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What is the impact of social media on human behaviour?

What is the impact of social media on human behaviour?

On Wednesday 4th February 2004, The Facebook was launched by Harvard student Mark Zuckerberg to connect Harvard students. Little did anyone know how revolutionary this moment in history would be, but more so how it would drive a fundamental change in human interaction and human behaviour.

From a standing start of being used by a handful of Harvard university students, Facebook (they dropped the “The”) is now the biggest social network in the world with over 2.9 billion monthly active users1. To put this into context, according to internetworldstats.com, there are 5.1 billion internet users worldwide, meaning that Facebook is used by almost 60% of the available global audience.

And that’s just Facebook. There are more than 200 social media platforms for people to access, post their views and opinions, and share their daily lives with each of their online friends. 

While there is much good that social media has brought to society, there is also a dark side… but not the dark side that most people assume. I’m talking about the prevalence of fake news.


The long history of fake news

Fake news is far from a new phenomenon.

In 17th-century Britain, coffee shops became a breeding ground for gossip, plotting, and political dissent. The amount of fake news generated at coffee tables became so worrying, that in 1672, King Charles II issued a proclamation “to restrain the spreading of false news” that was helping “to nourish a universal jealousy and dissatisfaction in the minds of all His Majesties good subjects”.

The history books are peppered with examples of fake news. Stories made up for political advantage, financial gain, or simply by mistake, with stories being told before all the facts have been gathered.

But today it’s very different. In King Charles’ days, a couple of people may produce and distribute a series of fake news pamphlets, and at best they would reach a few hundred people over the course of a week or so.

Today’s fake news, thanks to social media, can travel anywhere in the world in seconds, and spread at an alarming speed.

To prove this point, US research company Brookings tracked two specific, yet related tweets sent out on April 23rd, 2018.

The first tweet, about a potential localised terror attack, which was both FALSE and racist, was tweeted at 6:36pm. The first tweet to be posted that was a TRUE reflection of events was posted 43 minutes later at 7:19pm (see image below).

 

By the time the TRUE tweet was posted, the FALSE tweet had already reached over 406,000 people. Exactly 24 hours later, at 6:36pm on April 24th, 2018, the false tweet had reached 1.12 million people, whereas the true tweet had only reached 82,102 people. 


The blurred lines between fact and fiction

The ability for anyone to post a story that could be untrue, or stating opinion as if it’s fact, creates real problems for us as a society, but more so for us as individuals, since it can easily lead us down to the path towards the Illusory Truth Effect 2 a behavioural bias that can see us believing false information to be correct, simply because of repeated exposure.

The blurred lines between fact and fiction mean that when we’re making important decisions – especially financial decisions -- and we need to find evidence to support them, we can very easily run into a minefield, and end up make decisions based on false information. Not necessarily by choice, but by modern-day design.  


What might this mean for you?

Well, it can mean a great deal.

In an era of non-stop information overload, our unconscious behavioural biases are also in overload. We’re constantly trying to avoid framing 3 in a world where so much news comes pre-framed. We try to not let confirmation bias 4 dominate our thoughts. But when it’s difficult to find the truth, and we don’t have the mental or physical capacity to search through thousands of pieces of news to find the truth, it becomes easier to place more emphasis on our beliefs and opinions, even if they aren’t a reflection of the real world or more to the point, our values.

Therefore, it’s crucial that we each take ownership of our own decision-making. We need to do all we can to ensure we understand how we are processing all of the information we receive, including any financial planning advice we are given.

Many financial planning firms focus on the wrong thing. They zone in on products or investments, often at the expense of really getting to know the human they are there to help.

But Murphy Wealth are genuinely different. We put the human first.

Living in an always-on world can sometimes feel relentless and overwhelming. We know that we are constantly bombarded with news from either the mainstream, 24-hour news channels, or more likely, from our busy social media feeds. We are consuming information like never before and this has a significant impact on how we navigate the world around us.

It has an impact on how we process the abundance of available information we’re exposed to, and it has an impact on the underlying behavioural biases that live outside of consciousness and yet impact our decisions.

Social media is ubiquitous. It’s not likely to vanish in our lifetimes, which means that each and every one of us will continue to be exposed to vast quantities of information, news, opinions and views. Real and fake.

Understanding that this can have a real and profound impact on the decisions we make is important. However, understanding how this can impact our financial decisions is critical if we are to give ourselves the best chance at achieving our dreams and aspirations.

 

Neil Bage is Chief Behavioural Officer at Murphy Wealth.

1.       https://www.statista.com/statistics/264810/number-of-monthly-active-facebook-users-worldwide/

2.       Illusory Truth Effect: The illusory truth effect, describes how, when we hear the same false information repeated again and again, we often come to believe it is true. Troublingly, this even happens when people initially know that the information being provided is false.

3.       Framing is where we make a decision based on how information is presented to us. We have a tendency to focus in on information that is positive and avoid information that is negative. In addition, we ignore the “other side of the coin” such as not considering that an 80% fat-free yoghurt contains 20% fat. To learn more, listen here; https://podcasts.apple.com/sg/podcast/s2e3-framing-bias/id1534284786?i=1000498875339

4.       Confirmation Bias is where we search for, or interpret information that is consistent with our existing beliefs, whilst at the same time ignoring any evidence that could prove we are wrong. To learn more, listen here; https://podcasts.apple.com/sg/podcast/s2e2-confirmation-bias/id1534284786?i=1000497800156

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