Advertising- the seven sins of memory Essay Example for Free

Advertising- the seven sins of memory Essay INTRODUCTION As if effective marketing communication were not hard enough to achieve, even if we succeed in getting our message attended to and processed, and a positive intention formed, the very nature of memory may step in and upset everything. Memory distortion and plain old forgetting are unfortunate facts of life. The important question, however, is: can we do anything about it? As with most things, if we are to have any hope of dealing with memory problems and their impact upon advertising and other marketing communications, we must first understand what is going on. In this paper we will be looking at what Daniel Schacter (2001) has called the seven sins of memory: transcience, absent-mindedness, blocking, misattribution, suggestibility, bias and persistence. Most of what Schacter is dealing with involves declarative memory and not procedural memory, and as a result is highly dependent upon activity in the hippocampus. Although other brain structures are involved in mediating declarative memory, the hippocampus is critical, especially for tasks emphasising the representational as opposed to temporal properties of declarative memory. The hippocampus is always active in encoding new information for declarative memory. Nondeclarative emotional memory is also involved here, especially in the cases of bias and persistence, which means activity in the amygdala as well. There is compelling evidence that the amygdala is critical to emotional learning and memory (cf. Griffiths 1997). Imperfections in memory have obvious implications for the successful processing of advertising. Even if a positive intention is formed as a result of exposure to an advert, if a memory malfunction interferes with that intention, the advertising will be ineffective. The problems associated with these seven sins of memory, and what advertisers can do about it, are discussed below. THE SIN OF TRANSIENCE Forgetting that naturally occurs over time may be thought of as transcience. While the memory of what one did yesterday may be all but perfect, over time those memories tend to become more a generic description of what one expects to happen under those circumstances rather than what actually did happen. †¢Advertising implication: The sin of transience implies that what people recall from advertising is much more likely to reflect a generic description of what is expected about a brand rather than the specific benefits that are part of the message. This has clear implications for interpreting recall measures of advertising messages. But, more importantly, it also suggests that the specific content of marketing communication should be consistent with, or carefully integrated with, prior understandings of the brand. A recent advert for Reynolds Wrap illustrates this can be done with a headline Sticky Foods Wont Stic spelled out in cheese on a pan of lasagne, with a portion cut out of the corner cutting off the last letter of stick, revealing the aluminium foil, clean, beneath. Transcience increases with age. While older adults those over 50 years of age have the same ability to remember in the short term as younger people, over time, memory of specific detail deteriorates more rap idly. As a result, older adults tend to rely upon a general sense of knowing rather than specific recall. The problem of memory transience can be mediated by more elaborative encoding, essentially by stimulating the lower left frontal cortex. One popular way of trying to encourage more elaborate encoding is by using visual imagery mnemonics to facilitate memory. In fact, this idea goes back to the early Greeks. Unfortunately for marketing communication, not only does using visual mnemonics require a great deal of concentration and effort (and there is no easy way to encourage such effort), but for most people there is really very little evidence of general memory improvement using such techniques. †¢Advertising implication: However, one way to encourage more elaborative encoding to help reduce transcience is to relate information the target audience is interested in remembering with something they already know. In advertising, this could be encouraged with questions in the copy to stimulate elaboration: for example, in a recent advert for the Dodge Caravan with the headline What Idiot Coined the Phrase Stay at Home Mom? THE SIN OF ABSENT-MINDEDNESS When one fails to pay proper attention to something and as a result does not encode it properly, or when the information is actually in memory, but overlooked when needed to be retrieved, one experiences the sin of absent-mindedness. Absent-mindedness manifests itself both in failing to  remember past experiences as well as in failing to remember to do something in the future. Both, of course, can prove troublesome for marketing communication. Also, the fact that absentmindedness is more likely for routine experiences that do not in and of themselves require elaborative encoding (e.g. exposure to advertising) adds to the problem. Unfortunately, routine behaviour (which certainly includes such things as reading magazines and watching television) is associated with low levels of prefrontal cortex activity in the left inferior area, which makes it difficult to form vivid memories. Such automatic or superficial levels of encoding can also lead to something known as change blindness (Si mons Levin 1998), where people fail to detect changes over time, because of an inability to recall details. This has obvious implications for the introduction of new benefits over time in advertising campaigns, or for repositioning. Memories for past experiences may be classified as either recollections or familiarity. Recalling specific details from memory (e.g. remembering specific benefit claims from an advert) is defined as recollection. Familiarity is when one has a sense of simply being aware of something without recalling specific details (e.g. remembering seeing an advert, but not particular content). This difference is important, because when there is divided attention during exposure, there is a significant effect upon recollection, but little or no effect upon familiarity (cf. studies by Craik et al. 1996). †¢Advertising implication: Because one is more likely to pay partial attention rather than full attention to advertising, familiarity with advertising is more likely than recollection of specifics from the advertisement. This underscores the importance of maintaining a consistent look and feel over time (Percy et al. 2001), encouraging familiarity, and utilising imagery that will elicit a positive benefit (associated with the brand) even at low or even sub-cognitive levels of attention. Additionally, too much exposure, especially massed exposure, could lead to lower levels of specific recollection (as we understand from as long ago as Ebbinghaus 1885). Spaced exposures generally result in better memory, a finding demonstrated in Strongs simulations (1974) of various media schedules based upon Zielskes work, and more recently in fMRI studies conducted by Wagner et al. (1998). Remembering to do something in the future (e.g. buying an advertised brand the next time you are shopping) is described by psychologists as  prospective memory. Einstein and McDaniel (1990, 1997 with Shaw) have offered a useful way of looking at this idea of prospective memory, distinguishing between what they call event-based prospective memory, where we want to remember to do something at a specific event, and time-based prospective memory, when one wishes to remember to do something at a specific time in the future. An example of event-based prospective memory would be wanting to buy a new brand the next time you are at the store. An example of time-based prospective memory would be