My answer is… well, depending on the way you ask the question!!!

Have you ever felt swayed when making a decision? Or answered the same question differently on separate occasions simply because of the way that question was posed? Well, if so, you’ve just experienced the power of Framing!

This framing effect permeates throughout society and is used by all; Framing works particularly well as a tactic to influence our decisions because the average person doesn’t have time to carry out sufficient research to counter the frame.

For example, politicians may frame a position, should they be looking to implement some new scheme. Let’s say cleaner energy. They can decide to frame their position as either a) If you adopt this new system, then on average it will save you €300 per year or b) if you don’t adopt this new system, then it will cost you €300 per year. Numerous studies have shown that if this same information is framed in terms of losses rather than gains that it is much more powerful and more likely to be effective. Thus option B in this scenario is a far more powerful frame and therefore used to generate superior results.
Another good example of how this framing bias works comes from a journal on “Rational Choice and the Framing of Decisions” by Tversky and Kahneman. In their study of preferences between medical treatments, (McNeil et al 1982) respondents were given statistical information about the outcomes of two treatments for lung cancer. The same statistics were presented to some respondents in terms of Survival rates and to others in terms of Mortality rates. The respondents were then asked to indicate their preferred treatment. The information was presented as follows;
Survival Frame!
Surgery: Of 100 people having surgery, 90 live through the post-operative period, 68 are alive at the end of the 1st year and 34 are alive at the end of 5 years.
Radiation therapy: Of 100 people having radiation therapy, all live through the treatment, 77 are alive at the end of the 1st year and 22 are still alive after 5 years.

Mortality Frame!
Surgery: Of 100 people having surgery, 10 die during surgery or the post-operative period, 32 are dead by the end of the 1st year and 66 are dead after 5 years
Radiation therapy: Of 100 people having radiation therapy, none die during treatment, 23 die by the end of the 1st year and 78 are dead after 5 years
According to the study, the difference in the way these very same questions were framed resulted in significantly different responses. The overall percentage of respondents who favoured radiation therapy rose from 18% in the survival frame to 44% in the mortality frame even though they had been given the exact same information! The advantage of radiation therapy over surgery obviously looms larger when stated as a reduction of the risk of immediate death from 10% to 0% rather than an increase from 90% to 100% in the rate of survival.
A policy paper published by Dr Peter Lunn of the ESRI discussed MINDSPACE and the UK Governments thoughts on using behavioural science to generate policy and influence future policy design.
This MINDSPACE acronym incorporates a number of behavioural biases, including framing, amongst others, which I have previously spoken about. If the UK Government is actively engaged in spending time and money on this, I feel you should at least consider its implications for you, in decisions you make around your financial future. Furthermore, possibly the biggest danger with this framing bias is that it is often presented within the context of providing people with just two options. One of those options will generally be a frame to encourage a response beneficial to the presenting body.
Messenger – We are heavily influenced by who communicates information.
Incentives – Our responses to incentives are shaped by predictable mental shortcuts such as strongly avoiding losses
Norms – We are strongly influenced by what others do
Defaults – We “go with the flow” of pre-set options
Salience – Our attention is drawn to what is novel and seems relevant to us
Priming – Our acts are often influenced by sub-conscious cues
Affect – Our emotional associations can powerfully shape our actions
Commitments – We seek to be consistent with our public promises and reciprocate acts
Ego – We act in ways that make us feel better about ourselves

When making financial decisions or looking at planning your Financial Future, or to reserve your free Discovery Meeting consultaion, get in touch with us today.. Paul is the Managing Director of Lifestyle Financial Planners Ltd, has been in business since 1985 and offers specialist, tax efficient wealth management, retirement and estate planning solutions to our customers. Paul is a Certified Financial Planner and holds a Masters Degree from UCD in Financial Services and Risk Management.
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Waiver: The information contained in this article is for general information only and cannot be relied upon as the basis for any form of agreement or advice. The author recommends that you seek independent tax, legal or financial advice relevant to your own particular circumstances.
Published May 8th,2017

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