As the human mind is biological in origin, it is not naturally inclined to frame thoughts in absolute terms. Having no reference to an absolute definite scale, the human mind is forced to generate thoughts, pass judgments and form conclusions using relative references. This has wide-ranging implications for the behaviour of individuals, groups and societies.
Relativity among individuals
Relativity and sensation
Psychologist Cialdini's experiment with subjects reporting their sensation of water at room temperature is an example of relative bias affecting the rationalization of individuals. Cialdini instructed subjects to first place one hand in a bucket of warm water, then the other hand in a bucket of room temperature. The subjects reported that the water at room temperature felt cold. Similarly, he repeated the experiment, but changed the warm water to cold water. The subjects subsequently reported feeling that the water at room temperature felt warm.
Relativity affecting how the weights we ascribe to recent and historical events
This simple experiment shows 2 aspects of human irrationality that we often fail to acknowledge - the tendency to ascribe value in a relative manner and the recency effect. The recency effect refers to the way we tend to weight events that happened recently more than events which happened in the past.
Why we treat wins and losses differently
The relativity bias also affects how we treat potential losses and wins. Prospect theory demonstrates our aversion to loss and also our risk-seeking behaviour. (http://en.wikipedia.org/wiki/Prospect_theory) Simply put, we would walk 20 minutes to save $1 on a $4 plate of noodles, while we would not walk to the next Apple store to compare prices for a $700 iPad 2. For losses, we can examine the experiment conducted by Richard Thaler, where students display significantly different behaviours in 2 cases (http://www.sjsu.edu/faculty/watkins/prospect.htm). The first group of students were told to assume that they had won $30 and vote for a coin flip to decided whether they would win or lose $9. 70% of students voted to toss the coin. Another group were then given $30 and offered a chance to flip a coin to decide whether they would receive $21 or $39. 43% of students in the second group chose the coin flip. Thus, when people have gained something, they are reluctant to lose what they have gained. When people have nothing, they tend to adopt risk-seeking behaviour.
Since Prospect Theory seeks to explain the anamolous behaviour through a S-shaped utility curve, I would like propose that relativity bias be used to explain the origin of the S-shape. Relativity affects us in 2 ways, thus shaping the curve. For the example of lunch and iPads, we unconsciously or consciously judge the savings relative to the absolute amount we are intending to spend. Relativity also affects us in an emotional sense through our perceived relative social status. Once we have gained something, we perceive ourselves to be ranked higher in terms of social status and we are reluctant to lose that increased rank.
Examining the concept of identity, we can also break down an individual's perceived identity in terms of how an individual visualizes himself or herself relative to the other people whom he or she interacts with. We assume different roles according to the time and group that we are in.
Since Prospect Theory seeks to explain the anamolous behaviour through a S-shaped utility curve, I would like propose that relativity bias be used to explain the origin of the S-shape. Relativity affects us in 2 ways, thus shaping the curve. For the example of lunch and iPads, we unconsciously or consciously judge the savings relative to the absolute amount we are intending to spend. Relativity also affects us in an emotional sense through our perceived relative social status. Once we have gained something, we perceive ourselves to be ranked higher in terms of social status and we are reluctant to lose that increased rank.
Examining the concept of identity, we can also break down an individual's perceived identity in terms of how an individual visualizes himself or herself relative to the other people whom he or she interacts with. We assume different roles according to the time and group that we are in.
We can thus attempt to understand individual human fallacies such as the attitude towards sunk costs, gamblers displaying increasingly desperate behaviour and the failure to learn from history.
Relativity among groups
Envy driving economic exertions
What happens when the effect of the relativity bias is extended to groups? Many people would instinctively choose the option of winning $5,000 in a lottery while their neighbours gain nothing, than win $50,000 while all their neighbours win $100,000. This explains the general disquiet felt when someone gets a brand new sports car while the rest of their friends are driving normal sedans. This explains the rush to keep appearences up with the neighbours, office politics and the behaviour of relatives at family gatherings. The annual jockeying of positions is keenly felt by those who come from a Chinese family, although I believe this behaviour is present in most cultures. Hence, as income inequality increases, society will naturally experience greater unhappiness and disquiet until a great reset. Greed may not drive the economic progress as much as envy (http://falkenblog.blogspot.com/2010/03/why-envy-dominates-greed.html).
Fluctuations in the stock markets
If we allow ourselves to treat the stock market as an emergent system from the behaviour of individuals, the bias due to relativity becomes useful in explaining the inherent irrationality present in stock market movements. The Efficient Market Hypothesis is only roughly right, with the aberrant behaviour ("Mr Market") probably being explained by the relativity bias. Since relativity affects our decision-making processes with respect to time (recency), losses and wins, it is understandable why people cut their losses too late and why people sell their winners too early. It would be resisting typical hardwired human tendencies to not do so.
The relativity of morality and social norms
What is morality and social norms? If you merely hold yourself and others true to certain principles and commitments, you are merely being self-righteous. I will attempt to define morality as a common but not universal unexclusive dynamic intertwined commitments among a large porous group of people that emerges from the set of mutual commitments. Morality and social norms only become powerful as a set of mutually binding commitments relative to the individuals in a group or society. However, the boundaries of the group are porous, the dynamic set is largely common but not universally agreed upon and the way morality emerges cannot be controlled. Hence, it is logical to follow why morality becomes extremely subjective and divisive, as undeniably, there exists relative standards of commitments as perceived by each individual within the porous group. Regardless of such an argument, I do believe there exists universal human truths such as the "Golden Rule", which seems to be repeated across multiple monotheistic and multitheistic religions.
Possible counters against relativity
Are we able to counter this relativity bias? This relativity bias is not always bad. If we cast our future selves as always being relatively better than our current selves, this personal reflection using relative judgements is useful for self-improvement.
It is my own personal hope (warning: introduction of subjective human bias) that we are able to detect signs that we are being subjective and objectively correct our thought processes. Remarkably, Buddhism and Stoicism have devised practices that address this fallacy of relativity bias in human behaviour.
It is my own personal hope (warning: introduction of subjective human bias) that we are able to detect signs that we are being subjective and objectively correct our thought processes. Remarkably, Buddhism and Stoicism have devised practices that address this fallacy of relativity bias in human behaviour.
Both Buddhism and Stoicism seems to emphasize a clear recognition of desires or insatiables. Having recognized the presence of these desires, one cultivates a mindset that reflects upon these desires and devises practices to rationalize why those desires are unnecessary. One method used is the concept of "impermanence". Recognizing that most things life are transient, we are able to cast the desire or want as being a mere blip in any relevant timeline we choose. We can also choose to frame what we lack into what we already possess. Before getting angry, we can also observe the emotional state in which we are getting angry and find a way to cast the situation in a relative favourable light. Thus, only a person's imagination limits the number of alternative reference frames to switch to in a tricky situation.
On a deeper level, through daily cultivation, Buddhism and Stoicism works on removing the generation of thoughts that lead to such desires. Clearing the mist of such desires, one can then focus on true happiness.
Personally, I find this concept of relativity very useful. I find myself being extremely arrogrant most of the time. By shifting my relative frame of reference, I am attempting to find a way to reduce or remove this arrogance as way to introducing much-needed humility. I also tend to judge people extremely quickly and harshly. By shifting my frame of reference, I see the person completely and am able to appreciate the person's faults relative to their strengths.
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