I was quite amused by the debate on the Singapore ‘chope’ culture. Those who does not live in Singapore find it strange and there has been called by certain quarters to ban this culture.
What I want to write today is to explain the psychology behind the chope culture and as well as to examine the psychology behind the critics. With this understanding on psychology, we can actually see a parallel issue with financial planning. Most of the psychology explained below is not invented by me and can be found in textbooks.
What is the problem?
The first thing we need to ask ourselves is why does people need to chope a seat ? The main reason is simply because there is a serious overcrowding issue in Singapore. There is fear that there will be no seat to sit after a person orders his or her food. The second issue is one of safety. It is very dangerous to carry a tray of hot meal looking for seat. The third reason is because of wanting to sit together with colleagues instead of being separated.
Why is there so much fear of not able to find a seat? This has to do with the aversion to ambiguity. People like certainty. People dislike what is uncertain. Wanting to sit with colleagues is also related to the aversion to ambiguity. People dislike the fact that they could end up sitting with random strangers. Do remember that this is human psychology. It has nothing to do with uncivilized or poor upbringing. Everybody is subjected to the problem of aversion to ambiguity.
What is the solution?
The overcrowding issue in Singapore cannot be solved by any individual. We are limited by land space. How Singaporeans cope with the crowding issue is the development of an innovative system known as the ‘chope’ reservation system. This system involves putting tissue paper, namecards and other inexpensive items to indicate that seats are reserved. The system requires $0 setup cost and has $0 maintenance cost.
In fact, this invention is done by the ‘crowd’ and not invented by any specific individual. Such a solution helps the individual to reduce his risk of not able to find a seat and thus change the problem of ambiguity to certainty.
Another benefit of the chope system is the ability to know exactly whether is there enough seats in real time before you make your order. If you cannot find any available seat (i.e. all seats have been choped), you know that the demand is more than the supply of seats. You can move to another foodcourt without wasting time.
Consider the case if there is no such reservation system. You walk into a foodcourt at 11:45am and saw many empty seats. You proceed to queue thinking there are sufficient seats and purchase your hot soup noodle. After you made your purchase, you realized there is no seats available because all have been taken by those who queue up for food before you. As a result, you have to walk around looking for an empty seat. But because there is no ‘queue’ to wait for your seat, you end up running for an empty seat when you saw one far away and in the midst of doing your 100 meters sprint, you spill the hot soup on someone.
Hence, the chope system solves three problems: eliminate ambiguity, provide real time report on demand/supply and promote order and safety. All at the cost of $0.
Why debate over a system that has served well?
The debate of the chope system arises because of a video in which a couple refuse to share their table with an old man.
Like any system, it is subject to abuse but it does not mean the system is flawed. Banning the system does not solve the overcrowding issue. Being gracious does not solve the overcrowding issue too.
But there are a few other reasons why there is a sudden debate over the chope system.
A number of critics have argued that such a system does not exist overseas. Hence, this must be wrong. This is what we called familiarity bias. That is to say that what is familiar should be right and what is unfamiliar must be wrong.
Critics have also argued that such a system does not exists in other crowded countries like Hong Kong. Hence, it must be wrong. Besides the familiarity bias mentioned, these critics are also subject to the anchoring basis. Anchoring bias is the inability to fully incorporate and comprehend new information. Since the chope system in Singapore is new to them, then it must be wrong since they could not digest the new information.
One of the critic was Dr William Wan who was briefly quoted by Sunday Times as saying “The public space is for all and there should be no right to make reservations. If there is any priority at all, it should be 'first come with food, first have the seats'.” (Debate rages on over 'choping' in hawker centres , 30 April 2017 Sunday Times.). For Dr Wan, he is subject to another psychological bias called preconceived notion. For him, his preconceived notion is that there is no compatibility between reservation and the public space. Quite the contrary, such a reservation system actually provides a fair mechanism for the public space to be shared by all. It is through such a system that people who play by the rules are able to share the common public space. Without such a system, there is no rules and without rules I seriously doubt the common public space can be shared fairly with all.
