Human Hardware: Risk vs Reward, Expressed Through Search

We are emotional creatures. In fact, we are the most emotional creatures on the planet. Emotions are what cause us to act. The very word emotion means “to move” in Latin. Emotions move us to action. They cause us to avoid danger and pursue pleasure. They propel us to genetic propagation and steer us from genetic annihilation.

Emotions do not equal weakness

For a long time, we as humans have denied our emotional heritage. We have dismissed emotions as weak and impulsive. The purely rational creature was considered the human ideal through several centuries, from Descartes to Sherlock Holmes to Star Trek’s Spock. Consider this quote from Arthur Conan Doyle’s “A Scandal in Bohemia”:

“It was not that he (Sherlock Holmes) felt any emotion akin to love for Irene Adler. All emotions, and that one particularly, were abhorrent to his cold, precise but admirably balanced mind. He was, I take it, the most perfect reasoning and observing machine that the world has seen, but as a lover he would have placed himself in a false position.”

At least with Spock, we started to get hints that perhaps emotion had a place. Perhaps it’s our emotional frailty that makes us all too imperfectly human. But it wasn’t until the last two decades that we began to understand, thanks to the work of Antonio Damasio, Joseph LeDoux and others, that emotions are irrevocably connected to the act of reasoning. In fact, if we don’t have emotions, we can’t reason. We become human calculators that endlessly weigh pros and cons without being able to make a decision. Our gut feelings, more elegantly called somatic markers by Damasio, are what tips the balance and makes us able to decide one way or another. Damasio’s famous patient “Elliot” had exactly this problem, due to a massive tumor in his frontal lobes. Despite testing at or above normal on every psychological and intelligence test Damasio threw at him, Elliot couldn’t hold a job, maintain his marriage, or make sensible decisions. Elliot had lost the loop between his emotions and his rational mind. He became, for all intents and purposes, Spock, and it didn’t work out very well for him.

But emotions can equal irrational

While essential, emotions are often irrational. This has led to a recalibration of economics by many, notably Amos Tversky and Daniel Kahneman. Adam Smith’s model assumed rational behavior on the part of humans. Tversky and Kahneman, drawing on their unusually diverse academic backgrounds (primarily cognitive psychology and mathematics), began laying the groundwork for what is now called behavioral economics in the 70’s (sadly, Tversky passed away from cancer in 1996). Behavioral economics embraces the fact that humans make irrational and biased decisions because we are driven by emotions. Our decision mindscape is governed by polar forces variously called risk and reward, hedonism and utility, promotion and prevention.

The wiring of emotions

Our emotional circuitry is vastly complex. Neuroscientists are currently trying to map the neural structures that control our emotions and decision making, but it’s not easy. Contrary to what many of us believe, there is no “emotional center” to our brains. Many distinct parts are involved in the processing of emotions, including both the more modern (in evolutionary terms) neo cortical areas and the older limbic structures. Areas such as the amygdala (the fear center), the ventral striatum (the reward center), the insula (the risk control center), and the medial prefrontal cortex (the executive function core of the brain) can variously “light up” (in fMRI studies) as we ponder risk vs reward. As evolution adds new capabilities, it doesn’t replace; it builds on top of what’s already there. This creates a rather complex and often inefficiently designed process. But this is what we have inherited, and despite its design flaws, our human hardware is the most amazing biological mechanism in existence.

In addition to our neural circuitry, emotions are also governed by a mix of neurochemicals as well, including serotonin, dopamine, oxytocin, noradrenalin, and many others. These chemicals enhance or inhibit the performance of receptors on our neurons in various centers of the brain and are intimately involved in the processing of emotions. Almost every mood modifier, legal or otherwise, act on these neurotransmitters, altering the composition of our “neural soup.”

Emotions mirrored in Google’s click maps

So, with our neurobiological homework done, let’s look at how this plays out in the world today. comScore caused a minor furor in the world of search early this year when they announced that the composite make up of clicks on Google included fewer paid clicks. Analysists, doing what analysts do in the absence of commentary from Google, began speculating that the sky was falling on the mighty search engine. After all, we weren’t seeing the same drops in commercial clicking on Yahoo or Microsoft. At least, not to the same extent. It seemed that on Google, people weren’t clicking on ads anymore. Google’s share price tanked. Google quickly responded that it was due to changes they were making in their quality score, which dictates when ads will be shown, especially in the valuable “North” (top sponsored) real estate. comScore added that this was one data point from the US alone and Google’s worldwide business was doing very well, thank you.

