Recently I decided to come up with a rough measure of generosity across different communities. Which communities have a culture of giving away unused items as opposed to trying to sell them? And why?

One of the ideas was to use Craigslist as a rough measure. Looking at the 23 major cities on Craigslist, we took the number of free items being given away in one week and divided it by the number of items being sold in the furniture category, as a quick index of generosity. In a nutshell: for every 100 items of furniture being sold, how many items are being given away for free?

As you can see, Portland, SF Bay, Boston, and Seattle come up on top in terms of this measurement, with Miami, Phoenix, and Houston on the bottom.

Is this a good metric for measuring generosity across communities?

A lesson about (de)motivating employees

A few months ago an ex-student of mine, who was at the time working for a big software company, contacted me and asked me to meet with her and her team later in the summer. My student, together with a large team, had worked very hard for the previous two years on an innovation which they believed was the best new idea in the “computer world,” and the best new direction for their company.  They worked very hard on this project and were full of hope and expectations. But, between the time that she originally contacted me and the time that I arrived at their offices for my presentation, the CEO of the company looked at the project and decided to cancel it.

So there I was sitting with a group of highly creative people who were completely deflated. I’ve never seen people in the high-tech industry with a lower level of motivation. So I asked them, “How many of you show up to work later than you did before the project was shut down?” Everybody raised their hand. I next asked them, “And how many of you go home early?” All hands went up. Lastly, I asked them, “How many of you feel that you are now more likely to fudge a bit your expense reports?” In this case, no one answered the question—instead, they smiled in a way that made me think that they had first-hand experience with expense fudge.

Now, it is possible that the project was really not that good, or that it did not fit with the future direction of the company, which would mean that canceling it was the appropriate decision.  But even if this were the case, how the CEO could have behaved differently if he was also trying to keep the team members excited and interested in their work?  So I posed this question to the team and they came up with a few interesting answers:

1. The CEO could have asked them to present the project to the entire company.  The presentation would have included the process that the team followed and the final product specifications. This would allow everyone at the company to understand and (hopefully) appreciate the hard work they had done.

2. The CEO could have asked the team to write about the steps they took in the process of development, and then to use this as a template to help other teams as they developed new products. In this way, their work would not have felt wasted.

3. The CEO could have gone a step further and allowed the team to build a few working prototypes in order to let them experiment with the technology in more depth (which would have also provided a more accurate idea of the usefulness of the technology).

4. The CEO could have asked the team to redirect their efforts toward finding ways to introduce some of their new technology into other products the company was working on.

These were just a few of the team’s ideas, and of course there are many possible approaches that senior management could have taken to boost their morale. Of course, most of these morale-boosters would have required some investment of time and money. The CEO may have thought of these people as rats working in a maze, and therefore seen no reason to motivate or help them make the most out of their canceled project. But if he had understood the importance of meaning in the workplace he might have taken some of these steps, spent some money in the process, and ended up with more motivated employees.  Sadly, this was not the case. I recently heard that the main people in that particular group left the company, and that the whole group was dissolved.  Maybe this is the kind of expensive lesson that this CEO needed.  However, most likely, he will be able to tell himself a story about why he was correct and they were all petty and wrong.

While recently in Istanbul I took the opportunity to study the city’s market system, trying my hand at some negotiating. What techniques have sellers developed to gain the upper hand against savvy buyers?

Negotiation@Grand Bazaar from serendipity on Vimeo.

Is there symbolism of the choice of art at the world economic forum?

Maybe.

On the surface the world economic forum and the attendees are trying to maintain the feeling that we are over the recession and that the economic life is more or less back to what it used to be. But maybe the unconscious thoughts of the people at the world economic forum feel somewhat different — and maybe this is the reason for this particular piece of art?

Although I’ve very clearly come down on one side of the debate about rationality in economics, there is another war that I’ve just found out I’m in the middle of. If you look very closely in the picture below from a recent iPhone commercial, Upside of Irrationality is one of the preferred books of the AT&T iPhone user!

