Accounting The Cost Of Being Outside In The Cold


Have you read the health headlines lately? Apparently everything is going to get us at some time or another. The one that had us laughing was a warning to stay warm for the big freeze. All too often the simple pleasures, conveniences and familiarities, which seem to make life more comfortable, hold a hidden unpleasant side effect – I already know it probably won’t do me any favour having a mid-week Merlot, a Kit-Kat with my coffee or stare at the stairs while I’m riding the escalator…. but headlining a warning to stay warm, because it’s cold, is definitely from the school of lazy translation.

Research into the press coverage of scientific studies has been done, with a co-author saying, “The cumulative effect of so much potential exaggeration and misinformation could be very large”.  How we correlate potentially inflated headlines and conclude our own guidelines is as interesting as how lazy headlines disinterest us in reading the information that supplies them.

Relevant to finance, according to a paper I came across, mental accounting  (Thaler, Richard H. ‘Mental Accounting Matters’) is a process we use to measure the value of goods – our own `it’s-worth-it’  calculator.  The paper describes how we juggle ideas to make ourselves feel better about our choices or ‘losses less painful’ and how ‘attractiveness of choice’ is perceived from personal reference points and mental accounting, which includes using minimal account (examining differences between two options) through some using comprehensive account (incorporating all factors).  I found it a fascinating read with one hypothesis about shoe buying especially amusing for its accuracy:  We buy perfectly fitting new shoes, however, the first time we wear them, they hurt. A few days later, we try again, but discover they hurt even more. What happens now?  The author’s prediction is  1) the more we pay the more we’ll try to wear them,  2) eventually we will stop wearing them, but we won’t throw them away,  3) stored away, and the more we paid, the longer they’ll be stored. Eventually, we’ll get rid of them but not until we’ve decided their depreciation.Change

Using the dictionary definition of accounting (‘system of recording and summarizing business and financial transactions in books, analysing, verifying and reporting the results’), the paper explains how being our own accountants in daily life we use simplified but similar processes to manage our spending and keep it under control with, supposedly, conditioning (in essence perception of value) utilised as a basis for mental accounting.

The differing reference ‘frame’ as a value measurement happens between businesses and customers. Hence there’s no surprise that I don’t work with everyone who comes to me: the builder-developer who hadn’t factored sufficiently to cover all the gaps, the landlord who’d done their maths and wanted ‘cheap’ but forgetting their long term plan, the director of a retail pharmacy who’d spent an unusually excessive time ‘thinking’ about a project that it was ‘no longer viable’.

Input for perspective isn’t accumulated identically therefore, having differing structures for our reference points, what is ‘perceived’ as, for example, a saving for one person, might have a costlier impact for another.  Relevant to our value perceptions placed against the choices we make, is where those, or that, from which we take information, gain and understand their information, before translation onwards.

Why take the stairs?  What difference does it matter having a mid-day chocolate biscuit?

Health and wealth, two primary areas to our lives, they can be as confusing and complex, as precarious and problematic.  Would that headline have been better framed as how to stay healthy in the cold, than as a warning?  Perception relies on perspective, the more distorted or misleading a perspective – the less we are aware.

My perspective of being cold is, it’s uncomfortable, I’m past the `Big 4-0′ and live in Britain, so it’s practically a given, base layers  are a part of life during the  British winter, and sometimes summer, when temperatures slide I have no intention of being frozen out but I don’t need a reminder to stay warm, I need information on how to stay warm.

Image credits: brett Jordan; SUF   Article credit: Copyright SUF © 2015