Monday, March 1, 2010

Cognitive Fluency

Chris Upton “Easy and True”
Drake Bennet’s Article, “Easy = True” states that cognitive fluency is "simply a measure of how easy it is to think about something, and it turns out that people prefer things that are easy to think about to those that are hard." Upon reading the first paragraph of this article I was immediately questioning its logic. The article suggests that when analyzing company’s financial statements one should ignore price to earnings ratios, debt levels, cash flows, etc., and instead suggests to, “invest in companies with names that are easy to pronounce.” As an accounting major, I was shocked at this statement and this idea simply lacks all logic. This logic cannot be applied to investing in companies because then we should all invest in companies that are easy to say regardless of the fact that they may be losing billions of dollars a year. This argument seems to suffer from the classic psychologist problem that comes with experimentation when all variables are not controlled compared with the independent variable. Correlation does not necessarily result in causation if all dependent variables are not controlled!

After denouncing this first argument of the article, I found their logic and other arguments much more sound. In the case of font and beauty I agreed with them completely. Upon reading about how people prefer clear, simple, and legible font because they trust it more holds true to me. When you see a commercial for a new drug promising to do X, Y, and Z for you, but then at the bottom of the screen they have tiny font that is a disclaimer for their product do you trust the product? I do not because of the small font. The small font causes me to question the product and the truthfulness of its advertisement.

When it comes to font color I thought this was especially interesting because of the role it culturally plays in our society and around the world. For instance the color red is often perceived by Americans as a warning of danger or to abstain from a practice/ activity. This is due to the fact that the color red is commonly used in our societal signs that tell us things such as stop, do not enter, smoking prohibited, etc. However, in different cultures such as China the color red has a completely different meaning. In China, red is associated with power and luck so the normal cognitive beliefs between cultures are not the same. The differences that exist among cultures provide for a very interesting analysis of cognitive psychology. It is important to understanding that what is true in America may not be true everywhere else.

I find Bennet’s argument that short and simple language helps us remember an item to be sound. We can see proof of this in the marketing of products in our society. We identify products by short sayings and jingles. “Got a Hunger? Satisfy it with Snickers,” “Pepsi the choice of a new generation,” “Red bull gives you wings.” Regardless of the fact that more kids may currently like Coke more than Pepsi, we associate these products and remember them because of these short sayings. For instance the other day I was hungry and went to the vending machine. After looking at my options I saw a snickers and immediately thought of its promise to satisfy my hunger….not surprisingly I chose this for my snack.

Bennet also talks about how people identify beauty with what is already familiar to them. I agree with this completely, and find that it is very true when it comes to the “beautiful celebrities “that are portrayed in our society. We think they are beautiful because we recognize them as being beautiful due to constant exposure in our media. When we see a new face we are likely to judge it based on old prior learned beliefs of what we regard as normal and beautiful.

Overall, I enjoyed the article. However, after reading the first paragraph I still question the validity of its argument. Perhaps it is the fact that I am an accounting major, or perhaps because it is the first thing I cognitively associate/remember about the article, but throughout the rest of the article, Bennet makes some very true arguments that can be commonly seen in my everyday interactions.

1 comment:

  1. I'm not sure if I agree with your interpretation of companies with easy-to-pronounce-names. I understand the direction of your thought process, obviously financial statements are the most important thing you can research to determine whether or not to invest in a company, but I don't think he's saying people should invest in a company because it has a simple name. He is merely stating an observation, not stating a fact that you should invest in a company if its' name is easy to pronounce. I think what he's saying is that some companies are ahead of the curve, and in addition to their solid product they have realized that simplicity, even in just a name, can strengthen the product they are selling because it leads to more familiarity and recognition. I think your observation of Snickers slogan is a perfect example. While in this case the name of the company doesn't really come into play, the simplicity of the slogan "Hungry? Why Wait?" has millions of people like yourself standing in front of a vending machine, starving, and thinking to yourself that a Snickers would quench your hunger the best. When a simple memorable name or slogan can be attributed to a product, this is when your shares will be outperforming all the rest.

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