two events that are temporally related. If one of these events repeats again we remember both the events, as they are contextually related events. This can lead to further distortion in belief and some examples of such behaviour would be under or over-reaction to news, fear being a leading motivator of financial decision-making, and so on. 

However, we should note that this literature is fairly young and researchers all over the world are trying to understand the impact of cognitive functions on beliefs and subsequently on decision-making. So we should proceed with caution when interpreting the results from the early experiments. Just like any other scientific discipline, we can only conclusively make remarks after several studies have reproduced similar results. 

One major problem here is that human behaviour is complex and when combined with the stock market framework the scope of non-standard (from a neoclassical economics perspective) is large. This makes analyzing and predicting behaviour in the stock market particularly difficult. But one way forward would be to understand how humans form beliefs generally and extend that to the stock market scenario. This will also help us become better decision-makers and be more consistent with our own world-view. 

Srijita Ghosh is an Assistant Professor of Economics at Ashoka University and has done her Ph.D at New York University.

Sources:

Expectations of Fundamentals and Stock Market Puzzles by Pedro Bordalo, Nicola Gennaioli, Rafael La Porta, and Andrei Shleifer (2020)

Memory and Representativeness by Bordalo, Pedro, Katherine Coffman, Nicola Gennaioli, Frederik Schwerter, and Andrei Shleifer. 2020

 A Retrieved-Context Theory of Financial Decisions by Jessica A. Wachter and Michael J. Kahana

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