Dr William Wan also wrote a lengthy letter in Straits Times forum page implying that the chope-ing creates quarrels (Reserving seats at food centres can lead to disputes , 30 March 2017 Straits Times) which is also another preconceived notion because it has no statistical evidence. It is not the system that creates quarrels, it is the humans who quarrels. His solution is to ban the chope system as if that will stop people from quarreling. His logic is far from logical. His logic can be extended to this: since people are being killed by cars, cars should be banned. Instead of promoting safe driving, his logic says that the sales of cars should be banned.
He cited the hawker center at the new Tampines Hub as an example in which chope-ing is not permitted. I regularly visit the Tampines Hub hawker center and found it does not require chope-ing because it is not crowded at all.
For those who want to see what is truly crowded can visit the NTUC FoodFair at Collyer Quay. You will know the true meaning of what is really crowded during lunch hours. How does one cope with the overcrowding? By chope-ing seats. As I have a private office at Collyer Quay, I lunch there very often and have never found any quarrels. In fact, it is because of the reservations system that prevent quarrels from occurring. One can have their lunch in less than half an hour (from queueing to finish up the meal) in the jam pack foodcourt. Everyone is willing to share their tables. Nobody reserve more than they need. Very often in a table, you could end up having all strangers sitting together although all had chopped their seats. Without the chope system, you can be sure of riots over there.
Dr Wan, who is also the General Secretary of the Singapore Kindness Movement, sees the chope system as a half empty glass. Dr Wan’s solution to uncivilized behaviour is to empty the glass completely by banning the system. This is negative thinking. I prefer the positive thinking approach. I see the issue as a glass that is half full. I see that to counter uncivilized behavior is by filling the glass to the full by educating people to play by the rules and not abuse the system. I think one of the way to be kind to others is to be a positive thinker instead of negative thinker like Dr Wan. To be negative is not being kind to others. To be negative always involved judging others. Judging others is definitely not very kind.
The negative approach to problem solving is related to another psychology known as status quo bias. Under status quo bias, people tends to avoid changes so that the old system continues as it is. The suggestion to ban a particular ‘uncomfortable’ situation is an attempt to enforce the status quo.
The negative approach to problem solving in Singapore is quite common. Examples:
- The government banned chewing gums instead of educating people to dispose their chewing gum properly. As a result, the entire generation of children were deprived of the chewing gum. Till this day, Singapore continues to be subject of mockery for having such childish ban.
- All financial advisers are banned from marketing properties because of a few black sheeps. This ban results in the entire population of Singapore residents not able to get proper advice on property purchases.
This negative approach to problem solving is part of the Singapore culture which I am not proud of. The culture here is that an idea is not allowed unless explicitly permitted. The chope system is invented by Singaporeans to cope with the overcrowding issue and a means to address the psychological aversion to ambiguity. Yet it was shot down just like that. Those who shoots down the chope system could not even come up with a better suggestion. In fact, they offer no alternative solution.
That is the reason why there are so few innovators in Singapore. Innovators are always going against the norm. In Singapore, innovators are banned because society prefers the status quo.
A few weeks ago, an asset management firm came to my office to promote their newly launched fund which invests in companies that will be disruptors of tomorrow. But they admitted that they cannot find any such companies in Singapore! I am not surprised because, in Singapore, the culture is to enforce the status quo and banned the innovators.
The final psychological reason why there is so much debate on the chope system has to do with frame dependence. In this case, the mass media is the culprit. Consider this facebook post shared by Straits Times:
Singapore's chope culture is in the spotlight yet again. In what circumstance is reserving seats allowed?
The post says: “Singapore's chope culture is in the spotlight yet again. In what circumstance is reserving seats allowed?”
Implied in the question is that reservation is prohibited by default. This question is framed to provoke an emotional response. It is meant to increase traffic to the Straits Times portal and that in turn increases the advertising revenue. If the question is framed as “what circumstance is reserving seats not allowed?”, it would have many less comments and less traffic.
I promised to draw parallels between the psychology behind the chope system and financial planning. So let’s start.
Aversion to Ambiguity in finance
In behavior finance, aversion to ambiguity is viewed negatively. Just because an investment is ambiguous does not mean it is a bad thing. So this results in sub-optimal decisions. Due to the human nature to dislike ambiguity, many products have been created with capital guarantee. Structured notes and endowment policies are some examples. But these products typically have low returns. This will have a significant effect on one’s financial wellbeing because it means they have to retire later or never at all.
