Producer’s note: Someone on Quora asked: What is the psychology behind FOMO? Here is one of the best answers that’s been pulled from the thread.
Fear of missing out (FOMO) is an interesting psychological phenomena. And it doesn’t just relate to a Friday night party or that next hot Tinder date. FOMO can be costing you money. Seriously. Understanding FOMO can save you heartache and dollars.
In behavioral economics, and decision theory, the psychology behind FOMO can be partially explained by loss aversion. Amos Tversky and Daniel Kahneman demonstrated people’s strong tendency to want to avoid any losses. In fact, the research suggests that losses are twice as impactful on people, psychologically, as gains. This leads to risk aversion; we just hate to lose out on anything.
To add to that, people are more FOMO to lose what they already have or think they have. This plays into effect when you are going to buy a car, looking for a house, or going on a vacation.
Next time you are going to make a really big purchase, and if you want to save money, don’t even look at the high end item. Just window shopping at Ferrari, will cause you FOMO and hurt your pocket book.
Barry Schwartz did some interesting research on people buying cars.
Option 1: Customers saw the fully loaded version of the car. Then when they said the price was too expensive, the dealer took away options in an effort to reduce the price.
Option 2: Customers saw the base price of the car. Then the dealer asked them to select which options they wanted, increasing the price incrementally.
Result: People spent more money, and were less satisfied, in the first condition. The psychological theory is that people experience FOMO and are reluctant to give up what they felt they already had.
So, next time you are looking to make a big purchase, start by looking at the cheaper models and then move up. Don’t even expose yourself to FOMO by looking at the high end options first.
Another principle psychological principle behind FOMO is The Paradox of Choice. Schwartz wrote this FOMO credo, which explains that the more choices we have, the less happy we are with what we choose. Too many choices lead to anxiety and depressive FOMO feelings.
The people most sensitive to FOMO, according to Schwartz, are maximizers, people who are always trying to get “the best” out of every situation. Maximizers are more prone to regret, and depression over the choices they make.
To reduce FOMO and increase happiness and savings, the key is learning to accept “good enough.” Reduce the number of options you consider before making a decision, and practice gratitude for what is good in a decision rather than focusing on regret and disappointments with what is less than ideal.