Wednesday, June 8, 2011

Mental Accounting and Countries

Mental accounting is the idea that people think about outcomes in terms of particular categories, or mental accounts. You think of the profits on your risky share portfolio as being one set of money, and the profits on your kid's college fund invested in safe bonds as another set of money, and evaluate them differently. In reality, it's all your money, and it's all transferable. You ought to be optimising over the whole portfolio, but people usually don't.

Another area this shows up is in terms of travelling to countries. There is a certain class of traveller who I refer to as a 'list-checker'. They view it as their mission to go to as many countries as possible. But crucially, they tend to only go to each one once, and each one is somewhat interchangeable. Typically, these people are amongst the worst bores for telling travel stories, constantly interjecting 'I've been there' whenever a country comes up. This interruption is rarely associated with an actually interesting anecdote related to the current discussion, but instead is merely there to remind you how cultured and worldly they are. Their aim is not necessarily 'seeing more stuff', but more 'getting to tell people they've been to dozens of countries'.

If you want to see how this makes no sense at all, consider a map of South America.

(image credit)

According to wikipedia numbers, Brazil has about 48% of the total land area of South America, and about 52% of the people in South America. So regardless of whether you're after a representative sample of seeing different geography in South America or meeting different people in South America, you ought to spend half your South American vacations in Brazil, and the other half in the rest of the countries combined.

The list-checker doesn't work this way, of course. They'll spend a week in Brazil doing 4 days in Rio and 3 in Sao Paulo, and declare victory. "I've already been to Brazil!", they'll declare. "Let's check out what's in Suriname."

The answer is of course, "f*** all", and they'd be much better off seeing more of Brazil. That's assuming that they're actually after more interesting experiences. On the other hand, if you take their preferences seriously and think that there really is nothing more important than checking off that list, then they should stick to what they're doing. Tick off that country!

Here's the way to tell if you're a list-checker or not. If the northern half of Brazil decided to split off into a separate country called 'Holmesia', would you feel a subtle urge to go there that you don't currently feel?

If you would, you are mega lame. (Unless you're so enamoured of yer 'umble narrator that you're drawn by the name alone - in that case, think of it as 'Amazonia', and do the exercise again.)

Don't be that guy. Nobody likes a list-checker.

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