Attitude – 1 (Why & How of Investor’s Attitude)

       

Let’s first discuss how the attitude of a person is shaped. This is not only an important subject but also very interesting as well. I have tried to study and understand this from various authoritative sources and then I tried to correlate these theories with my personal experiences. The subject is too wide. After the basics, I would focus exclusively on Indian “Investor’s Attitude”.

In psychologyattitude is a psychological construct, a mental and emotional entity that characterizes a person. They are complex and an acquired state through experiences. It is an individual’s predisposed state of mind regarding a value and it is precipitated through a responsive expression toward a person, place, thing, or event (the attitude object) which in turn influences the individual’s thought and action.

The famous psychologist Carl Jung’s analysis and definitions, though stated long back, still appear practical and relevant. He says in simple terms that attitude is readiness of the psyche to act or react in a certain way. He has also very correctly defined some “dualities” in the one’s attitude. Such as

  1. Consciousness and unconsciousness.
  2. Extraversion and Introversion.
  3. Rational and Irrational. Rational is subdivided into thinking and feeling Irrational is subdivided into sensing and intuition.
  4. Individual and Social attitudes.

It’s important to understand the factors which lead to the formation of above attitudes.

Values: These are guiding principles in one’s life or goals that people strive to obtain.

Beliefs: These are cognitions about the world. Subjective probabilities that an object has a particular attribute or that an action will lead to a particular outcome. These can be false also.

Perceptions: Same as above.

Family: Family plays a significant role in the primary stage of attitudes held by individuals.

Society: Social culture, tradition, religion, language, customs etc influence a person’s attitude.

Financial Status: Salary, status, nature of work, work environment etc affect a person’s attitude.

Components of attitude. It’s important to note that the following components too influence one’s attitude. It is called the ABC Model.

Affective component: These are feelings or emotions linked to an attitude object. For example, many people are afraid/scared of spiders. This negative affective response is likely to cause a negative attitude towards spiders.

Behavioral component: These refer to past behaviors or experiences regarding an attitude object. People infer their attitudes from their previous actions.

Cognitive component: These are the beliefs, thoughts and attributes that one would associate with an object. Many times a person’s attitude might be based on the negative and positive attributes they associate with an object.

Additionally, there are also two measures which shape an individual’s attitude and behavior. These are:

Explicit measures: Attitudes at the conscious level those are deliberately formed and easy to self-report.

Implicit measures: Attitudes at an unconscious level those are involuntarily formed and mostly unknown to us.

Both of the above measures shape an individual’s behavior. It is generally observed that when the demands are steep and one feels stressed or distracted, the implicit attitudes are most likely to affect.

NOTE

Having revised the fundamentals of the factors which shape one’s attitude; next in Attitude – 2 we will discuss how the Indian investor’s attitude is shaped. This understanding is of significant importance to guide and deal with an average Indian investor.

 

 

 

 

 

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