Rational Consumer Behavior (and Why Most of Our Mind Isn’t Ready for It)

By Guest Contributor

Imagine a completely rational society. People behave in a consistent, predictable manner based on the information available to them. They make decisions that promote the common values and well-being of their interdependent society. Community members work together in a cost-effective, altruistic way to achieve the greatest positive outcomes for the largest number of people.

Though this hypothetical assumption is a precursor to many social and economic theories attempting to model and predict human behavior, unfortunately, it does not exist. According to contemporary neuroscientists, humans are conscious of only about five percent of our cognitive function, which leaves the other 95 percent open to unconscious irrationality.

Rational consumer behavior assumes that people not only exhibit control over their behavior, but also that they make decisions using conscious, rational thought — a function very few brain structures are capable of doing. For example, the limbic system plays a key role in reacting to various stimuli and determining our behavior, especially in social situations. This reptilian brain function has two concerns: to seek pain and avoid pleasure, regardless of the consequences. This 300 million year old cerebral system developed about 105 million years before our more mammalian conscious minds. Given that our species has spent less than one percent of its evolution in civilized society, it’s no mystery as to why we aren’t fully equipped to always make rational decisions for the greater good.

Science is saturated with examples of irrational human behavior. One study found that simply doubling the size of a container of snack food prompts most people to eat 30 to 45 percent more food. Another study found that people tend to stop sharing during times of limited resources and even increase their personal consumption at the expense of others. Yet another experiment discovered that describing a meal using vivid adjectives led most people to rate that food as better tasting in comparison to the exact same ingredients under a more generic label; apparently “seared and savory sirloin adorned with velvety mashed potatoes” tastes better than “steak and potatoes.” Clearly the subconscious mind is frequently confused and responds with irrationality, yet it is primarily responsible for registering our experiences that can only be perceived consciously in hindsight.

It makes sense that humans are inherently self-serving and competitive. After all, it’s difficult (if not impossible) to ascend to the apex of the animal kingdom while putting the needs of others first. Although humans now live in societies that benefit greatly from cooperation and mutual coadaptation, our reptilian brains still strive to fulfill our basic needs (or at least what our unconscious minds perceive those needs to be in a strange new environment).

For an example of irrational behavior with a global impact, we need look no further than the stock market crash of 2008. Essentially, American mortgage lenders were (irrationally) extending easy credit to un-creditworthy Americans. Millions of people were loaned money they had little chance of repaying. Why? The short answer is greed. A more comprehensive answer is that large investment banks gave worthless mortgage bonds high ratings by inventing “collateralized debt obligations.” They could report the difference between the high and real values as earnings, while providing a credit laundering service for lower- class Americans.

Why would people making inordinately large amounts of money create complex and obscure financial loopholes to make more at the expense of people with less? It’s the same reason that Jennifer Keltner, a social psychologist at UC Berkeley, found a negative correlation between wealth and compassion. The wealthier we get, the more competitive and self-engaged we tend to become in a race for more. Our subconscious conveniently forgets other, less fortunate people.

In Charles Darwin’s culminating work outlining his theory of evolution, On The Origin of Species, he mentions that, “In social animals, it [natural selection] will adapt the structure of each individual for the benefit of the community.” In other words, if irrationally selfish behavior continues to widen our nation’s inequality gap, our communities will suffer and America as a whole will underachieve.

If we can’t predict human behavior on a large scale, how can we better understand our species? The answer may be, by coincidence, what Darwin believed to be “the most noble attribute of man:” compassion. While our instincts may predispose us to greedy and selfish behavior, there is at least one action we have control over. It begins with keeping others in mind when making decisions and continues with further adapting to life in a civilized, interdependent society. Who knows, it might help save the species.

GRANT NISHIOKA ’13 is from Wayland, Mass.