Behavioural Economics: Doing the Gruen

When making our future financial plans, the best investment plan can go to pieces if our expenditure gets out of control.

Whilst we know general inflation is largely unavoidable (hence we plan for it in our projections) it can still be hard not to overspend, particularly when every major retailer employs teams of people to make spending easier.

This came to mind recently while I was talking to a friend about the ABC show Gruen, which looks at the world of advertising. The show is named after the architect Victor Gruen, who designed shopping malls and stores in a deliberately confusing way, so that shoppers will forget their intentions and make impulse purchases.

If you’ve ever been to an Ikea to buy one item, you’ll know how hard it is to get in and out quickly.

Similarly, supermarkets will layout their stores so that ‘essentials’ like milk and eggs at the back of the store, hoping that you’ll pick up other items on the way.

Have a look at this list of different psychological techniques that are used in advertising on the Visual Capitalist website

Many of these will be familiar, but there’s perhaps a few there that you didn’t know.

By being aware of them, you’ll find you can spot them more easily in day-to-day transactions.

Of course, some techniques Financial Planners are prone to use too – helping someone to clear a credit card or set up a regular investment plan by visualising it as ‘the cost of a coffee per day’ is generally more effective than saying $100 a month or $1,200 a year!