Peer pressure was a buzzword when I was a young buck.
The lesson was: don’t give into peers that would pressure you to do bad things.
You may get made fun of. You may not fit in. But don’t give into social conformity if it takes you in the wrong direction.
This is not just a problem for kids and teenagers.
Adults give in to peer pressure all the time.
In their book Nudge: Improving Decisions About Health, Wealth, and Happiness, the authors give several examples of social influence:
Obesity is contagious. If your best friends get fat, your risk of gaining weight goes up.
Broadcasters mimic one another, producing otherwise inexplicable fads in programming. (Think reality television, American Idol and its siblings, game shows that come and go, the rise and fall and rise of science fiction, and so forth)…
Federal judges on three-judge panels are affected by the votes of their colleagues. The typical Republican appointee shows pretty liberal voting patterns when sitting with two Democratic appointees, and the typical Democratic appointee shows pretty conservative voting patterns when sitting with two Republican appointees. Both sets of appointees show far more moderate voting patterns when they are sitting with at least one judge appointed by a president of the opposing political party.1
This kind of thing happens in the stock market consistently.
When everyone is buying, it’s easier to buy.
When everyone is selling, it’s easier to sell.
As the authors say, “The bottom line is that Humans are easily nudged by other Humans.”2
So, who is nudging you?
- What family members or friends do you hang out with most?
- What are your media sources?
- What does your social networking feed look like?
Make a list of each.
Now ask the following questions to determine what each one is nudging you towards:
- Are they making you want to keep-up-with-the-Joneses?
- Are they giving you a positive or negative view of the world?
- Do they make you more hopeful and wiser or more cynical and foolish?
- Do they have a growth mindset or an I-got-it-all-figured-out mindset?
- How do your peers and social influences pressure you to act in certain ways about money and investing?
- Has that been helping you or hurting you?
If it’s helping you, continue in those media spaces and friendships.
If it’s hurting you, make some changes today.
- Cut the cord.
- Delete the app.
- Join a new club.
- Make a new friend.
- Reach out to an old friend.
- Read a book or listen to a podcast that you wouldn’t normally consume.
What and who we surround ourselves with shapes us financially and personally.
- Richard H. Thaler & Cass R. Sunstein, p. 55.