As luck would have it, I had lunch with comScore’s SVP of Search and Media, James Lamberti, the day of the fateful announcement. James was understandably a little nervous, as the announcement hadn’t gone public yet, and he knew what the reaction would be. We speculated on the possible causes and why we weren’t seeing the same degree of drop on Microsoft and Yahoo. We didn’t come up with any answers.

It’s been 3 months since that lunch in Palo Alto and I recently had a chance to chat with Gian Fulgoni, the Chairman of comScore. In the intervening time, I had come up with another reason, one tied to behavioral economics. My hypothesis is that both the analysts and Google were right. A shift in user behavior was compounded by Google’s tweaking of the commercial threshold. Analysts were quick to pounce on Google because they didn’t see similar dramatic drops in the competitors. I think to find the hypothetical answer to this, we have to look at a pretty diverse set of factors, including the macro economic climate, the make up of our social networks, our human aspirations and anxiety, our increasing use of search, and finally, our emotions.

I’m not in the mood

First of all, our mood, which is governed by our emotions, colors everything we do, including how we shop. We buy more when we’re in a good mood. We buy less when we’re anxious. When we’re in a good mood, our brains are bathed in neurotransmitters that alter the brain chemistry, putting us on an enduring high (the same effect is realized by cocaine). Our reward center is on high alert, as we seek pleasure through the act of acquiring new goods. The risk circuitry of our brain is dampened. In our culture, this consumer high is fueled by the use of credit. Availability of credit removes us from a stimulus that reduces our desire to buy, the pain of parting with cash. As humans, we’ve built up a rather complicated relationship with cash (Dan Ariely has done extensive academic research in this area). Despite the fact that cash has only symbolic value, we’ve built up a heightened sensitivity to losing it. Psychologically, it’s much harder to part with 100 dollars from our wallet than it is to put 100 dollars on our credit card. So, if you combine a good mood with ubiquitous credit, you have an emotional climate that guarantees robust consumer activity.

On the flip side, anxiety and a negative mood dampen our desire to buy. Instead of seeking to buy new things, we seek information about how to hang on to what we have. We “hunker down” and go into a loss prevention mode. Evolution had dictated that loss looms larger than gain. We are pre-wired to protect what we have more vigorously than to seek to acquire new possessions. In our drive to protect our possessions, we go into a defensive mode and start circling our wagons. We seek information to help us defend ourselves against loss.

The mood of the nation

Given this emotional underpinning, think about the collective mood of the nation over the last several months. We have been inundated by bad news: recession, a war, record mortgage foreclosures, a credit crisis, soaring gas prices, global warming. If that’s not enough to sap all the serotonin from your brain, nothing is. But to really understand how this barrage of bad news affects us on an individual basis, it’s important to know how our moods are altered by external factors.

Psychologist David Lykken believed we have a happiness set point. No matter what happens to us, over time we return to a genetically pre-determined level of happiness. Despite the short term impact that winning a lottery or losing a job might have on you, in time you return to your happiness set point. Even more amazingly, psychologists Dacher Keltner and LeeAnne Harker from the University of California, Berkley, was able to predict the life long happiness of subjects based on nothing but their college yearbook pictures and the way they smiled (see Duchenne smile for more).

But even if we have an emotional equilibrium, it’s impacted on a daily basis by our environment. We are surrounded on a daily basis by different emotional, mood altering emotional stimuli. Often, we absorb these on an unconscious basis, with our moods shifting without our knowing the reasons why. The more homogeneous and connected our society, the more we share a common mood. Emotional contagion is driven by the strength of our social network ties, and there is no society on earth that is more connected and more easily influenced than the US. We watch the same TV, we listen to the same news, we visit the same websites, and we have the same conversations during our coffee breaks.

Each stimuli, negative or positive, has the ability to alter our mood. Negative stimuli promote anxiety and a desire to protect what we have. Positive stimuli promote euphoria and a desire to seek rewards. The balance of stimuli will largely determine our moods. I think it’s fair to say that a barometer of the mood of the US would have been primarily in negative territory in the last year. As a consequence, we’re in prevention mode.