While it’s nice that Apple put me in the middle of this war between AT&T and Verizon, In line with their slogan that “two is better than one”; what would have been really nice is to have both of my books featured–one on each shelf.

I am deeply attracted to the process of hacking – perhaps because I taught at MIT for a long time, or maybe because I tend to approach life with a similar problem-solving mindset.

Think about what hackers do. They start by looking at the flow of information in a system – let’s say a series of servers – and then try to identify weak points along the path.  Once they identify the weak points, they try out all kinds of ways to attack them, forcing the system as a whole to behave in certain ways (often toward not-so-desirable outcomes, at least from the perspective of the people who try to run the system).

I think social scientists often work in an analogous way, though (of course) with nobler intentions.  Let’s say that we social scientists want to look at a certain human behavior, such as overeating at the cafeteria: we would start by examining the different steps that people take as they go through the cafeteria – looking at where the customers stand, what they see, who they see, what tempts them, how they decide what to take, where and how they pay, and so on.  Next, we would try to identify possible points in the process that seem to encourage or enable overeating, and then try to come up with different ways to influence peoples’ decisions at these weak points.

For example, we might notice that people pass by the burger-and-fries station on the way to the salad bar. If the cafeteria is set up this way, it’s very hard for hungry people to resist temptation. So with this in mind, we might suggest to push the burger stand off into to the far corner and place the salad bar front and center. Alternatively, we might realize that people fill up their plates to their capacity, so we might recommend decreasing the plate size (a strategy that Brian Wansink shows to be effective in achieving weight loss).

By conducting this kind of  “hacking analysis” of the way people behave in a cafeteria “system,” we can discover the most promising ways to intervene in the process and improve behavior.

Another thing I like about the hacking analogy is that hackers are not necessarily looking for one absolute solution. Rather, they are looking for a simple approach, using available tools, in order to get the “job” done right now. This is not to say that we should come up with interventions in a slap-dash fashion, but the standard academic approach to exploring all the possible nuances of a topic for 30 years and understanding it in perfect detail before suggesting any intervention … well, I simply don’t have that kind of patience. I’m much more excited by cases of human behavior where we can learn something essential in a relatively short timeframe, test ways to change behavior for the better, improve the process, and continue learning and improving.

Enjoyable hacking to us all,

Dan

Here is a letter I recently got from a reader:

How to remind a child to take his medication?

Dear Dan,

My son has Type I diabetes. He is constantly forgetting to check his blood sugar level and inject insulin when he needs it, and I am forced to remind him every couple of hours. I hate to nag him, and know it doesn’t help him become more independent. On the other hand, if he keeps forgetting he could become severely ill. What should we do?

Tal

Dear Tal,

It is often hard to remember to take medication, especially when you hardly feel the severity of the illness or the relief of the medication. On the other hand, no one forgets to take heartburn medication – you’ll probably sprint for it as soon as heartburn begins to set in. With asthma and other inflictions that require more preventative measures, forgetting to take your medication will exacerbate symptoms and eventually lead to greater consequences. But until this critical point, there is no definitive moment where long-term preventative medication clearly needs to be taken. If you have an asthma attack, you can always pull out your inhaler. Similarly, diabetes does not cause chronic excruciating pain and won’t remind you to take your medication.

As for reminding your son, you might not have a choice. No one wants to monitor glucose levels all day, and he may need reminders to do so. But the reminders can and should come from his environment, as well as from habits you and your son can create together. Rather than reminding him every few hours yourself, create a mechanism that will remind him automatically.

Several doctors whom I’ve talked to told me that they recommend patients who need to take medications twice a day to put it next to their toothbrush. This way, this new habit is combined with the existing habit of brushing your teeth. But if you need to take your medication more than twice a day, the toothbrush will not be enough.

