How Wearables Could Rationalize Human Behavior
A lot has happened since we last took a look at the future of wearable technology. While Credit Suisse is keeping up with recent developments (the first version of the Private Banking Switzerland app for the Apple Watch has been launched recently), the possibilities in this market are yet to be discovered. In this article, we take a glimpse into the future of wearable technology, and think about how devices may one day influence our behavior and decision-making processes.
We undoubtedly live in the age of data, and monitoring our bodies has become a way of life for a growing number of people. And the advances in wearable technology over the past few years have played the key role: Today, there are plenty of wearable devices that help us track our steps, record our runs, count our calories, monitor our sleep or measure our heartbeat.
Although the number of people using wearable technology is still relatively small, it is a growing market: In 2015, shipments of smart watches worldwide are projected to reach 25 million units. That may not seem like much, but this is a 20-fold increase compared to two years ago. Growth rates look promising and, according to a recent report by IDTechEx, the market for wearable technology will reach $70 billion by the year 2050.
While the wearable market may become much more diverse in future, today's devices are most often found in the fitness industry. With increased competition however, this industry has become highly competitive and saturated, which is why developers of wearable tech are slowly starting to explore other promising areas. The next obvious one being the health industry.
The Health (Not Fitness) Industry
The US is the nation with the highest health costs: in 2013, national health expenditures amounted to $2.9 trillion, or $9,255 per person. In this context it is no surprise that the prevention of disease and promotion of health take high priority – and wearable technology can help immensely. Developers of wearable devices for the healthcare industry are innovating in all areas: nowadays, devices can manage your asthma, help you quit smoking, monitor your diabetes or even improve your eyesight. A few of these technologies may still be in the development phase, but many are ready to be applied.
Physical health is not the only field of application – there are several wearable devices in the making that are aimed at improving our mental state. Humanyze, for instance, is a Boston-based company that applies wearable technology to analyze employees' behavior to improve work satisfaction and, hopefully, the company's bottom line. It does this all by gathering and analyzing data on human behavior – with the help of wearables. Another device – the Muse headband – is designed to assist you in your meditation efforts by measuring and visualizing your brain activity. It will guide you to relaxation and finding your inner peace. Another interesting approach is that of Thync. This company claims to have developed the "first wearable technology that changes the way you feel". Its identically named product apparently stimulates your "neural pathways" and lets you control your mood – essentially, it helps you calm down or power up.
Making Better Decisions
Looking at the examples above, it seems to be merely a question of time when technology and biology merge and we can use wearables to stimulate our senses and alter our state of mind. In such a scenario, technology could help us change our behaviors and improve decision-making processes. If, for instance, we know we make better decisions when most relaxed, why not to use technology to reach a state of calm? If, for instance, we know we perform better when we are alert, why not stimulate our brain with a wearable device to achieve this?
And this is where the technology may become useful within the world of finance and investing. As Robert Shiller, 2013 Nobel Laureate in Economics and a leader of the Behavioral Finance movement, points out: "Investing is very much tied to psychology." In other words: as good as any number-based system may be, it is ultimately dependent on human behavior and human decisions. Therefore it is not entirely predictable and not entirely rational.
If wearable technology of the future can influence our psychological, cognitive or emotional state, it could also influence the (ir)rationality of our financial system. Financial decisions would no longer be so prone to the irrationalities of human behavior – instead, we could use technology to help rationalize our decision making process. One day, wearable devices could inform us when it's the time to buy certain equities or invest in a particular company. And, on a larger scale, wearable technology might even be able to analyze mass behavior and predict behavioral anomalies.
Right now, this may all sound futuristic and perhaps a bit scary, too. In the end though, wearable technology could help rationalize the financial system and prevent us from making costly mistakes.