making sure you are home at 3p.m. to meet the delivery man. Why people experience prospective memory failure is that they are usually so preoccupied with other things in their lives that when the event occurs, or the time arrives when it is necessary to remember to do something, the correct associations in memory are not activated. †¢Advertising implication: Prospective memory failure may be minimised in advertising by using distinctive cues that are unlikely to be associated with other long-term memories (especially for competitive brands). It is important to establish links in memory with the appropriate category need in such a way that when a purchase or usage occasion occurs, it will trigger a memory of the intention to act. This is especially true for recognition-driven brand awareness, which means for most package goods products. In the store point-of-purchase material as well as packaging must be both sufficiently informative to trigger the stored memory of an intention to buy, and be distinctive enough to minimise confusion with other brand memories. Shoppers are almost always in a hurry and preoccupied with other things when they are in a store, and this may get in the way of attending to the appropriate prospective memory cue. This is just the sort of thing that goes on when a salesman creates a distraction, hoping you will forget all about your initial good intentions not to be influenced by his pitch, as we know from the literature on compliant behaviour (cf. Cialdini 2001). THE SIN OF BLOCKING We are all familiar with the sin of blocking, that all-too-familiar experience of recognising someone but not being able to remember their name. According to Schacter (2001), blocking is not the same thing as absent-mindedness or transience. In the case of blocking, the memory has been encoded and stored, unlike absent-mindedness. In fact, an appropriate  retrieval cue could be in place, but the association is just not made. Unlike transience, with blocking, the information is still in memory, but remains just out of reach when required. Because blocking generally occurs when trying to remember names, it potentially can be a problem for brand names. Blocking seems to originate in the left temporal pole, where there is a breakdown in the link made between the characteristics associated with something and the name by which it is known. The reason people often have trouble remembering someones name is that a persons name tends to be isolated in memory from any conceptual knowledge about that person and, as a result, difficult to retrieve. Most models of name retrieval hold that activation of phonological representations in memory occur only after activation of conceptual and visual representations. This is why it is easier to recall something about a person than to recall their name. It is also what can lead to remembering something about a product without being able to recall the brand name. Interestingly, names that are most likely to be blocked are familiar ones which have not recently been encountered (Burke et al. 1991. †¢Advertising implication: Brand names that are not well integrated or related to obvious associations with category need will be highly susceptible to blocking. If there are no logical and immediate links in memory between a brand name and the category need, there is the risk of occasional blocking. Arbitrary or more abstract brand names will be blocked more often than descriptive brand names, even when those names are equally familiar to people (cf. Brdant Valentine 1998). Brand names such as Vitalegs (a herbal gel that relieves tired legs) and Soft Scrub (a cleanser that enables you to clean without harsh scratching) illustrate good descriptive brand names that are less likely to be susceptible to blocking. To minimise blocking, it is necessary to suppress the retrieval of recently encountered information that is related to a recall cue so that the mind is not cluttered with irrelevancies that could interfere with the desired memory. †¢Advertising implication: When a brand possesses identical or similar benefits as the leading brand in its category, it will be that much harder to build an association for those benefits with the brand because of learned interference from advertising for the leading brand. This again suggests the need to have copy (and packaging as well as other marketing communication) unique to a brand in order to avoid multiple connections in  memory that could minimise or override the desired brand-related memory. Certain retrieval inhibitions that lead to blocking can be released if we encounter a sufficiently powerful cue (e.g. nondeclarative emotional memories) that helps us re-experience something in the same way in which it was initially experienced. Appropriate triggers in advertising or other marketing communication that elicit the correct emotional memories may help overcome retrieval inhibitions, and release positive memories for a brand. A wonderful advert for Nestls Toll House chocolate chips showing a mother with a pan of chocolate chip cookies fresh out of the oven with a little girl looking on in anticipation perfectly illustrates this point. THE SIN OF MISATTRIBUTION If one correctly remembers something learned, but attributes it to the wrong source, this is misattribution. Often referred to as unconscioustransference, it causes real problems with eyewitness identification. The problem stems from a strong sense of general familiarity, coupled with an absence of specific recollection. While the consequences of misattribution in advertising are obviously not as serious as they are with eyewitness identification, it can nevertheless cause marketers real problems. †¢Advertising implication: Avoiding misattribution requires more than simply retrieving appropriate benefits from memory. The benefit must be linked together in memory in such a way that you make the correct association of the brand with its benefit claim. This linking process is known as memory binding. All of the important brandbenefit associations in advertising must be bound together by the receiver into a unifying whole at the time of encoding. When advertising for different brands is visually or verbally similar, this memory binding is unlikely to occur, leading to memory conjunction error. Memory conjunction errors occur because people misattribute strong familiarity with similar (even if not identical) things from more than one source as coming from a single source; brand advertising in our case. Interestingly, a strong visualverbal congruence can help minimise misattribution (cf. Schacter et al. 1999). A recent series of adverts for Good Humor-Breyers uses the exact format and headline (Less fat, fewer calories, no guilt) for three brands: Popsicle, Breyers and Klondike. This would seem to almost encourage misattribution. THE SIN OF SUGGESTIBILITY Suggestibility in memory occurs because one tends to include information that has been learned from an outside source as something personally experienced. This information may come from any external source, including advertising or other marketing communication. While suggestibility is similar to the sin of misattribution, misattribution does not require suggestions from outside sources. But when the two combine, it is quite possible for us to develop memories of something which in fact never occurred. †¢Advertising implication: Interestingly, while suggestibility may be a sin of memory, in the world of marketing communication this sin may often become a blessing. For example, suggestive questions may produce memory distortions by creating source memory problems. As a result, advertising that utilises questions that remind people of a favourable brand association could occasion a memory for that positive experience, even if it never occurred, e.g.: Remember how easy it is to remove