Bring abstractions down to earth
Abstractions abound in the financial industry. What pictures form in
your mind when you read these phrases: mutual fund, the Dow Jones
Industrial Average, zero coupon bond, call option, or foreign currency
trading? Most people don’t have an image in their minds when they
hear abstract words like these. And yet, it’s far easier to comprehend
a concept or a situation when your mind can form images.
In a study conducted at Carnegie-Mellon University, a cognitive psychol
ogist and an English professor discovered that readers faced with com
plex written information frequently resorted to creating “scenarios” in
an effort to understand the text. That is, they often made an abstract
concept understandable by using it in a hypothetical situation in which
people performed actions.
You can make complex information more understandable by giving
your readers an example using one investor. This technique explains
why “question and answer” formats often succeed when a narrative,
abstract discussion fails.
Here is an example of how this principle can be used to explain an
abstract concept—call options:
For example, you can buy an option from Mr. Smith that gives you
the right to buy 100 shares of stock X from him at $25.00 per share
anytime between now and six weeks from now. You believe stock
X’s purchase price will go up between now and then. He believes it
will stay the same or go down. If you exercise this option before it
expires, Mr. Smith must sell you 100 shares of stock X at $25.00
per share, even if the purchase price has gone up. Either way,
whether you exercise your option or not, he keeps the money you
paid him for the option.
Although it is impossible to eliminate all abstractions from writing,
always use a more concrete term when you can.
“Use concrete terms and your
readers will have a clearer idea
of your meaning. You enhance
your words when you allow
readers to visualize what
Bryan A. Garner
The Elements of Legal Style
a plain english handbook