Vote buying works in a loop of poverty. The poor need money and the politicians give them money.
Rappler interviewed Prof Ricky Lim, Dean of the Asian Institute of Management and marketing expert on why people fall for scams as part of an article on "Why are we so gullible?" Here is the full transcript of the interview:
Rappler: What are the elements of a scam?
Ricky Lim: Just like any sales pitch--AIDA--attention, interest, desire, action.
Scam/hoax men grab your attention with a good financial opportunity. They gauge your interest, look for your hot buttons, and raise your behavior to desire. They push you to action -- a buy, or extract a promise to buy. It is the nuances of each phase of AIDA that differentiate various scams, hoaxes: scammers exploit our supposedly rational behavior to get to the end.
As a start, Ma. Ceres P. Doyo writes in the PDI article that education will help prevent fraud. She is right. Education will mitigate being duped. But just because you're educated, do not be complacent: you don’t have to be poor or dumb to fall -- in fact, many wealthy people, and people with postgrad degrees, are routinely scammed. Yes, greed trumps rationality; but we make bad decisions because we behave, in the words of Dan Ariely, predictably irrational.
Rappler: What are the nuances, these irrational behaviors that scammers exploit?
Lim: 1. Credibility. Randy David talks about how one church group got great returns, so people trusted the returns (because it was coming through the church) and they plunked their money in. This is establishing credibility. Other ways to establish credibility is to be precise: many scams will ask for "We need only P1425.36 from you." The precision lulls you into thinking, "How could be a scam, it is so precise!" Many scams will mention legitimate people, respected people, even though they are not around. Many Internet scams involve people whose Yahoo accounts have been raided: "Hi, please help me...I am in Tunisia and I got robbed.- Ricky Lim." Since you know the person, the message gains credibility. Credibility breaks down suspicion. You want to trust, and when you see credible information, you turn 180 degrees from suspicious skeptic to gullible believer.
2. Decoy effect. Dan Ariely talks about how most persons will not make a decision when we are presented with one price. (Buy this bag for P25,000!) But if presented with a superior and inferior comparison, we will be more prone to making a decision -- in fact, an irrational decision. (Buy this bag for P25,000, or buy this bag for P30,000, get one bag free. You might opt for the P30,000 deal, because now you have a comparison.) Scammers will offer you a deal with a high price, then present you with a deal with a lower price. You might fall for it. (OK, if you won't make an investment for P100,000, I am taking P10,000 investments. You can add more later!) So do not fall for the big number, small number game.
3. OBLIGATION. The useful website talks about how scammers actually make you feel guilty, by creating psychological obligation: "Don't you want your kids to have a good life?" or "You promised that you would consider the deal! I will lose my commission, please help me." This actually exploits our goodness.
4. INTIMIDATION AND THREATS. If obligation does not work, scammers escalate to subtle intimidation. This is not "We will break your arm," but rather, "This sick child might die!" or "You might lose your account if you do not top it off" or "You already promised, you signed a legal document." "I will get my lawyer to sue you." It is much easier to capitulate than to resist.
5. AROUSAL. This is an age-old tale, according to Dan Ariely. When men (and some women) are sexually aroused, they fall for scams. This is why we hear of the mythical "Ativan gang" heists, where men are lured to some hotel room for sexual favors, only to wake up from a drug stupor 3 days later, sans clothes, money, and dignity: they will in fact be too embarrassed to even report the crime even to the police.
6. FEAR of EMBARRASSMENT. This is a variation of #4. When we face potential embarrassment -- we do not know which line to line up in, we do not know which BIR officer to speak to -- we are susceptible to friendly "scams" by fixers. We are willing to pay for the safety of certainty. (Are fixers scammers? I argue, yes. They get you in the same AIDA way to pay for something you may not need.)
7. ENDOWMENT EFFECTS. Aman succeeded because they would pay postdated checks to investors. The first checks paid off handsomely -- 50% to 70% after a few weeks. This made the owner of the money -- the investor, endowed. Owners put more value on things they own, and have a much harder time disposing of it. Later, the postdated checks started bouncing. And the owners irrationally held on, because their investment was worth more than they were actually worth.
Finally, there is a factor not so behavioral: unfortunately, older people get scammed more. In this article, they talk about how older people's brain functions are more impaired and cannot resist scams. So yes, older people are victimized more.
Rappler: Is there anything particular to the Filipino psyche or culture that makes us more prone to scams?
Lim: Like the Randy David article, the success of Aman was from social pressure, social infection. People saw, they believed, they got sucked in. One can argue that Filipinos are more susceptible, because we derive our bases for decision, our actions, our trust, from our social relationships (other societies may be more individualistic).
Rappler: Do we lack the proper regulatory laws or systems to detect and prevent scams? If so, what can be improved?
Lim: Laws or systems are easy barriers to scammers. Scams are not truly criminal -- they are constructed to create a gray area where there is no obvious crime, but rather, a situation where the "victim" is not so much bilked, but makes an "investment." The scammer merely catalyzes this final decision -- but always, the victim makes the final decision. The scammer never puts a physical gun to the victim's head. So technically, there is no crime. Deception, yes. But the sum of it all is that victims are investors as well -- they took the risk, which all investments have, and they should have known better.
As stated earlier, education can limit damage. There are no guarantees, of course, but quick exposure of these scams through the net, through bulletin boards, to make people aware of these scams and their variations. You might want to browse snopes.com, a useful repository of known scams, hoaxes, urban myths. There are other scam websites that illuminate the various modus operandi. Ultimately, the best action is NO action. Say no. When you are not sure about something, walk away. This is difficult when you see a good thing -- but common sense should tell you, there is no such thing as such a good thing.
Rappler: In your opinion, can some financial schemes/instruments or investment/insurance products be considered as scams? Particularly when the buyer is not aware of all the fine print? I'm referring specifically to the sub-prime mortgage market and credit crisis in the US?
Lim: Ha, ha. I can argue that in financial instruments, I make the pitch, but you make the decision. You knew what you were going for. Ok, I did not tell you the risks, but did you ask? No, you wanted the money. I made it possible for you. Don't blame me if this thing falls through. - Rappler.com