those nasty stains when you use our brand? Schacter has suggested that if you embellish a fake memory with vivid mental images it should make it look and feel like a true memory. This is based upon work done by Hyman and Pentland (1996) in successfully creating false childhood memories via suggestion, simply by asking subjects about things that never occurred. One of the important conclusions they drew from their work is that these false memories produce vivid visual images. †¢Advertising implication: The application to advertising is obvious. If a suggested favourable experience with a brand is reinforced with a strong visual image of such an experience, it should help seed a memory of a positive experience. In an extension of these ideas, we know that one of the best ways to elicit early childhood memories is to ask someone to visualise themselves as children. While there is no evidence that anyone can remember anything much earlier than about two years of age, because the areas of the brain needed for episodic memory are not fully mature until that age, with suggestive visualisation techniques one can create false memories for events going back almost to birth (cf. Spanos et al. 1999). The key here, as in all suggestibility, is expectancy. If one is instructed to expect something, and it seems plausible, it is possible to create rather strong false memories. †¢Advertising implication: It is very difficult to  suggest a false memory for something that runs counter to a recent or strong existing memory. If you dont like a brand, advertising is not likely to create a false memory that you do; nor should you try. But if a brand is one of a set of brands used by the receiver, it is certainly possible to suggest more positive experiences with that brand. And if it is a brand they have not used, if the advertising can relate it to a posit ive experience from childhood, it is quite possible to suggest positive memories for the benefit, and then link it to the brand. THE SIN OF BIAS The sin of bias reflects how current understandings, beliefs and feelings have the ability to distort how one interprets new experiences and the memory of them. Biases that are associated with memory of past experiences will greatly influence how one perceives and understands new information or situations. Schacter talks about five major types of bias: consistency, change, hindsight, egocentric and stereotypical biases. Gazzaniga (1998) has identified something in the left brain that he calls an interpreter that continuously draws upon peoples experiences and understanding of things in order to provide some stability to their psychological world. This would seem to be the neurological source of biases, and utilises such things as inferences, rationalisations and generalisations in relating the past with the present, enabling people to justify their present attitudes with past experiences and feelings. The left brain interpreter, however, is mediated by systems in the right brain that are more attuned to actual representations of what is going on in the world around us. Consistency and change bias Consistency bias reflects a tendency to behave (or believe) today in a fashion consistent with how one remembers similar previous experiences. When this happens, current experiences and feelings are filtered through and made to match memories of those past experiences and feelings. Because memories are not exact, people tend to infer their past beliefs, attitudes and feelings from what they are experiencing today. †¢Advertising implication: This suggests that for people who hold current positive attitudes toward a brand, advertising could imply they are of long standing. For brand switchers who include a particular brand in their purchase set, advertising  could imply a long standing preference for that brand: You know you have always liked this brand, why not buy more? Something similar occurs with change bias, where one remembers something being worse than it actually was, making what they feel now an improvement by comparison. Both consistency and change bias can occur beca use they help reduce cognitive dissonance, even when someone is not really aware of the source of the inconsistency they are trying to manage (Lieberman et al. 2000). Hindsight bias Hindsight bias is that familiar feeling that one has always known something would happen after becoming aware of the outcome. One is reconstructing the past to make it consistent with the present. The key here seems to be an activation of general knowledge. The new information is integrated with other general knowledge in semantic memory, and is not distinguished as such in making judgements. There is evidence that this selective recall is a function of the general knowledge that influences perception and comprehension, and a vulnerability to misattribution. †¢Advertising implication: Hindsight bias would seem to indicate that when exposed to advertising or other marketing communication one will recall benefit claims that are not actually made, but which would have been expected to be there because of the claims that actually were made. Work by Carli (1999) tends to support this idea. Recent adverts for Infusium 23 set up a beforeafter case, but leave out the before picture, wit h the headline You really think I would let them publish the before picture? This clever execution encourages hindsight bias as you imagine the before hair problem. Egocentric bias The self plays an important role in ones ongoing mental life, and is at the root of egocentric bias. When encoding new information by relating it to the self, memory for that information will be better than other types of encoding. This is because people are more likely to value their own understanding of things, among other reasons because the self-concept plays a key role in regulating mental activity. As Taylor (1989) and her colleagues have pointed out, individuals do not see themselves objectively. †¢Advertising implication: The implication is obvious: include personal references in advertising and other marketing communication. Moreover, given  our tendency to see ourselves in a positive light, it follows that memories related to ourselves will be seen in a self-enhancing light. This suggests that copy asking people to remember a situation in a positive light should encourage an egocentric memory bias, e.g.: remember when you . In the same way, egocentric bias can resul t from exaggerating the difficulty of past experiences: remember how hard it was to . This idea is well illustrated in a campaign for National Rails Senior Railcard, where a dated-looking picture of a young child is featured, with headlines like Remember what it was like to go somewhere for the first time and Remember how it felt just to let yourself go. THE SIN OF PERSISTENCE Research has shown that emotionally charged experiences are better remembered than less emotional occasions. The sin of persistence involves remembering things you wish you would forget, and it is strongly associated with ones emotional experiences. †¢Advertising implication: Emotionally-charged information automatically attracts attention; and even in the briefest exposure, the emotional significance of it will be retrieved from nondeclarative emotional memory, and evaluated as to how that information will be encoded. Understanding the emotional associations generated by specific advertising is critical. Because people are more likely to remember the central focus of emotionally arousing information rather than peripheral details, it is essential to tie the brand in marketing communication to the appropriate emotion. Otherwise, it will become peripheral to the information conveyed (a problem with a lot of highly entertaining advertising). There is evidence that persistence thri ves in negative emotional situations such as