Tuesday, June 30, 2009

The gift that keeps on taking....

We've written before about why gift cards are a big mistake (See our Jan. 6 post). Now comes even more evidence.

Today's Wall Street Journal reports that state governments are trying to grab those gift cards that are lying unused in your wallet, dresser drawer or purse.

Why? Big money, of course. Each year, Americans spend about $65 billion on gift cards -- but don't redeem $6.8 billion. In the past, that's meant free money for the big retailers that issue these cards. Home Depot Inc., for instance, reported $37 million in revenue from unredeemed gift cards in 2009. And last year, American Eagle Outfitters Inc. collected more than $12 million.

Now, cash-strapped states want in on the action. They want to consider unredeemed gift cards as "abandoned property" -- like that old safe-deposit box that Uncle Elmer had forgotten about. And, as abandoned property, the gift cards are no longer yours. Which is just one more reason gift cards are a bad idea.

Labels: , , ,

Monday, June 22, 2009

Why we nod off on Fridays

Notice anything odd about the jury verdict below?

"We, the Jury, find the Defendant Guilty of the offense of POSSESSION OF CRACK COCAINE.
"We, the jury, further find that the amount of crack cocaine WAS in the amount exceeding ten one hundred (100) grams as charged in the indictment."

Neither, apparently, did the jurors. But the defendant did. And if you read closely, you'll notice what he noticed: that the word "ten" in the second sentence is extraneous.

It may seem like a small error, but it was big enough that an Ohio appeals court ruled the defendant's prison sentence should be cut to just one year instead of 10.

The case nicely illustrates how easily we overlook things, relying instead on context to guide our understanding of what we read or see.

"Overlooking" mistakes are so common that researchers have given them their own designation: they are called “proofreader’s errors.” These humdrum errors reveal some interesting quirks about the way human perception works. One is that perception is economical; we notice some things and not others. And what we notice, to a degree, depends on who or what we are. If you're a dentist, you probably notice someone's teeth; if you're a manicurist, you notice hands.

In any event, our attention is not always equally distributed. When reading, for instance, we tend to pay a lot of attention to the beginnings words -- an area that we expect to be rich in cues about what may follow -- and less attention later on. Investors, interestingly, appear to do the same thing: they pay more attention to financial news released at the beginning of a week, but tend to nod off on Fridays.

Labels: , , ,

Tuesday, June 16, 2009

No See 'Ums

A new report by the World Health Organization says that traffic accidents worldwide kill an estimated 1.27 million people a year -- and that nearly half of these are pedestrians, cyclists and motorcyclists.

There's a good explanation for this: drivers often don't see them. That's because it is possible to look right at something and still not see all there is to see. This type of accident is so common, in fact, that traffic researchers have a phrase for it: a "looked-but-didn't-see" accident.

For a fantastic illustration of this phenomenon, check out a series of ads by Transport for London. It is using the ads to help make drivers aware of just how hard it can be to see things (like bicyclists) that you aren't looking for. Go ahead and take the test in the ads and see how well you do.

For more information on the phenomeneon, check out the visual cognition lab of Professor Dan Simons. It's great.

Labels: , , ,

Monday, June 15, 2009

The Heart of the Matter

A new study from Britain shows that more than half of the people surveyed could not accurately locate on a diagram the position of the human heart.

The study, published in the journal BMC Family Practice, showed there has been little improvement in anatomical knowledge since a similar study was performed in the 1970s.

This should come as no surprise, at least to readers of this blog. Overconfidence is a prime (though often well-camouflaged) culprit behind many of our mistakes. We often overestimate the precision of what we (and others) know. And this overestimation can lead to problems, especially when it comes to our health. One study conducted in the U.S. in 2007, for instance, found that doctors overestimate patient literacy, and that the lack of patient knowledge leads to poorer care.

Labels: , , ,

Monday, June 8, 2009

Who -- me, biased? For a lousy $3 million?

In a closely watched case that illuminates a common (and powerful) bias in human decision-making, the U.S. Supreme Court ruled today that the Constitution can require a state court judge to step aside when he is faced with a case involving a major campaign donor.

The case involves Brent D. Benjamin, now the chief justice of West Virginia's Supreme Court, and the Massey Energy Co., his major campaign contributor.

West Virginia, like most states, allows judges to be elected (instead of being appointed). And Massey's chairman, Don Blankenship, had spent $3 million in the 2004 election attacking an incumbent for the court. The incumbent lost and Benjamin won, which turned out to be a good thing for Massey: Benjamin twice joined 3-2 majorities to throw out a $50 million verdict against Massey, which was involved in a long-running dispute with another coal company.

Writing for the majority of the U.S. Supreme Court, Justice Anthony M. Kennedy noted that no “quid pro quo”had been established between Mr. Blankenship’s campaign contributions (which dwarfed those of other donors in the judicial elections), and Justice Benjamin’s stance in the lawsuit. But there was, he noted, “a serious, objective risk of actual bias.”

This squares with a raft of recent research on bias and gift-giving. As we've pointed out before, even a small gift like a coffee mug can bias the judgment of the person who receives it. The same is obviously true for a $3 million campaign contribution. No explicit quid-pro-quos are necessary; that's because the bias is implicit -- and inherent.

In fact, when judging the conduct of others it can be incredibly hard to be impartial -- even when we are trained to be unbiased. For an illustration of just how hard, see Justin Wolfers's eye-opening look (with Joseph Price) at biased officiating by NBA referees.

Labels: , , , , , ,