r/BehavioralEconomics • • 2h ago

Ideas & Concepts The Ostrich Effect: avoiding what we don’t want to see

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3 Upvotes

The ostrich effect is a cognitive bias in which people ignore or avoid negative information, data, or feedback to escape emotional discomfort or anxiety.

The name comes from the myth that ostriches bury their heads in the sand when they are scared. The term was used by researchers Dan Galai and Orly Sade in a 2006 paper on financial information and investor behaviour.

Common examples include:

-Investors checking their portfolios during market booms but ignoring them during crashes.

-Avoiding unread bills, bank statements, or debt balances.

-Skipping a doctor’s appointment out of fear of a bad diagnosis.

Many times, we avoid facts that could bring real disappointment. For example, when we know an exam went badly, we may want to avoid facing the result. We may seek out information that pleases us and reject information that doesn’t.

I felt like exploring this kind of avoidance. When checking our weight or reflecting on past mistakes, we may try to avoid what we see.

Perhaps it hurts the image we hold of ourselves, the image we rely on to maintain a sense of who we are. That image gets shaken, and our instinct for self-preservation kicks in.

We have expectations about how we want things to be, and we project those expectations onto reality. It can be painful, sometimes almost unbearable, to realise that things are otherwise.

Avoidance, then, may not only be about the uncomfortable fact outside us; it may also be about protecting the version of ourselves we are unwilling to question.

This connects, though not in exactly the same way, to denialism. Climate denialism takes things a step further: it involves arguments against established evidence, not simply avoiding information. In some cases, denying or dismissing facts can help people continue acting in accordance with their desires or interests. Avoidance and denial aren’t identical, but both can protect us from information that challenges what we want to believe.

Despite many warnings from Earth itself, we want to keep going on and on with our own projects.

How do you see the relationship between avoiding uncomfortable facts and protecting our image of ourselves?

Sources:

https://acharyaprashant.org/en/articles/climate-change-a-crisis-of-honesty-1_09e5187


r/BehavioralEconomics • • 53m ago

Ideas & Concepts A salary hides your hourly rate, so every unpaid hour quietly comes out of it

• Upvotes

Most salaried people never divide their pay by the hours they actually work, and the result is worth seeing once.

Payroll treats a full-time year as 2,080 hours: 52 weeks times 40. Take a $52,000 salary. Divide by 2,080 and you get $25 an hour. Now say your real week is 45 hours. Your hour is worth about $22. Make it 50 hours and it's $20. Same salary, same contract, and the price of your hour fell by a fifth without anything on the payslip changing.

Those extra ten hours a week add up to 520 hours a year, which is thirteen full work weeks given away. A salary hides the hourly rate, so every unpaid hour comes straight out of it.

There's a second layer. Time behaves like perishable inventory, the way an airline seat does. Once the plane leaves, an unsold seat is worth zero. But airlines price seats dynamically, while most workers sell every hour at one flat rate. The 3am hour before a deadline is priced the same as a slow Tuesday afternoon.

So "time is precious" leaves out the key part: time expires, and it expires at a fixed price.

Have you ever worked out your real hourly rate once you counted the hours you actually put in?

We made a full animated breakdown of this, if you'd rather watch: https://www.youtube.com/watch?v=zM79lJZugIg