Author: ken

Manipulating the Brain for Profit

Marketers and advertising agencies are coming to realize that they have been speaking to only the most superficial part of the mind, the conscious part.  “If pitches are to succeed,” says A. K. Pradeep, the founder and chief executive of NeuroFocus, “they need to reach the subconscious level of the brain, the place where consumers develop initial interest in products, inclinations to buy them and brand loyalty.” (See, “Making Ads That Whisper to the Brain.”)

For many years now, marketers have known that the emotional impact of the message is what leads customers to act.  So far, however, finding the messages that actually work has been hit or miss.  Now, according to The New York Times, “volunteers in NeuroFocus marketing tests wear a fabric cap that houses EEG sensors and an eye-tracking device while they look at a commercial, use a Web site or view a movie trailer.”  This allows “researchers to connect the volunteers’ brain patterns with the exact video images or banner ads or logos they’re viewing.”

It had to happen, and now it’s getting easier and cheaper to do.  Should we worry about it?  Will there be anyway of guarding against abuses?  Or does anything go in our freewheeling “free market economy”?

Consumer advocates, who call it “brandwashing,” worry that it has effects on individuals they won’t be informed about.  This may not matter so much if it’s a question of whether you buy Toothpaste A or Toothpaste B, Dr. Pradeep comments, but “if I persuaded you to choose President A or President B, the consequences could be much more profound.”  He adds, “The fact that we can use this technology to do this doesn’t mean we should.”

His company’s clients include American Express, Clorox, General Motors, Campbell Soups and MTV Networks.  Other companies have equally impressive rosters of clients.  Pradeep says his company will not work on political campaigns, nor will it ever “use subliminal techniques — like embedding stimuli that last 30 milliseconds or less — that people can’t consciously register.”

But other companies do, and it is a sure bet that more and more will.  NeuroFocus may stay clear of political campaigns, but already other firms are learning how to do that better and better.  Skeptics say that the technology is unproven.  Moreover, there are other factors that influence our behavior.  The technology does not make us into robots.

But, inevitably, it will become more and more effective, and a real cause of worry.  Unless there is regulation, it is sure to influence our behavior increasingly in ways we won’t be able to detect.

The Contradiction of Profit and Service

The conflict between the profit motive and the desire to serve others is something many of us live with every day.  Like most therapists, I struggle to make a living while also accommodating patients who suddenly find themselves unable to pay my usual fee.  I don’t know if I always get it right, but I take the struggle seriously.

So I think we often miss out on the fact that it is very different for businesses.  With responsibilities distributed in a business, there is room for different points of view.  But, then, in our system, there is a bottom line.  In the end, profit will trump all other considerations.

A new book by Wendell Potter, former director of media relations at CIGNA, makes clear that it is not reasonable to expect reliable and effective health care coverage from insurance companies that are driven to make profits.  He notes the following:  between 2000 and 2008, as private insurers raised premiums by over 90 percent, payments to care providers grew by only 72 percent.  Moreover, even in the recession, profits for the five biggest insurers totaled a staggering $12.2 billion last year, up 56 percent from 2008.  (Deadly Spin, recently reviewed in The Boston Globe, “An insider dissects the health insurance industry.”

The top executives did well, according to Potter, but it is their job to manage profitable companies that give good returns to investors.  They did well because they performed well.  But despite claims to the contrary, their primary job is not to serve the public.

Potter points out that they manage the contradiction in two ways:  they engage in sleezy practices like purging their roles of less profitable customers, like small businesses when their claims go up and individuals with “pre-existing conditions” (now illegal under the new health care law);  then they engage in massive public relations campaigns to discredit critics.  They begin with slogans like “Socialized medicine” and “government takeover,” but go on to talk about “death panels” and provide horror stories about insurance coverage in other countries.

Potter’s book is immensely useful because he was on the inside for 20 years, crafting PR campaigns and writing slogans for politicians (mostly Republicans) to use against efforts at reform.  He supplies facts and stories.  But I don’t think he is telling us something that we don’t already know.

Those who are profiting from the current system simply cannot support reform.  Just like Wall Street cannot welcome regulation, and industries cannot support oversight into safety that cuts into profits.  To expect otherwise is to deny an awkward and unwanted truth – at least, in our system — and allow oneself to be manipulated.

Betting on Justice

Investors increasingly have the chance to buy into the lawsuits of others, and, according to an article in The New York Times, the plaintifs don’t even have to know about it.

“Large banks, hedge funds and private investors hungry for new and lucrative opportunities are bankrolling other people’s lawsuits, pumping hundreds of millions of dollars into medical malpractice claims, divorce battles and class actions against corporations — all in the hope of sharing in the potential winnings.” (See, “Putting Money on Lawsuits, Investors Share in the Payouts.”)

Reading this, my brain lit up with an instant sense of recognition. Hadn’t I seen this before, with mortgages?  By bundling and securitizing mortgages, investment firms created new investment vehicles – which they then aggressively marketed to clients who had been lulled into a false sense of security by the AAA ranking provided by the ratings agencies.  And the people who took out the original mortgages never knew it was happening.