disappointment, sadness and regret. Ones memory of traumatic experiences is persistent, and while these unwanted memories may occur in any of the senses, visual memories are by far the most common. Research reported by Ochsner (2000) supports this idea. He found that when people recognise a positive visual image they tend to just say it is familiar to them. But when they recognise negative visual images, people relate detailed, specific memories of what they thought and felt when they were originally exposed to the picture. †¢Advertising implication: All of this underscores the importance of the visual images in advertising and other forms of marketing communication. Because persistence thrives in a negative emotional climate,  if advertising illustrates disappointment or problems dealing with a situation, which is resolved by using the brand, this should tap into any persistent memories of product dissatisfaction (always assuming such dissatisfaction). It also suggests that for appropriate product categories (especially those reflecting high-involvement informational decisions such as medical or other insurance, financial planning, and so forth) visual reminders of past problems which could be avoided with a brand should be an effective strategy. Such a strategy should also be equally effective in situations where there is strong psychological risk involved, e.g. reminding young people of a social disaster which would never occur if they used our brand. The root of much of this kind of activity is centred within the amygdala, the source of nondeclarative emotional memory. It is the amygdala that regulates memory storage, and can release hormones that can force us to remember an experience vividly (LeDoux 1996). And as we have already noted, this response by the amygdala is much more likely to occur for negative than positive experience. †¢Advertising implication: For appropriate product categories, it could make sense to create situations in advertising that suggest possible threats to the receivers wellbeing. This threat may then well intrude upon active memory when thinking about the category, with our brand linked to avoiding the trouble. This is well illustrated in a recent advert for Imitrex, an ethical drug for migraine, that uses the headline I cant let a migraine call the shots thats why I use Imitrex. SUMMARY Schacter has provided us with an extremely useful framework for looking at memory problems: his seven sins of memory. Each of these imperfections (in his words) has the potential for interfering with the successful processing of advertising and other marketing communication. Recent work in neurobiology, utilising the recent technology of fMRIs (functional magnetic resonance imaging) and PET scans (positron emission tomography), has shown us that our earlier understanding of memories as snapshots stored away in the mind ready to be recalled is not how the brain works. Memories for objects and experiences are decomposed into a number of different parts and those parts are stored in various areas of the brain, waiting to be reassembled and remembered. This underscores why memories are rarely  perfect, and why they can be potentially unreliable. As this discussion makes clear, effective communication faces a number of formidable hurdles in memory. However, forewarned with this knowledg e, we are in a better position to avoid or at least minimise some of these potential problems. To help advertising communication overcome the seven sins of memory, advertisers should: †¢ensure the message is carefully integrated with how a brand is understood (transcience) †¢encourage elaboration of points the target is interested in remembering (transcience) †¢use personal references, especially to positive memories (bias) †¢imply current positive brand attitudes are of long standing (bias) †¢tie brands to appropriate emotions (blocking, persistence) †¢use distinctive cues not likely to be associated with other longterm memories (absent-mindedness) †¢create a unique brandbenefit claim link (misattribution) †¢establish links in memory to appropriate category need (absentmindedness) †¢make sure those links are well integrated with obvious associations to the category need (blocking) †¢ensure a consistent look and feel over time to encourage familiarity (absent-mindedness) †¢use strong visual images to create or reinforce positive memories associated with the brand (suggestibility) †¢utilise reminders of past problems that could be avoided or solved by the brand (persistence). If these points are considered in the creation of advertising executions, one is well on the way to avoiding, or at least minimising, problems inherent in how memory works. REFERENCES Brdant, S. Valentine, T. (1998) Descriptiveness and proper name retrieval. Memory, 6, pp. 199206. Burke, A., Mackay, D.G., Worthley, J.S. E. Wade (1991) On the tip of the tongue: what causes word failure in young and older adults? Journal of Memory and Language, 30, pp. 237246. Carli, I.L.L. (1999) Cognitive reconstruction, hindsight, and reactions to victims and perpetrators. Personality and Social Psychology Bulletin, 25, pp. 966979. Cialdini, R. (2001) Influence: Science and Practice (4th edn). Boston: Allyn and Bacon. Craik, F.I.M., Govoni, R., Naveh-Benjamin, M. Anderson, N.D. (1996) The effects of divided attention on encoding and retrieval processes in human memory. Journal of Experimental Psychology: General, 125, pp. 159180. Ebbinghaus, H. (1885/1964) Memory: A Contribution to Experimental Psychology. New York: Dover. Einstein, G.O. McDaniel, M.A. (1990) Normal  aging and prospective memory. Journal of Experimental Psychology: Learning, Memory, and Cognition, 16, pp. 7 17726. Einstein, G.O., McDaniel, M.A. Shaw, P. (1997) Aging and prospective memory: the influence of increased task demands at encoding and retrieval. Psychology and Aging, 12, pp. 479488. Gazzaniga, M.S. (1998) The split brain revisited. Scientific American, 279, pp. 5055. Griffiths, R.E. (1997) What Emotions Really Are. Chicago: The University of Chicago Press. Hyman, I.E. Jr. Pentland, J. (1996) The role of mental imagery in the creation of false childhood memories. Journal of Memory and Language, 35, pp. 101117. LeDoux, J.E. (1996) The Emotional Brain. New York: Simon and Schuster. Lieberman, M.D., Ochsner, K.N., Gilbert, D.T. Schacter, D.L. (2000) Do amnesiacs exhibit cognitive dissonance reduction? The role of explicit memory and attention in attitude change. Psychological Science. Ochsner, K.N. (2000) Are affective events richly recalled or simply familiar? The experience and process of recognizing feelings past. Journal of Experimental Psychology: General, 124, pp. 242261. Percy, L., Rossiter, J.R. Elliott R. (2001) Strategic Advertising Management. Oxford: Oxford University Press. Schacter, D.L. (2001) The Seven Sins of Memory: How the Mind Forgets and Remembers. Boston: Houghton Mifflin Company. Schacter, D.L., Israel, L. Racine, C. (1999) Suppressing false recognition: the distinctiveness heuristic. Journal of Memory and Language, 40, pp. 124. Simons, D.J. Levin, D.T. (1998) Failure to detect changes to people during realworld interactions. Psychonomic Bulletin and Review, 4, pp. 501506. Spanos, N.P., Burgess, C.A., Burgess, M.F., Samuels, C. Blois, W.O. (1999) Creating false memories of infancy with hypnotic and non-hypnotic procedures. Applied Cognitive Psychology, 13, pp. 201218. Strong, E.C. (1974) The use of field experiment al observations in estimating advertising recall. Journal of Marketing Research, 11, pp. 369378. Taylor, S.E. (1989) Positive Illusions. New York: Basic Books. Wagner, A.D., Schacter, D.L., Rolfe, M., Koutstaal, W., Maril, A., Dale, A.M., Rosen, B.R. Buckner, R.L. (1998) Building memories: remembering and forgetting of verbal experiences as predicted by brain activity. Science, 281, pp. 11881191.

