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The Technology Effect

by: Allison Montgomery  /  April 15, 2015

Have you ever invested in technology stocks because you were confident they would perform well, despite truly understanding that technology? Do you binge eat junk food while watching Netflix because surely, by the time you are made ill by your lousy eating habits, there will be new technology to fix the problems your diet has caused? According to recent research from the University of Missouri, these seemingly harmless decisions could end up causing you unexpected troubles.
University of Missouri researcher Chris Robert says that "Technology has advanced to the extent that people may not understand how a particular technology works, but they do assume that it will work," meaning that this way of thinking can lead to people making important decisions based off the assumption that the technology will indeed work. Robert asserts that because people unconsciously associate technology with success, it influences things such as forecasts of business performance and financial decisions. This has been dubbed the "technology effect."
The University's research included three different studies. The first was the measurement of participants who unconsciously associated technology with success. They asked a second group to make business decisions based on new technology they were either familiar or unfamiliar with. Lastly, they had a third group make decisions on technology-related stocks. The results were that people heavily invested in technology, even though those particular stocks weren't projected to do any better than other options available.
Even more alarming is that the bias tends to occur more often when the technology is unfamiliar to a person. Roberts suggests seeking help from an expert in that specific technology before making important decisions-especially financial ones.
Robert said, "People should be mindful that when they make decisions about many things in their lives, they might unconsciously be influenced by how much they think technology can affect the outcome. This belief could affect how governments make decisions about allocations of resources, how corporations make decisions about research and development, or how individuals make purchase and investment decisions."
Not only do people make financial and business decisions based on their trust in technology, but they also make personal decisions such as forgoing healthy eating because they depend on that technology will find a way to cure whatever ails them. While medical technology has come a long way, it is never a guaranteed success.
Robert believes it is crucial for consumers and financial advisors, and corporate decision-makers to be aware of the technology effect and its impact on decision-making.
So be smart, do your due diligence before making any important decisions – especially when they affect your finances or health. It could save you a lot of money, as well as frustration.

Written by Allison Montgomery  /  April 15, 2015