Aspirations and anxiety in searching

Now, let’s look at how we express ourselves through search. John Battelle called search the “database of intentions,” and that’s an apt name. I have often called search the connection between intent and content. The fact is, more and more often, when we seek information, we do so through search.

Now, let’s return to our moods and how they drive our actions. If we’re in a good mood and looking to acquire, we will be considering purchases. Consideration requires information, which will often be sought through a search engine. But I believe consideration is not a distinct phase, but rather a continuum. There’s the consideration that happens when my washing machine dies and I decide to buy a new one this weekend. But then there’s a much more subtle, much more emotional consideration that is prevalent when the nation’s mood is running high. We start dreaming about our ultimate rewards: a new house, a new car, a dream vacation, a motor home, a boat. And as we dream, we live those dreams out online. That vicarious consumerism usually starts with a search. I believe it was Kevin Lee that first coined this “aspirational searches,” a term I love. For me, my aspirational searches are a condo in Hawaii, a plane, or a sailboat, despite the fact that I’m several years away from being able to spend my winters in Hawaii, I’ve never taken a flying lesson, and the last time I sailed was 20 years ago, and that incident ended in my being towed back to shore behind a motorboat. Never mind, because online, I can dream without worrying about the intrusion of reality. Of course, for the poor marketer tracking my behavior on the other end, there was no way of knowing that I may never buy a Kauai condo, a Cessna 182, or a 32″ boat. I’m certainly not in the market for any of these in the foreseeable future.

But what if our mood turns to anxiety about the future? We still search, but we search for different things. We search for information needed to help us weather the storm. Or, we search out of a desperate desire to need to know just how bad things are. The following Google Trend graphs illustrate far better than I just how our mood has shifted and how that’s reflected in search:

The above graph shows is a sobering reflecting of the housing industry, showing search trends for house plans and foreclosures.

The ultimate aspirational search, “Ferrari,” has been in a slow decline over the last 4 years, while searches for “recession” are up significantly.

Motor homes and sailboats are in similar decline.

While gas prices are on everybody’s mind lately.

What happened to Google’s ad clicks?

The graphs above show a few isolated examples in the shift of our collective moods, mirrored through search. There’s always a danger in showing a few examples in support of a general trend, but I believe what the comScore numbers showed was the aggregate results of these trends. As comScore stated, the trend was puzzling for a few reasons:

“The most puzzling data element is that Google’s U.S. paid clicks dropped sequentially by 7%, while, at the same time, its total number of search queries grew by 9%. At the same time, Google’s market share of all search queries grew slightly from December, and its annual query growth remains very strong. All indicators point to the company continuing to do very well as far as consumer usage and competitive position. The drop in paid clicks becomes even more puzzling when it is normalized on a per query basis: The number of paid clicks per search query drops by 16% in one month! The corresponding metric for the rest of the market drops by 4%. What accounts for this dramatic difference?”

Analysts believed it was a softening of the impact of search ads and that the mighty Google was showing its Achilles heel. It wasn’t this at all. It’s that the searches that were being launched, especially on Google, were showing fewer ads. There was a compound effect being felt. January, which is the month the data shows, is typically a month where our mood swings into negative territory from the temporary lift it gets during Christmas. We tend to buffer this effect by dreaming a little online, whether it’s planning a holiday, thinking about a new car, or planning a new house. Notice the uptick after the typical December trough in each of the above graphs that show aspirational searches. But, in the trend graph for “recession”, notice the huge upswing in both news about recession and queries for recession in January. Just at the time we tend to improve our mood with dreams of big ticket consumer purchases, we were being bombarded with bad news. Risk replaced reward in our collective consciousness, and, more importantly, our emotions.

Compounding this was the fact that at the same time, Google became more stringent about showing ads. Google has always been the least aggressive of the search players in showing ads for non-commercial searches for the sake of relevancy, and they raised the bar through January. So, you had fewer commercial searches being launched, more informational searches replacing them as people went into defensive mode, and Google tightening the screws on ad presentation at the same time. It all came together to create the aggregate click picture that comScore reported on. If anything, this report highlighted the importance of search as a barometer of social mood, if we take the time to read it correctly.

Gord Hotchkiss is CEO of Enquiro, a search marketing firm that produces search engine user eye tracking studies and other research. The Just Behave column appears Fridays at Search Engine Land.