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January 21, 2009

Why the Sky Isn't Falling: What Successful Direct Response Advertisers Already Know

In late December, the New York Times published an article by University of California Professor Sonja Lyubomirsky, who is the author of "The How of Happiness". Dr. Lyubomirsky's article reveals some fascinating insights about human behavior that any respectable advertising person needs to understand.

But more than that, her article points to some of the reasons why advertising in the current economic climate is proving so profitable for our clients - why people are still buying, rather than hunkering down in their bomb shelters and waiting for the "sun" to shine again.

Because the Times didn't publish her original article, Dr. Lyubomirsky published the original submission on her blog. Below is her post in its entirety:

"The New York Times published an op-ed piece of mine titled "Why We're Still Happy" (Dec 27, 2008). Because it was cut substantially, I thought I'd post the original here:

***

These days, bad news about the economy practically wafts from newspapers and LCD screens. It's all you can do not to sink into panic or all-out despair.

So, after perusing the latest analysis of yet another crisis symptomatic of the collapse of our economy, another alarming set of news (usually in large bold type) that portends the coming of the second Great Depression, you look up from your reading expecting that the world has drastically changed since you've last taken it all in.

But, for most of us, it hasn't. Gaze out your window. And around your neighborhood, movie house, or grocery. Listen in on conversations among coworkers, coffee drinkers, and fellow moms and dads at school. Most of you will notice few signs that anything is horribly awry.

Ask your friends to keep track of their moods and thoughts at random times throughout the day. You'll find that, all in all, they are not spending their days dejected about the economy. Instead, they are mostly preoccupied with the quotidian tasks and concerns of life. Traffic, dinner, homework, deadlines, sharp words, and flirtatious glances.

How can people remain relatively normal, or even happy and upbeat, at the same time that they drown in the bad news?

Because the news affects everyone, not just you.

Research in psychology and economics suggests that when only your salary is cut, you make a foolish investment, or you lose your job, you become considerably less satisfied with your life. But when everyone becomes worse off, your life satisfaction remains pretty much the same.

Indeed, human beings are remarkably attuned to relative position and status. As a famous decade-old study had revealed, people prefer to live in a world in which they receive an annual salary of $50K (when others are pulling in $25K) than an annual salary of $100K (when others are making $200K). Along similar lines, researchers in the UK have demonstrated that we will readily give up our own cash to destroy others' earnings. To some, such findings show up the dark side of human nature, but to me, they reveal an all-too-human truth. We care more about social comparison, about status, about rank, and about so-called positional goods than about the absolute value of our bank accounts or reputations.

For example, Andrew Clark has shown that being laid off hurts less if you reside in a community with a high unemployment rate, being overweight stings less if you live in a country full of the super-sized, and even being married to an unhealthy or plump spouse makes it easier to cope with your own health or weight problem. Shockingly, if you are unemployed, you will, on average, be happier if you spouse is also unemployed than if he or she is working.

So, knowing that everyone's 401K plan, home value, and ability to obtain credit has declined surely dulls the pain.

After a spirited race, the Dodo bird in Alice in Wonderland announces, "Everybody has won, and all must have prizes." In today's economy, everyone loses, and all bear (a reduced) price.

Posted by Jeff Small & Brett Astor at 09:07 AM | Permalink