Thursday, August 30, 2018

econlife - Why We Suffer From FOMO by Elaine Schwartz


Today, some thoughts about FOMO…

Every morning, I walk and listen to one or two economic podcasts.

Years ago, the choices were few. Because there was just Econtalk and Planet Money, my decision was an easy one. On Mondays, I listened to each new academic discussion from Econtalk. Then Tuesday, I looked forward to Planet Money. After that, This American Life and Radio Lab were Wednesday and Thursday possibilities. As for the rest of the week, having heard all the new podcasts, I could even select an episode from a Great Courses lecture series.

No more.

Ranging from Amicus to Trade Talks, and Outside/In to More or Less, and Crazy Genius to Mismatched, my podcast series library is currently at 70! I guess it makes sense that most mornings I suffer from FOMO.

FOMO

FOMO (Fear of Missing Out) and its sister symptom FOBO (Fear of a Better Option), both drive us to consider every alternative. However FOMO pushes us to do more while FOBO holds us back. The Boston Globe called the FOMO phenomenon a “hallmark of the digital age.” With social media telling us everything our friends are doing and much more, we have a slew of vacations, movies, Netflix series, restaurants to ponder. And it can be exhausting.

Legend has it that FOMO was first described by a marketing strategist in 2000. Four years later, an HBS student newspaper column spread the word and then the academics started investigating FOMO. Still now, it appears every once in a while in a headline like this one from Bloomberg: “Investing in An Age of FOMO is Hard.”

You might enjoy (as did I) this excerpt from the 2004 HBS Op-Ed that connects FOMO, FOBO, and FODA:

“…FOMO and FOBO are irreconcilably opposing forces, the antithesis of yin and yang, and can drive a person towards a paralytic state I’ll call FODA, or Fear Of Doing Anything…”

“…Notice that as a person becomes more and more FOMO, the energy needed to maintain such an active social life is tremendous. On the other extreme, practicing aggressive FOBO will only serve to alienate your friends. Poor management of the trade-off’s between the two forces leads to FODA…”

So yes, we can observe FOMO, FOBO, and FODA. But a behavioral economist would say it is really about decision fatigue.

Our Bottom Line: Decision Fatigue

Behavioral economists have concluded that too much choice can impact our subsequent behavior. Called decision fatigue, we tire from too many choices.

At a German car dealer, researchers observed consumers’ behavior. They watched them choose among four styles of gearshift knobs and 13 kinds of wheel rims. There were 25 configurations of the engine and gearbox and 56 color combinations for the interior. As the decisions accumulated, the (more expensive) default option became more attractive. They even saw that if those 56 colors were initially presented, buyers chose the default sooner.

Buying a car returns us to my massive podcast library and the stress of wondering about all of the alternatives we might not choose. Because that concern fatigues us, it affects the quality of our decision-making. It can even result in FODA…

Which then takes me to my Audible novel rather than one of 70 podcasts.

My sources and more: If you want to learn about decision fatigue, do read this excellent NY Times Magazine article from John Tierney. And, this is the HBS Op-Ed that initially popularized FOMO.



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Ideal for the classroom, econlife.com reflects Elaine Schwartz’s work as a teacher and a writer. As a teacher at the Kent Place School in Summit, NJ, she’s been an Endowed Chair in Economics and chaired the history department. She’s developed curricula, was a featured teacher in the Annenberg/CPB video project “The Economics Classroom,” and has written several books including Econ 101 ½ (Avon Books/Harper Collins). You can get econlife on a daily basis! Head to econlife.