Psychology is one of the coolest things anyone could learn. I mean, what could possibly be better than having the ability to grasp the underlying mechanisms behind what makes people tick?
Having a good grasp of basic psychological concepts will turn you into someone who not only understands people better but can sometimes predict and anticipate outcomes when dealing with them.
Because I care, here are 7 mind-blowing psychological concepts that will change the way you see the world.
1. The Dunning–Kruger Effect : The more you learn about a particular topic, the less certain you become
This concept helps explain why people with limited knowledge sometimes appear more confident in their abilities, while experts often sound less definite.
Have you ever tried learning something new? Investing, dropshipping, psychology, or day trading?
You watch three YouTube videos, and suddenly you feel like you have learned everything you need to know.
Then you continue to study the subject seriously, or begin to practice the actual thing, and things become less certain. You go from feeling like a master to realizing you just stumbled down a rabbit hole.
There’s a whole lot more to learn.
This is known as the Dunning–Kruger effect. When our knowledge is limited, we may also lack the ability to accurately evaluate the limits of our knowledge.
Confidence isn’t always competence. Sometimes, it’s evidence that a person hasn’t yet discovered how complicated the subject is.
2. The Bystander Effect : The more people around when something goes wrong, the easier it becomes for nobody to act
Kinda like that old poem about everybody blaming somebody because nobody did what anybody could have done.
This one is powerful because I actually witnessed it in real life before I ever learned what it was called.
Picture a scenario where someone falls.
Ten people are standing around. But for a split second, everybody freezes because they are expecting the next person to intervene.
And strangely, nobody moves.
Our instinct is to think:
What is wrong with these people?
But social psychology offers another explanation.
When several people witness an ambiguous emergency, responsibility becomes psychologically distributed. Each person may unconsciously think:
Surely somebody else will help.
Another cause of the bystander effect is what psychologists call pluralistic ignorance.
People often look at everyone else in the vicinity to determine whether the situation is actually serious. But everyone else is doing exactly the same thing.
Hence, nobody reacts.
And because nobody reacts, everyone interprets everyone else’s calmness as evidence that perhaps nothing is wrong.
Now juxtapose this scenario with one where there are only two or three people in a room and one person falls or has a seizure. The others are much more likely to jump into action immediately, for no other reason than there aren’t a lot of people present.
3. The Paradox of Choice : The more options you have, the less satisfied you may become with your choice
This is also called “The Psychology of Option Overload.”
Suppose you go to buy toothpaste.
If there are three choices, easy.
Now imagine there are 47 options:
Whitening. Sensitivity. Gum repair. Charcoal. Fluoride-free. Herbal. Enamel restoration. Extra whitening. Advanced whitening.
All of a sudden, shopping turns into research.
We often assume that more choice equals more freedom and, therefore, greater satisfaction.
And up to a point, it does.
But beyond that point, additional options can increase cognitive load, make decisions harder, increase regret, and create a disturbing question after the decision has been made:
What if one of the other options would have been better?
This may also help explain some of the dissatisfaction we see with modern dating.
You make a choice in a partner, but because there are hundreds of available matches to swipe through, you start to think:
What if one of the other options would have been better?
Compare that to choosing a partner from a small town in rural Texas before dating sites became a thing.
Sometimes, fewer options actually make people more satisfied with the option they choose.
We have more options than almost any generation before us—and somehow spend enormous amounts of time wondering whether we chose correctly.
4. Hedonic Adaptation, or the Hedonic Treadmill:
This simply says that people tend to have a relatively stable level of happiness over the course of their lives and often adapt to changes in their circumstances.
People often think:
Once I get that job…
Once I start earning six figures…
Once I buy the house…
Once I get married…
Then they achieve the goal and are thrilled—for a short while.
Six months later, the novelty has worn off, and their happiness begins to move back toward baseline.
This can also happen with sad events.
We are butt-hurt during a breakup. It feels like our world has come to an end.