The Heart Of Darkness :: Essays Papers

The Heart Of Darkness The novel, Heart of Darkness, by Joseph Conrad, is literally about Marlow’s journey into the Belgian Congo, but symbolically about the discovery of his heart and soul during his journey, only to find that it is consumed by darkness. He realizes that the man he admired and respected most, is really demonic and that he may be just like him. He is able to come to this realization however, before it takes the best of him. The main character of the story, Marlow, is a thirty-two year old English seaman who has been traveling all his life. All he really wants is to find some shred of goodness in the European domination of Africa. He finds his thoughts completely consumed by one man named Kurtz. Kurtz is a man in charge of the most successful ivory business in the Congo. He is the focus in the novel, in that he is the one whom the other characters react to. Marlow’s thoughts are so consumed by Kurtz, that he is built up to be much more of a man than he truly is. In turn, Marlow is setting himself up for a let down. He says at one point, â€Å"I seemed to see Kurtz for the first time...the lone white man turning his back suddenly on the headquarters, on relief, on thoughts of home...towards his empty and desolate station†(P.32). When Marlow reaches Kurtz’s station, he begins to become disillusioned. He begins to hear about, and even see, the acts that Kurtz is committing, and becomes afraid of him. He sees in Kurtz, what he could become, and wants nothing to do with it. He does not want people to know he has any type of relationship with him, and says in response to the Russian, â€Å"I suppose that it had not occurred to him that Mr. Kurtz was no idol of mine.† (P.59). It is at this point that he begins to discover the darkness in his heart. Towards the end of the story, right before Kurtz dies, Marlow looks at Kurtz, and says â€Å"I saw on that ivory face the expression of somber pride, of ruthless power, of craven terror-of an intense and hopeless despair.† (P.118), and then Kurtz screams, â€Å"The horror, the horror.† (P.118) and he dies. He is referring to what he sees inside himself. This is just what Marlow was afraid he was becoming, he looked deep inside himself, and saw Kurtz.

Discuss the strengths and weaknesses of DSM-IV TR Essay

DSM-IV TR, which stands for Diagnostic and Statistical Manual of Mental Disorders (4th edition), Text Revision was published by the American Psychiatric Association in 2000 and serves as a guide book for many health professionals to diagnose a patient with a mental disorder. It also helps health professionals to determine what types of treatment could be carried out to help the patient. The latest DSM is widely used, especially in the USA and many European countries.1However, it may not be completely followed by health professionals as they know that there are some weaknesses of the latest version of DSM as well. This essay will discuss the strengths and the weaknesses of the latest DSM and new changes for the DSM-V, which is expected to be published in May, 2013. DSM’s strength would be that it standardizes psychiatric diagnostic categories and criteria2, making the diagnosis of a mental disorder relatively easier than it was in the past. It allows health professionals to diagnose a patient, use the DSM to give them possibly the best treatment and overall, help them to cure the patients if the disorder is curable. DSM also has statistical data such as the prevalence of a certain disease in different genders, age of onset of diseases, etc. This allows health professionals to have a very wide range of knowledge which may be very useful for diagnosis and treatments. Besides, the DSM allows a common language for discussing diagnosis. It provides clear criteria for certain disorders so that every clinician would come up with the same diagnosis. This makes sure that a person is not diagnosed with different types of disorders in different clinics.Thus, treating patients more efficiently. Compared to the older versions of the DSM, the latest DSM also has more subtypes and specifiers which increases the diagnostic specificity. As I mentioned before, this increases the chance of diagnosing a patient with the same disorder in different clinics, assuring that they are diagnosed with the correct disorder as misdiagnosing them could possibly lead to serious damage. For some disorders, such as bipolar disorder, there are severity indicators such as mild, moderate and severe as well. This helps clinician to decide the course of the treatment according to the severity of their disorder. This is one of the strength of DSM as using the same treatment for different severity of the same disorder will not be very appropriate or efficient. However, this severity indicator is absent in some disorders such as manic episodes which is one of the weaknesses of DSM-IV TR. These were some of the strengths of DSM-IV TR. However, we know that another edition of DSM, DSM-V is expected to be published soon. This is obviously because there are some, or many weaknesses in the current DSM with which people are not satisfied. One of the major weakness of the current DSM and probably all the older editions is â€Å"Cultural Bias†. DSMs are mainly published by anglo-Americans and most of the behaviour that is considered as â€Å"normal† in the DSM is actually what is considered normal by the anglo-Americans. That is, some of the behaviour that is considered as abnormal in the DSM might be considered as normal in other cultures. For example, in some cultures, people tend to put a lot of emphasis and values filial piety and due to that, they would behave in a way that might not be considered as normal by the anglo-Americans. Would that classify them as abnormal? What exactly is normal anyways? According to the DSM, it it, I believe, what is considered as normal by the anglo-Americans. This is one of the weaknesses of the DSM which is well-known and I think it is because of this reason that DSM might not be as popular in countries where the culture is much different compared to countries like the USA and many European countries. Another weakness would be that DSM promotes a mechanical approach to mental disorder assessment. The clinicians may focus excessively on the signs and symptoms of mental disorders and they might not put much emphasis on a more in-depth understanding of the clients/patients problems. This problem have improved but it is still a problem caused by the DSM. DSM-IV TR also does not consider patients subjective experience of a disorder. That is, the  approach is not a dimensional approach as there is no first-person report but rather, observations are usually carried out which may neglect the more somatic and psychological processes that underlie the symptoms (Flanagan, Davidson & Strauss, 2007).3 Also, DSM causes most clinicians to be primarily concerned with the signs and symptoms of a disorder rather than the underlying cause by giving a list of certain criteria for diagnosis. Another weakness and debate about the DSM is that it is an unscientific system and it is the opinion of a few powerful psychiatrists. This has raised