So the question is what regular activity can be tied to your son’s medications? Can you do something that is connected to his meals, or that is connected to other desires or hobbies? Can you set an electronic reminder in his cell phone? Once he has established a habit of checking his blood sugar, he may not even need these reminders anymore – but they can help build this habit until it takes on a life of its own.

It is also important that your son have a way to tell you that he has taken his medication without asking him. For example, you can make a board that he can mark when he checks his blood sugar and when he takes the insulin, or a designated can to put the used syringes. He could even upload this information to the internet – there is probably an app for that. If you are creative, you can find the right solution for you and your son with minimal effort.

(this one is a bit long)

Neoclassical economics is built on very strong assumptions that, over time, have become “established facts.” Most famous among these are that all economic agents (consumers, companies, etc., are fully rational, and that the so-called invisible hand works to create market efficiency). To rational economists, these assumptions seem so basic, logical, and self-evident that they do not need any empirical scrutiny.

Building on these basic assumptions, rational economists make recommendations regarding the ideal way to design health insurance, retirement funds, and operating principles for financial institutions. This is, of course, the source of the basic belief in the wisdom of deregulation: if people always make the right decisions, and if the “invisible hand” and market forces always lead to efficiency, shouldn’t we just let go of any regulations and allow the financial markets to operate at their full potential?

On the other hand, scientists in fields ranging from chemistry to physics to psychology are trained to be suspicious of “established facts.” In these fields, assumptions and theories are tested empirically and repeatedly. In testing them, scientists have learned over and over that many ideas accepted as true can end up being wrong; this is the natural progression of science. Accordingly, nearly all scientists have a stronger belief in data than in their own theories. If empirical observation is incompatible with a model, the model must be trashed or amended, even if it is conceptually beautiful, logically appealing, or mathematically convenient.

Unfortunately, such healthy scientific skepticism and empiricism have not yet taken hold in rational economics, where initial assumptions about human nature have solidified into dogma. Blind faith in human rationality and the forces of the market would not be so bad if they were limited to a few university professors and the students taking their classes. The real problem, however, is that economists have been very successful in convincing the world, including politicians, businesspeople, and everyday Joes not only that economics has something important to say about how the world around us functions (which it does), but that economics is a sufficient explanation of everything around us (which it is not). In essence, the economic dogma is that once we take rational economics into account, nothing else is needed.

I believe that relying too heavily on our capacity for rationality when we design our policies and institutions, coupled with a belief in the completeness of economics, can lead us to expose ourselves to substantial risks.

Here’s one way of thinking about this. Imagine that you’re in charge of designing highways, and you plan them under the assumption that all people drive perfectly. What would such rational road designs look like? Certainly, there would be no paved margins on the side of the road. Why would we lay concrete and asphalt on a part of the road where no one is supposed to drive on? Second, we would not have cut lines on the side of the road that make a brrrrrr sound when you drive over them, because all people are expected to drive perfectly straight down the middle of the lane. We would also make the width of the lanes much closer to the width of the car, eliminate all speed limits, and fill traffic lanes to 100 percent of their capacity. There is no question that this would be a more rational way to build roads, but is this a system that you would like to drive in? Of course not.

When it comes to designing things in our physical world, we all understand how flawed we are and design the physical world around us accordingly. We realize that we can’t run very fast or far, so we invent cars and design public transportation. We understand our physical limitations, and we design steps, electric lights, heating, cooling, etc., to overcome these deficiencies. Sure, it would be nice to be able to run very fast, leap tall buildings in a single bound, see in the dark, and adjust to every temperature, but this is not how we are built. So we expend a lot of effort trying to take these limitations into account, and use technologies to overcome them.