To address the concern of investing in something that appears to be ambiguous, they should seek professional financial advice instead of just going for the low risk products which although has certainty of returns, their retirement is certainly going to be in jeopardy.
The most classic documentation of familiarity bias is known as the ‘home’ bias. This means investors tend to invests in their own home country because they are familiar with it. Again, this results in sub-optimal decision making such as putting all their eggs into one basket.
Another example of familiarity bias is only wanting to buy known branded financial products although they may be the most expensive in the market.
Research has shown that financial analysts tend not to fully incorporate the true value of information due to this anchoring bias. Therefore, financial analysts tend to underestimate the value of a security in the bull run resulting. This also means in a bear run, financial analysts tend to overestimate the value of the security. So we have a situation in which the analyst is always behind the curve.
I am aware that many people who buys stocks tend to follow the analysts report. But if analysts are going to be always behind the curve, I do not think investors are going to be able to gain their financial freedom anytime soon.
Preconceived notions are simply sets of beliefs. They are normally negatives in this part of the world. Examples of preconceived notion related to finance are:
- “The government wants to cheat my money by keeping my CPF.”
- “Since this product is sold by a reputable bank, it must be good.”
- “Property is the safest investment.”
Preconceived notions can indeed jeopardise one's financial health. See this article on the preconceived notion that property investments is safe: Rental income may not be enough to service property loans, warns MAS
I have a client who is extremely skeptical about the as-charged integrated shield plan. I tried to explained to him about risk pooling but he was clouded with the bias arising from preconceived notion. Even he admitted it by saying: “I have a rather negative perception of insurance companies to start with…”
Status quo bias
In other countries, employees exhibit status quo bias by not changing their investment composition in their pension plan thinking that the status quo is the best. This is not exactly applicable in Singapore but there is another status quo bias that everyone can identify: occupation.
Most – if not all – are quite comfortable with their occupation. They may change jobs to find greener pasture but their occupation remains similar. It takes a lot of courage to actually change to another field. Unfortunately, it has been said that nearly half of the jobs will no longer exists in 2025 (“The jobs - they are a-changing”, 9 November 2015, Straits Times). This means if you do not keep pace with the changes, these changes will outpace you. Without a job, you can never save enough for retirement.
The culture of status quo also affects the manner which many financial advisory firms do their prospecting methods. Many continue the old fashion route of prospecting by harassment and misleading people (e.g. ‘survey’). They continue to do this because these agencies / firms managers only know the old methods and prefer the status quo. Their refusal to change their methods of prospecting methods will eventually cause their agencies and firms to go under. Here is a complain about a salesperson’s old fashion approach to prospecting using misrepresentation:
The old fashion way of doing financial planning remains the mainstream way of doing sales. Despite numerous changes by the government, many advisers continue to sell products like selling koyok. The old fashion way of financial planning is to sell products. The ‘new way’ of financial planning is to sell an advisory service. Products are becoming commodities that people can get it at low or zero cost elsewhere. For example, unit trusts these days can be purchased from online portals at 0% sales charge and no platform fee. Those who wants absolutely low cost can buy ETFs. The rich can have access to Vanguard institution class share which is almost as good as free. So you see, financial advisers shouldn’t focus their energy in promoting their products. They should focus in providing an advisory service. Yet, a large proportion of my peers still dwell in the status quo of the old ways of doing things.
Their jobs definitely will not exist in the next few years. The probability of an ‘insurance sales agent’ to be replaced by a computer is a whopping 92%. The probability of an ‘insurance underwriter’ to be replaced by a computer is a shocking 99%! (Source: The Future Of Employment: How Susceptible Are Jobs To Computerisation? , 17 September 2013 , Oxford).
I did not intend to write such a long article. But understanding human psychology is my interest. Maybe because I got bored with my background working in an analytical field in the initial years that now I swing to the extreme of preferring to work with humans. But I hope that this article will set people to think that human beings are a rather complicated beings and they should not judge nor jump too quickly to conclusions.
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