a lot of questions and have caused people to question the validity and reliability of the diagnostic categories as well. The validity and reliability were especially questioned after the Rosenhan experiment in the 1970s in which it was concluded that the sane could not be distinguished from the insane in psychiatric hospitals. Thus, even though the reliability and validity has improved now when compared to the 1970s, it is still a weakness which I believe could not be entirely fixed. However, validity problems of the diagnostic criteria especially arise when children or adolescents are involved. For example, the DSM-IV TR criteria for bipolar and manic disorder were originally developed for adults but right now, after a few changes, it is used for children as well. This increases the chance of misdiagnosing children with bipolar disorder. This information is supported by the fact that in the last 10 years, there has been a 40%4 increase in the number of children diagnosed with bipolar disorder. It is believed that there is not a sharp increase in the number of children with bipolar disorder but rather that the clinicians have been applying the diagnostic criteria (which were originally developed for adults) much more aggressively to children.5This is one of the weakness of DSM-IV TR that needs to be improved in the future as the effects could be devastating. One of the weakness, which I believe is not very significant but still is a problem and which is actually questioned by people is the definition of the mental disorder. This was also mentioned in the lectures. According to DSM-IV TR, a mental disorder is â€Å"associated with present distress or disability or significant increased risk of death, pain, disability and important loss of freedom†. This raises the question.. what about those  individuals who engage in activities that threatens their lives but they actually enjoy it? Such as mountain climbers, scuba divers, etc. Obviously they are no considered as abnormal but according to the definition of the DSM, they are considered as having a mental disorder. But we know that this is not correct. Thus, there is a problem with the definition of the word ‘mental disorder’. There are many other weaknesses as well such as with Personality Disorder diagnosis. It is believed that the description of symptoms is very broad. This means that patients diagnosed with the same disorder could actually have very different clinical presentations. For personality disorders, DSM uses a categorical approach6. However, it would be better to use a dimensional approach so that the different types/ degree of disorder could be distinguished and thus, could be given different and more efficient treatments. Another major weakness of the Axis II personality disorder is that there is a very high degree of overlapping or co-occurence with each other. This is also a problem for Axis I mental disorders.7 There are many other weaknesses with specific disorders of DSM especially about the diagnosis criteria and some other issues such as whether ‘Paraphilias’ should be included or not. Most of the major ones has been discussed above. Now, the new changes for DSM-V will be discussed. There are many new changes for the DSM-V. I will mainly mention those that are related to the weaknesses mentioned above. However, the new changes are discussed, the 4 principles behind the current process for revising DSM should be discussed. (Obtained from APA DSM-V Development’s official website) 1) Clinical Utility- the manual should be useful to those who diagnose and treat patients with mental illnesses 2) Recommendations should be guided by evidence 3) DSM-V should maintain continuity with previous editions whenever possible 4) No priori restraints should be placed on the level of change permitted  between DSM-IV and DSM-V From these 4 principles, it becomes clearer to us why DSM-IV is being revised and what changes should be expected. One of the changes is that in order to better assess the severity of symptoms, a dimensional assessment will be included. For example, other factors such as sleep quality, mood, etc will be considered regardless of the diagnosis. This will help to reduce the problem of â€Å"mechanical approach† as mentioned before. They will also help to address symptoms that are not included within the diagnostic criteria for specific illnesses (e.g. the problem of insomnia for patients diagnosed with Schizophrenia). DSM-V might also include something that could solve the problem of how to handle patients with co-occuring disorders, which is a major weakness of DSM-IV TR. Besides that, DSM-V will also have improved diagnostic criteria that are not precise in DSM-IV TR. Also, a few words would be changed as well in the new DSM. For example, the word â€Å"Mental Retardation† would be changed to â€Å"Intellectual Disability†.   Another change that would also be included would somehow, indirectly address the problem of cultural bias. In the new DSM, careful consideration would be given to the gender, race and ethnicity. This, I believe could help to lessen the severity of the cultural problem as mentioned before. Besides that, another ‘proposal’ is that, the criteria should be more stringent for the diagnosis of bipolar disorder in children. This also addresses one of the weakness mentioned earlier. This is a very important proposal as I believe it is not very humane to misdiagnose children with â€Å"Mental Disorders†. It could affect their life significantly. Another major changes is in the assessment and diagnosis of personality disorders. As mentioned before, a dimensional approach will be used rather than a categorical approach. This can help to determine the different severities of disorders and determine the ‘subtypes’ more accurately. Overall, it would make the diagnosis much more accurate and thus, more  efficient treatment could be used. These changes were mainly in response to the weaknesses mentioned above. Other changes include creating a new category called â€Å"Behavioural addiction†. This category is solely based on gambling. Internet addiction was also proposed. However, due to the lack of research in that field, it was rejected. This shows that they somehow followed principle 2 which emphasizes on the importance of evidence. Another category called the â€Å"Risk Syndromes† is also being considered. This will help clinicians identify earlier stage of mental disorders. The category of substance abuse and dependence will be removed and it would be replaced by a new category called â€Å"Addiction and Related Disorders†. This is done to help clinicians distinguish between similar types of disorders more easily and lower the chance of misdiagnosis (e.g. dependence is often confused with compulsive drug-seeking behaviour addiction). 