Human behaviour
By
Christine St Anne
Thu 26 Feb 2009
Icelandic pop icon Bjork once noted there is something very strange about human behaviour. In fact, she even penned a song about it.
"If you ever get close to a human be ready to get confused. There is definitely no logic to human behaviour," Bjork wrote.
Human behaviour has often frustrated economic theorists. And it seems such frustration may be shared by the super industry.
While Bjork chose to sing about human behaviour, the Australian Institute of Superannuation Trustees decided to hold a lunch about it.
Andrew Ford, author of the book How Much is Enough, gave the audience an insight into human behaviour and how it affects a person's investment decisions.
Citing research from the United States, Ford said even simple mistakes, such as spending more than you earn and buying at the top and selling at the bottom, were still being made by a vast majority of people.
Too much choice also tended to bamboozle people, with the research also showing people opted for less choice over myriad alternatives.
But in the end, Ford revealed it was inner happiness that would lead people to a less emotive path when it came to investment decisions.
Throwing up an image of the world's most successful investor, Warren Buffett, on his PowerPoint presentation, the audience took note of a simply clad gentleman clutching a plate with a burger and can of Coke.
"Warren Buffett continues to live a simply humble life. His investment portfolio includes a list of the dullest companies. But his conservative, even approach to investing has paid off. It's an approach that has helped him keep emotion out of investing," Ford said.
Ensuring their members achieve inner happiness is perhaps a tall ask for super funds.
While Bjork also wrote "there is no map to human behaviour", Ford noted something practical, such as marketing communciations, could empower people if such communications spoke to them in simple language that could help them avoid a knee-jerk reaction to negative returns.
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