Buy now, pay later (not for spock)

December 30, 2009 | Filed under: business

I went shopping a few days ago, and even in the middle of a recession caused mainly by lending to people who have no money, this phrase is everywhere:

BUY IT NOW, PAY IN A YEAR

I don’t go for these things. In fact, I only ever bought something (apart from a  car) on credit once, purely because they offered ‘interest free credit’ and refused to give me a discount for paying cash, which I found insulting… Anyway…

Why do these things work? Are people really that stupid to fall for it? Actually yes, and they aren’t stupid, they are emotional, or passionate, and they can’t help it.

I’ve been reading more pop neuroscience books, and reading about the difference between the amygdala and the pre-frontal cortex. Basically the amygdala does the emotional stuff, the PFC does the analytical bit.  The amygdala is seeing “BUY NOW” or more importantly “NOW” and the PFC is seeing “pay later…“.

Why does this work? Because the response from the amigdyla is faster, and often (for most people) louder. It’s especially true for the young, when the PFC is still developing.  Thats partly why they can be more impulsive and reckless, and why kids can’t resist taking sweets even when they understand they will get more sweets later if they resist the urge for 5 minutes (Someone tested that, and found it a phenomenally good indicator of future financial success).

It’s all down to evolution, the amygdala gets first dibs on our attention because it does the rapid pattern-matching stuff such as “IT’S A SNAKE!!!!” rather than the cool analytical “it’s a stick” that takes longer. The amygdala takes care of time sensitive vital emotional stuff like fear, hunger, lust etc. It’s the bit that makes negative scary political TV ads work, and it’s also why BUY NOW PAY LATER works.

Our brains have evolved in creatures concerned for short term survival. Its way more important to eat when we find food than it is to worry about being overweight, hence we have huge trouble  dieting. The same is true of all problems with long term planning. You conciously want to work on your indie game, but your amigdyla just wants you to eat, sleep and have sex. It’s a tug of war!

I’ve read that the stroop test is an indication of how your amygdala beats your PFC, but although it’s fun i’m not convinced. Thats just two different types of pattern matching going on surely?

However, I’m sure there is some truth to the thing that we are hard wired for irrational short term passionate thinking. that’s why some we are rubbish at saving, dieting, healthy eating, or basically doing anything that fights our emotions. we are a long way off becoming vulcans :D

If you are thinking how does this make me sell more games, it’s all about how and why people make purchasing decisions.

You could be playing Gratuitous Space Battles RIGHT NOW. Just Click here for free food sex and sleep.:D

7 Responses to “Buy now, pay later (not for spock)”

  1. Socapex_2K says:

    Quite interesting. But you forgot to put the picture of a sexy girl on that link, like those stupid Evony ads. lol

  2. radio_babylon says:

    while its clear that there is a biological component to this problem, it isnt the sole (or, in my estimation, even primary) factor at work.

    i think for most people the problem with doing all the things that feature “delayed gains” as their primary reward (saving, dieting, working hard for a degree/cert, etc) is that at the point in your life that you begin contemplating delaying immediate gain in favor of greater deferred gain in the future, you dont have any actual experiential verification that the deferred gain IS in fact greater. you have to kinda take it on faith that waiting will pay off… and thats a hard thing to do, especially when the immediate reward *seems* so enticing. then not only do you have to take that leap of faith to begin with, but also maintain enough discipline to not wimp out part-way through… which is actually the WORST case and further reinforces short-term thinking: “look, i delayed, and im no better off (or indeed worse off) than i would have been if i just took the immediate gratification route!” of course, once youve got a few of these “deferred gain” situations under your belt, it becomes a lot easier to *know* at a gut level that its worthwhile to delay… but acquiring that experience is easier said than done.

    typically, this kind of behavior needs to be TAUGHT, the earlier the better, and if it isnt taught by your parents or a mentor or the schools before someone reaches adulthood, its often NEVER learned, which is a tragedy. and its the kind of tragedy that affects EVERYONE; when this behavior is widespread across a population, it leads to the kind of economic disaster the world is currently facing.

    my hope is, when the current economic situation finally turns itself around, there will be enough adults who have learned these lessons the hard way to impart them to the following generations and perhaps keep things on a more even keel for the next 75 years or so, much like what happened after the Great Depression…

  3. cliffski says:

    This is very true. I think it is very telling that the generation of credit card debt is also the generation that didn’t live through WW2 or the great depression. In other words, they don’t recent enough experience of the downside of this attitude.

    I think our brains wiring explains why otherwise reasonable intelligent people who arent by default bad with money can also end up buying stuff they dont need or can’t afford.

  4. radio_babylon says:

    fortunately, i was raised by my grandfather, who was born in 1910, and lived through the depression and fought in WW2… he imparted those values to me, and theyve helped me greatly… especially now. everyone is all “omg economic crisis!!” and im like “uhh what crisis? ive GOT money.” the only debt i have is my house, and its almost paid off (i had the good sense to 1) not buy more house than i needed, 2) save until i could put 1/3 down (50k), 3) take a 15-year note and 4) pay extra on it every month)… in fact, if anything, the economic crisis has been GOOD for me, because everything is so damn cheap right now, and ive actually got some money to be able to take advantage of it.

    i just hope that people LEARN something from all this. but im not too terribly optimistic about that :(

    but youre right, sometimes otherwise money-savvy people make stupid purchases, and the biology might help explain that… hell, i nearly bought a netbook the other day that i have absolutely ZERO use for just because it was so damn cheap… but i have a policy of not buying anything over $100 without waiting 24 hours first (and if i for some reason i cant wait, because the sale is “today only!” then i just dont buy period)… and fortunately i could see the senselessness of the purchase the next day :)

  5. Guy says:

    I think i suffer from this to some extent in that ive managed to buy a good years worth of games in the steam christmass sale (and the D2D one Before) becuase they were there.

  6. paul says:

    Doesnt affect me, I must have an underdeveloped amygdala or an overdeveloped PFC :p
    However, in a debt based money system, money is only created (apart from coins) when someone borrows it. So all the smug clever people with no debts (like me) would be broke without impulsive people getting into debt!

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