But over time, a year or two passes, and life somehow becomes normal again.
The idea behind this concept is that people have an extraordinary ability to psychologically adapt to changed circumstances.
While positive experiences can raise happiness, many eventually become incorporated into our new normal.
The new job becomes your job.
The dream car becomes your car.
The new house becomes your house.
This is one reason endlessly moving the goalpost can become a terrible strategy for happiness.
5. Loss Aversion: The fear of losing something can be stronger than the joy of gaining that same thing
Psychologically, a profit is not simply the opposite of a loss.
Losses often weigh more heavily.
Hence, losing $100 may hurt more than gaining $100 feels good.
For many people, the pain of losing something is disproportionately powerful compared with the pleasure of acquiring something equivalent.
This helps explain irrational-looking behavior everywhere.
Such as staying in relationships because of everything we have already invested, or becoming furious when a benefit is taken away even though we were perfectly happy before receiving it.
We are often more psychologically attached to not losing stuff than we are excited about gaining stuff.
6. The Sunk Cost Fallacy : “I’ve already come this far” can be one of the worst reasons to continue
We have all experienced this phenomenon.
We keep investing more into an experience, relationship, or outcome for no other reason than what we have already put into it.
You spend $30 on a movie.
Twenty minutes in, you realize it is terrible.
Yet you stay for another two hours because:
“I already paid for it.”
Objectively, the $30 is gone whether you stay or leave.
Yet you waste another two hours of your life.
This is a very difficult emotional blind spot for most people to navigate.
We end up allowing past investments that cannot be recovered to influence future decisions.
This happens with degrees, careers, businesses, relationships, books, investments, and entire life paths.
We fear that quitting means wasting what we have already invested, and then we end up suffering through an even worse experience instead of cutting our losses.
This also happens in investing or gambling when we chase after bad money and end up losing even more. I like to call this the double whammy.
7. The Fundamental Attribution Error : We judge others by their character but judge ourselves by our circumstances
This one is probably responsible for numerous relationship breakups.
We automatically judge other people by their character or behavior, while we tend to judge ourselves by our circumstances or intentions.
For instance, someone walks in late for a meeting, and our mind goes:
“They’re irresponsible.”
But when we are late:
“Traffic was insane.”
Someone snaps at you:
“What a rude person.”
You snap at someone, and your mind goes:
“I’ve had an awful day.”
We have a tendency to overemphasize personality when explaining other people’s behavior while underestimating the circumstances acting upon them.
And then we often do the opposite when explaining our own behavior.
Hence, a frightening amount of interpersonal conflict may simply be two people explaining the same behavior using different rules.
Bonus Principle: The Spotlight Effect : Nobody is thinking about you as much as you think they are!
The Spotlight Effect says that we tend to overestimate how much other people notice our mistakes, appearance, or embarrassing moments.
Nobody is thinking about you as much as you think they are.
And just like you, everybody is mostly thinking about themselves.
You walk into a room wearing something embarrassing.
You make an awkward comment.
You trip and clatter the dessert plate at a party.
Or you pronounce a word incorrectly.
Embarrassing moment, right?
You go home and think about it for three days. Meanwhile, everyone else probably thought about it for approximately seven seconds.
People substantially overestimate how much attention others pay to their appearance and mistakes.
There is a beautifully freeing implication here:
You and your problems will never be as important to other people as they are to you.
You are the main character in your consciousness, but you are a supporting character in almost everyone else’s.
And there you have it: 8 psychological concepts that affect our day-to-day experiences and dealings with people.
I hope one day you recognize one of these happening in real time and immediately think back to this post.
Next time you are contemplating quitting a movie, TV series, book, or relationship that no longer brings you joy, remember the sunk cost fallacy.
Or next time you are tempted to splurge on a shiny new car—or whatever—because you believe it will finally make you happier, think about the hedonic treadmill.
Thank you for reading.