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Psychology Theories That Are Useful For Day-to-Day Life

Majoring in Psychology was probably one of the best decisions I made in life. It taught me how to think critically and exposed me to a lot of theories and thought processes that are very practical in my day-to-day life.


Some of these theories helped me make better financial decisions, reduce my prejudice against people and generally be more aware of my own intentions. I have also learnt concepts that give me the emotional maturity I need to succeed in the workplace and relationships.


Of course, theories are just “head” knowledge unless we learn to apply it to our daily decision-making processes. So here are some of my favourite and most useful psychology theories and how I have used them to navigate through life:



1. Loss Aversion Bias

Man sitting in front of a laptop while holding a phone and investing

This is both a psychological and economic theory that defines the behaviour of being so fearful of losses that we end up focusing on avoiding losses rather than earning gains. We fall prey to this in how we spend or invest. For example, we refuse to realize a stock even though it’s been on a continuous downward trend.


It also slips into our daily decisions such as choosing to remain in a traffic jam thinking that “I’ve been in this jam for so long, what if the jam clears in just five minutes?” – and then being stuck for another hour. In some situations, it’s better to just cut your losses.


This is similar to the sunk cost fallacy where we refuse to back out of something because of the initial investment we made. Examples include continuously buying lottery or coin slot machines thinking that one day you’re going to “win” all your money back, or buying a property and realizing that the conditions were much worse than imagined but not wanting to re-sell it because you “already invested so much into it”. However, you might end up spending more on renovations than on the property itself!


2. Self-fulfilling prophecy

Sometimes we feel like we have very little control over our circumstances, but this theory taught me otherwise. 


A self-fulfilling prophecy is a belief or expectation that an individual holds about a future event that manifests because the individual holds it” (Good Therapy, 2015).


This means that Billie Eilish is right: you think; therefore, you are (sort of). This is also the underlying concept of “fake it until you make it”. When you choose to believe in something (about yourself or the world), sometimes you unconsciously influence your environment so that what you believe actually comes true. Just like how people are “manifesting” anything they want and desire, for example, relationships, career, or even a particular meal such as sushi. It is the idea that behaving in ways would subsequently attract certain outcomes.


If you perceive yourself as unfriendly, you might unconsciously frown more to deem yourself unapproachable.  If you wake up thinking that you would have a good day, you are naturally more able to accept whatever comes your way. Even if they are negative circumstances! Lastly, if you have the habit of thinking that your partner is cheating on you, you may unconsciously project insecurities that eventually drive them away. This same habit might also happen within parent-child relationships.


Of course, things don’t magically happen just because you think about it. You also don’t have to force yourself to believe something or portray a side of yourself that isn’t a fair representation of who you are or how you feel. This is simply a theory to help us realize that we have a lot more control over our lives than we thought.


3. Operant Conditioning

Teacher teaching a child at a desk

This is a basic learning theory that includes two aspects: rewards and punishments. It is very practical for self-motivation, in organizations (for monetary and non-monetary rewards), and in schools. The 4 conditions are: 

    • Positive reinforcers: obtaining favourable outcomes after a certain behaviour.
    • Negative reinforcers: removing an unfavourable outcome after a certain behaviour.
    • Positive punishment: presenting an unfavourable outcome in hopes to reduce or remove certain behaviours.
    • Negative punishment: removing a favourable outcome in hopes to reduce or remove certain behaviours.


This is evident in our daily lives such as clapping for a speaker after their presentation (positive reinforcement); reducing chores when a child scores good grades (negative reinforcement); giving extra chores when a child is rude (positive punishment) and taking away allowances when employees are continuously late (negative punishment).


It is important to realize that favourable behaviours can now be harvested in more civil and kinder ways. Gone are the days where superiors would shout, slam tables or throw files to voice out their dissatisfaction (which is ineffective anyway); you can just remove their bonuses instead. Parents also no longer have to physically discipline their children (and potentially cause trauma). They just have to simply reduce TV time or tell them they can get ice cream should they behave.


4. Confirmation bias

As humans, we have the tendency to avoid unpleasant feelings. This sometimes results in us intentionally seeking out information that would support our existing beliefs, because we are too mentally drained to challenge the status quo.

Woman reading a book on a couch

Naturally, we don’t like things that contradict, this is because we try to always be in a state of cognitive equilibrium. However, it is unhealthy when these biases lead to prejudice or discrimination towards others. For example, confirmation bias often leads to closed-mindedness, and portrays itself in our unwillingness to socialize with people who are different (in terms of race, religion, or political stands). We might also intentionally seek out information that is unhealthy, such as the benefits of weight loss products because we are too lazy to exercise.


Being aware of this useful psychology theory makes me challenge my own beliefs and perceptions. This, in turn, makes me more aware of the information I come across and stops me from being too quick to judge. I am now more careful with what I say. I make sure I do not make groundless statements but always seek second opinions to reduce confirmation biases.



If we understand these theories and begin to apply them in our everyday interactions and decision-making, we would make much wiser decisions and be a lot kinder. Of course, being able to extend kindness starts with self-awareness and making sure our intentions are right. So, take time to reflect on your internal monologue. Don’t be afraid to challenge the lens you view yourself or your world with.

Change Management Consultant by day, writer by other parts of the day - because at night I sleep. Being funny is my self-proclaimed strength and I enjoy talking about politics, social issues and faith.

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