8Another change is that the criteria for some eating disorde rs such as Anorexia Nervosa has been improved. Overall, the diagnostic criteria for many disorders has been improved and a dimensional approach is being used in DSM-V rather than the categorical approach used in the previous editions. All of these changes, together with many other minor ones, aim to improve the diagnosis process and thus, ensures that people are saved from misdiagnosis (which could lead to devastating effects) and so that they can receive better treatment which would increase their chances of being cured (if the disorder is curable). Bibliography Berman, J. (n.d.). Understanding the DSM-IV TR. Retrieved on 15th March, 2013, from http://www.ceuschool.com/librarydocs/SOC222.pdf Dombeck, M., Hoermann, S., Zupanick, E.C. (2011). Personality Disorders: Problems with current diagnostic system. MentalHelp. Retrieved on 14th March, 2013, from http://www.mentalhelp.net/poc/view_doc.php?type=doc&id=569 Flanagan, E., Davidson, L. & Strauss, J. (2007). â€Å"Issues for DSM-V: Incorporating Patients’ Subjective Experiences.† Am. J. Psychiatry, 164(3), 391 – 392. Kleinplatz, P.J., Moser. C. (2005). DSM-IV-TR and the Paraphilias: An Argument for Removal. Retrieved on 14th March, 2013, from http://www2.hu-berlin.de/sexology/GESUND/ARCHIV/MoserKleinplatz.htm Kronemyer, D. (2009). Phenomenological Psychology. Retrieved on 14th March, 2013, from http://phenomenologicalpsychology.com/2009/06/how-can-dsm-iv-be-improved-as-it-transitions-to-dsm-v/ American Psychiatric Association. (2000). Diagnostic and statistical manual of mental disorders (4th ed., text rev.). Washington, DC. Bipolar Disorder in Children. Wikipedia. Retrieved on 14th March, 2013, from http://en.wikipedia.org/wiki/Bipolar_disorder_in_children Diagnostic and Statistical Manual of Mental Disorders. Wikipedia. Retrieved on 14th March, 2013, from http://en.wikipedia.org/wiki/Diagnostic_and_Statistical_Manual_of_Mental_Disorders DSM-5. Wikipedia. Retrieved on 14th March, 13 from http://en.wikipe dia.org/wiki/DSM-5 DSM-5 development: Frequently Asked Questions. American Psychiatric Association.Retrieved on 14th March, 2013, from http://www.dsm5.org/pages/default.aspx Rosenhan Experiment. Wikipedia. Retrieved on 14th March, 2013, from http://en.wikipedia.org/wiki/Rosenhan_experiment

Risk and Return Analysis of the Capital Market - Free Essay Example

Sample details Pages: 6 Words: 1949 Downloads: 1 Date added: 2017/06/26 Category Finance Essay Type Analytical essay Did you like this example? A financial market is a market in which the financial assets are created or transferred. A real transaction involves an exchange of money for real goods or services, whereas a financial transaction involves creation or transfer of financial asset. Financial assets or financial transactions represent the claim to a payment of a sum of money in future or periodic payment in the form of interest or dividend. Don’t waste time! Our writers will create an original "Risk and Return Analysis of the Capital Market" essay for you Create order Indian financial sector can be divided into two major segments: Organized and un-organized. Organized sector includes banks, financial institutions, insurance companies and non-banking FI such as unit trusts, mutual funds etc. Unorganized sector consists of indigenous banks, money lenders, chit funds etc. Various financial markets are as follows: Money Market wholesale debt market for low-risk investment Credit Market banks and other financial institutions giving short, medium and long term loans to corporations Forex Market deals with multi-currency requirements Capital Market long-term finance instrument to corporations and government Capital market has two broad segments: primary and secondary market. Primary market helps in raising funds by issuing securities, government and corporations can both participate. Secondary market is where the previously issued securities and financial instruments are transacted by traders. Risk Risk is defined as probability that the return from a security will not match the expectations. Every investment has inherent uncertainties. Uncertainties can be due to economic, social, political or industrial factors. These uncertainties result in making the future returns in this investment risk prone. Total Risk = Market Risk + Issuer Risk The risk in any investment will be either of the following: Systematic risk (Market Risk) Unsystematic risk (Issuer Risk) Systematic risk is a risk which is present to the whole market. It is the change in the security or its variability in terms of overall return which is directly associated with the overall movements in the market. In practical scenario all the securities will have systematic risk in it irrespective of the level of diversification of funds. In contrast, unsystematic risk is specific to an industry or a company. It is the change in the security in term of overall return which is not present on the moveme nts in the existing market. As is apparent, this risk is generally associated to a unique security or a set of similar securities. There are various types of systematic and unsystematic risks to which any security is exposed to, some of them are listed below: Market Risk Interest Rate Risk Purchasing Power Risk Regulation Risk Business Risk Re-investment Risk Bull bear market Risk Management Risk International Risk Default Risk Exchange Rate Risk Country Risk Liquidity Risk Political Risk Industry Risk Measurement of Risk Since, risk will always be present in the securities, quantifying these risks becomes an important issue. In order to quantify first some factors must be standardised on which these risks will be analyses. The most widely accepted factors are as follows: Volatility Risk basically is the deviation of a stock from its anticipated or expected value. The deviation can be in both positive as well as negative direction. Generally, it is being used to focus in the direction of the potential harm. This range of fluctuation from the expected level of return is termed as volatility. The more a security moves up and down in in price, the more volatile will be the security. As it is apparent, more the volatility higher will be the uncertainty in a stock. Hence, increased volatility leads to increased risks. Standard Deviation It is a widely used instrument to measure the risk present in a stock or portfolio. It is similar to volatility, and is used to measure the absolute variation of a stock from its expected price or value. Beta It is the systematic risk inherent in a stock which cannot be cannot be avoided by diversifying. Beta is a relative indicator of the risk of an individual security as against the market portfolio of the securities. It is important to observe that the measure of fluctuation of beta is from the set benchmarks (portfolio of stocks). Beta is a useful instrument to perform comparative analysis of risks prevalent in various set of stocks. This instrument is a direct measure of the riskiness. Most of the times the stocks are ranked in the market based on their beta values. High beta values result in high risk securities. Expected Return Any investment decision is hinged on two important criterions: risk and expected return. Another important factor is the rate of return (ROR). ROR depends upon the capital appreciation and the yield. The key determinants of ROR from the investor perspective are as follows: Expected Rate of Inflation Risk associated with investment unique to the investment Time preference risk free real estate Therefore, ROR = Risk free real estate + Inflation Premium + Risk Premium The rate of return can be calculated as: EQUATION Risk and Return Relationship The fundamental principle of this seminar paper is that there is trade-off between risk and return. The connection between the risk and return demands that as the returns increase there is an increase in risk. Low levels of risk are associated with low potential returns and vice-versa. The risk and return relationship is the desire to be exposed to minimum possible risk and highest possible returns. The following figure represents the risk-return relationship: DIAGRAM The slope in the above figure is the measure of return per unit of risk. High risk prone investments will have steeper line. Generally, higher yield compared to the rest of the market indicates an above average risk. The following figure illustrates that: DIAGRAM Risk-Return Relationship of Different Stocks In most of the practical scenarios, various lines of securities in the market exist. An investor would like to choose options which are consistent with his/her risk preferences. It might be a low risk or a high risk option. There is an important myth that higher risk leads to better returns. The trade- off tells us that higher risk leads to possibility of better returns. Thus, it can also result in potential losses. The risk tolerance differs from person to person. It depends on the income, goals, standard of living, and variety of other issues. On the lower scale of risk-free ROR is treasury bills provided by the government. These bills are virtually risk free as they are backed up by the Indian government. Portfolio Security Returns A portfolio is a collection of securities. Investors rarely put their entire funds of an individual or an institution in a single stock. Thus, It becomes essential to view a security in portfolio context. Expected return from a portfolio will depend on the expected return of each security in the portfolio. Return of portfolio (Two assets) The expected return from a portfolio of two securities is equivalent to the weighted average of the expected returns from them. DIAGRAM Risk of Portfolio (Two assets) The risk will be measured in terms of the various measurement parameters as discussed in the previously in the paper. The risk will not simply be the weighted average risk of the variance of the returns of securities from expected value. These securities will be inter-linked as they belong to the same portfolio. In this case, the portfolio risk also needs to be taken into account. It will consider the co-variance (it is a measure of co-movement) of the two securities and will provide the degree to which these securities vary together. The standard deviation in such a scenario will be calculated by: EQUATION The co-variance of security A and security B can be expressed as: EQUATION The unsystematic risk diversification of the two securities portfolio will depend on the degree of co-relation which exists between the return of these securities. Co-relation varies from -1 to +1. The different values will imply following: Co-relation co-efficient (r) = -+1; No unsys tematic risk can be diversified Co-relation co-efficient (r) = -1; All unsystematic risk can be diversified Co-relation co-efficient (r) = 0; No co-relation It is important to note that ideally, as an investor, assets with low or negative correlations should exist in the portfolio. When one or more of the holdings depreciate in value, the other holdings should pick up the slack. Risk and Return of Portfolio (Three assets) The risk of the portfolio consisting of three securities can be calculated as follows: EQUATION Optimal Portfolio (Two assets) The objective of an investor is minimizing the risk of the portfolio. The tools which are used to achieve this are: risk avoidance and risk minimisation. These tools are integral part part of portfolio management. A portfolio will contain various securities; by combining the weights of these securities expected return can be calculated. An optimal portfolio will minimize the risk to the greatest extend. The minimum risk portfolio of two assets is calculated as follows: EQUATION Portfolio diversification and Risk The fundamental principle of portfolio diversification is not-to hold-all-eggs-in-one-basket. Co-relation is the underlying principle of any diversified portfolio. Ideally in order to diversify project risk and thereby reducing the firms overall risk; the projects which should be added in the portfolio are those which are negatively co-related with the existing projects. By adding such stocks the overall variability of the returns/risks can be reduced to an extent. The following figure shows reducing risks through diversification: DIAGRAM As is clearly visible from the above diagram that project A and B are negatively co-related. The securities have same expected return E under similar market situation. The combination of the two projects also has return E but with less risk and variability. Such, a risk is known as the alpha or diversifiable risk. The combination of two perfectly positively correlated stocks does not reduce the risk of the overall project below the lea st risk level. In contrast, two stocks with perfectly negative co-relation will reduce the risk component of the overall project below the risk of either stocks or in certain situation in can touch 0 also. Modern Portfolio Theory Modern portfolio theory (MPT) is an investment theory which attempts to maximize the portfolios expected return for a given amount of portfolio risk, or to minimize the risk for a level of expected return, by selecting the amounts of various assets. One of the most important models of modern portfolio theory is listed below. Markowitz Model of Risk-Return Optimization Harry Markowitz proposed the portfolio theory. The model proposed in 1952, tries to optimize the trade-off between the risk and expected return of a portfolio. The underlying assumption of the theory is that individual assets do not matter to the investor but its the contribution in the total risk of the portfolio is critical. Utility function and Risk Taking Common investors will have three possible attitudes to undertake risky course of action: An Aversion to risk A Desire to take risk An Indifference to Risk This behaviour can best be understood with the help of an example. There are two stock options A and B with expected return of 100 each in normal economy. In a booming economy the return will be 110 and 200 units for stocks A and B respectively. The risk seeker or the person, who desires to take risk, will in such a scenario prefer the riskier stock option B. A risk indifferent (risk neutral) will be unresponsive to both the options A and B as they have same expected returns. Utility in economic terms is defined as the indicator of relative satisfaction. Generally, money is considered as a desirable commodity and large sum of money has a greater utility than smaller sum. The utility function is expressed in the following figure: DIAGRAM The figure clearly implies that the risk preferring decision maker maximi ses the expected utility by increasing the expected monetary value to maximum.