There are a couple of differences with these investments, but it is far from clear that these differences will end up actually making a difference.  As of now, it doesn’t seem as if these lawsuit investments have been aggregated and securitized.  But it could just be a matter of time before creative financiers get into the act and figure out ways to do it:  “July 2013 Divorces” or “Cancer Surgery Malpractice Suits/ 2012.”  Moreover, there doesn’t yet seem to be a way to assess risk.

The absence of any significant reform in the financial industry is increasingly a source of worry.  Who will see the dangers of such investments?  Or the madness crossing the line into our personal lives for such purposes?  Or the impact it will have on the law?

Lawsuits could become an obscene set of “reality shows,” the private dramas and conflicts of ordinary citizens being played out for the profit of others.  Investors will be rooting for plaintiffs or defendants, and ordinary citizens who have the misfortune to be engaged in lawsuits that capture the fancy of investors will become celebrities or villains without ever asking for it.  They will be selected by the market.

And then there are additional worries.  Can the integrity of the law withstand such economic pressures and publicity?  With so much attention and so much money riding on the outcome of trials, can any form of impartiality be maintained?  Will people initiate lawsuits primarily for the investment opportunities they will create?

It is easy to imagine our society becoming a vast casino, bets being placed on anything and everything.  But these are not just bets – they are investments.  New classes of interested parties will be following events over time, and like most investors they will inevitably seek to ensure that their investments pay off.

Shouldn’t we think about this first?

And the “Talking Cure”

I don’t know who coined the term, but whoever it was deserves a medal.  I was introduced to it early in my training as a psychologist and psychoanalyst, and it’s a good diagnosis for those who cannot tolerate doubt.  They believe something is true, essentially, because they cannot bear thinking otherwise.

I see this again and again in my work with traders.  They will take a position, and then hold to it stubbornly as the market turns against them.  Sometimes they just can’t change their minds until, suddenly, they wake up to the fact that have they have lost tens of thousands of dollars.

This issue comes up again as Bloomberg News published a piece by Barry Ritholz, author of Bailout Nation, reiterating some of the obvious truisms about the uncertainties and risks of markets.  He adds a comment about those who attempt to predict them:  “Pundits may hate uncertainty — it tends to makes them look foolish — but markets harbor no such bias. In fact, markets thrive on uncertainty. It is their reason for being.”  (See, “Kiss Your Assets Goodbye When Certainty Reigns.”)

Pundits and financial advisors — and journalists, too — get paid to guide us through the murky realms of future markets.  It’s not really surprising how much they try, given our eagerness to know.  What is more surprising is how quickly we forget their mistakes, and pursue them for our next fix.  Most people who believe pundits or listen to their financial advisors are not “pathologically certain,” but there is a dangerous tendency to lean in that direction and to keep going back for more.

It is a problem that is generally unrecognized because we crave certainty so much, particularly when it comes to money.  It’s hard to see when you have too much conviction.

So how can we become more mindful of our limitations?  How can those who offer advice refrain from being seduced into saying more than they know?   How can we be less willing to entice them into trying?

Here again I am a great believer in the talking cure.  If we talk about it with someone neutral, a friend who isn’t motivated to agree with us too much, we can hear ourselves better.  The friend may have good advice to offer, but, even better, by talking about it we can become more attentive to our own thinking.  And we can become more reflective about our motivations before we act on them.

Locked in Combat

In daily life people get caught up in mutual hatred, unable to see anything about the other person apart from their faults.  It often happens in families and between groups as well.  And it happens in the larger world.

There is no doubt that extremist Muslims hate westerners and even those among themselves who collaborate with us.  But the evidence is piling up that many of us are joining in to keep the hatred alive, providing evidence that justifies their hatred.  “The far right and the jihadis need one another,” says anthropologist Scott Atran.

The plans of Christian ministers to burn Qu’ans clearly show their contempt, and they reinforce the fear and hatred of Muslims in return.  In New York, the vehement opposition to building an Islamic Center and mosque near ground zero confirms the Muslim belief that we will never accept them.  In Europe, there’s a growing impression that Muslims with immigrant backgrounds are “being thrown to the wolves,” says Atran.  France has just banned the wearing of burqas.  Parliamentarians in Holland openly attack Islam. (See “Turn on the Red Light,” in Newsweek.)

The west has been attacked and terrorized by Islamic extremists, and it continues to be attacked by Al Quada operatives who blow up innocent civilians.  It is not hard to understand the wish to retaliate, but it is also not hard to grasp how that can lead to an endless train of violence, steeped in mutual hatred.  Such feelings can be useful in war as a means to motivate soldiers and civilians to fight.  But do we really want to go down that path?

This is not a moral or ethical point.  Nor is it based on the Christian idea of turning the other cheek.  It’s just common sense, rooted in the psychological principle that hatred blinds us to the consequence of our actions.  When it happens to two or more people – or in groups – it’s hard to stop, even when we want to.

In political campaigns the incentives for restraint are loosened.  The short-term gains of a few votes seem to outweigh the long-term harm to peace.  Many observers believe that the French parliament acted cynically to gain votes, and that seems to be true of some Dutch politicians as well.

Will calmer voices prevail here?