Why the cash in my wallet seems so different than the money in my savings account?


Photo by rupixen on Unsplash

As a UX designer, I’m used to reading articles about Cognitive Bias. If you are not familiar with the term, the Interaction Design Foundation has a very good definition “Cognitive bias is an umbrella term that refers to the systematic ways in which the context and framing of information influence individuals’ judgment and decision-making”. Basically it means that even though we design trying to predict the user’s behavioral you have to consider that not all human-beings actions are rational and predictable.

Outside the design world, those biases are known as elements part of the Behavioral Economics field. This area of study combines decision making, economics, judgment, and psychology. Among the most noted biases are stereotyping, selective perception, placebo effect, zero-risk bias, overconfidence, confirmation bias, anchoring bias and much more. Business Insider magazine has a good poster to explain these and others’ biases.

Business Insider poster

If our goal as UX designers is to create a better experience for the user, we have to deeply understand how people think and design interfaces that will help them make the best decisions for themselves. Especially because digital products are oftentimes connected with payment gateways and we want our users to make smart decisions. That will be much easier if we could eliminate cognitive bias.

However, this is not possible. Let’s be brave. Let’s do one step at a time. Buster Benson created an amazing app Pocket Biases to help designers study those biases by showing every day a different one and how to deal with it.

To illustrate the impact of cognitive bias in our daily activity I choose one of them: Mental Accounting.

Mental Accounting explaining why we see our money a single dollar bill different according to the situation. Think more a moment. How much do you spend in a beer at the grocery store and how much do you pay for the same brand at a concert? It is not the same amount and you still pay for it.

That all happen because we all have a peculiar way to do mental calculations. Every time you buy something we are not only considering the amount we paid but also the difference between that and how much we think it’s worth. That calculation will give us a sense that if we are making a good or bad deal.

To help users minimize the impact of mental accounting in their decisions we need to simplify the mental math. Even though this might not be enough. A good strategy form the user’s perspective is to take things out of the head and write it down. When we see the numbers in a paper it makes it tangible and the user can rationalize their decision.

If you are into tech, you are probably thinking that AI will fix it. Humans in the near future will have artificial intelligence to help them avoid those biases. That might happen if now we create the AI with no bias. However, as they are learning based on your behaviors is harder than we thought to teach them to avoid this behavior. The MIT Technology Review has an interesting article explaining this next step in the AI learning curve.