What I find amazing is that when it comes to designing the mental and cognitive realm, we somehow assume that human beings are without bounds. We cling to the idea that we are fully rational beings, and that, like mental Supermen, we can figure out anything. Why are we so readily willing to admit to our physical limitations but are unwilling to take our cognitive limitations into account? To start with, our physical limitations stare us in the face all the time; but our cognitive limitations are not as obvious. A second reason is that we have a desire to see ourselves as perfectly capable — an impossibility in the physical domain. And perhaps a final reason why we don’t see our cognitive limitations is that maybe we have all bought into standard economics a little too much.

Don’t misunderstand me, I value standard economics and I think it provides important and useful insights into human endeavors. But I also think that it is incomplete, and that accepting all economic principles on faith is ill-advised and even dangerous. If we’re going to try to understand human behavior and use this knowledge to design the world around us—including institutions such as taxes, education systems, and financial markets—we need to use additional tools and other disciplines, including psychology, sociology, and philosophy. Rational economics is useful, but it offers just one type of input into our understanding of human behavior, and relying on it alone is unlikely to help us maximize our long-term welfare.

In the end, I do hope that the debate between standard and behavioral economics will not take the shape of an ideological battle. We would make little progress if the behavioral economists took the position that we have to throw standard economics—invisible hands, trickle-downs, and the rest of it—out with the bathwater. Likewise, it would be a shame if rational economists continue to ignore the accumulating data from research into human behavior and decision making. Instead, I think that we need to approach the big questions of society (such as how to create better educational systems, how to design tax systems, how to model retirement and health-care systems, and how to build a more robust stock market) with the dispassion of science; we should explore different hypotheses and possible mechanisms and submit them to rigorous empirical testing.

For instance, in my ideal world, before implementing any public policy—such as No Child Left Behind or a $130 billion tax rebate or a $700 billion bailout for Wall Street—we would first get a panel of experts from different fields to propose their best educated guess as to what approach would achieve the policy’s objectives. Next, instead of implementing the idea proposed by the most vocal or prestigious person in this group, we would conduct a pilot study of the different ideas. Maybe we could take a small state like Rhode Island (or other places interested in participating in such programs) and try a few different approaches for a year or two to see which one works best; we could then confidently adopt the best plan on a large scale. As in all experiments, the volunteering municipalities would end up with some conditions providing worse outcomes than others, but on the plus side there would also be those who would achieve better outcomes, and of course the real benefit of these experiments would be the long-term adoption of better programs for the whole country.

I realize that this is not an elegant solution because conducting rigorous experiments in public policy, in business, or even in our personal lives is not simple, nor will it provide simple answers to all of our problems. But given the complexity of life and the speed at which our world is changing, I don’t see any other way to truly learn the best ways to improve our human lot.

A fascinating new study just came out, showing that tears that were produced by women under negative emotions reduce the sex drive of men!  This gives men yet another reason not to upset women.

Here is the abstract:

Emotional tearing is a poorly understood behavior that is considered uniquely human. In mice, tears serve as a chemosignal. We therefore hypothesized that human tears may similarly serve a chemosignaling function. We found that merely sniffing negative-emotion-related odorless tears obtained from women donors, induced reductions in sexual appeal attributed by men to pictures of women’s faces. Moreover, after sniffing such tears, men experienced reduced self-rated sexual arousal, reduced physiological measures of arousal, and reduced levels of testosterone. Finally, functional magnetic resonance imaging revealed that sniffing women’s tears selectively reduced activity in brain-substrates of sexual arousal in men.

The full paper is here:

Michael Jackson died of cardiac arrest on June 25, 2009. Recently, a hearing started regarding his former personal physician Conrad Murray.  In this hearing the physician is accused of involuntary manslaughter, negligence, and administration of a dangerous and unnecessary cocktail of medications that accelerated the superstar’s death.

While I won’t argue for the physician’s innocence, I do think we should ask – how common is the tendency to prescribe patients what they want? Is this a singular incident, a case of a drug-pushing “bad apple,” or could there be more general forces at play?

What I hear from my physician friends is that they feel tremendous pressure to please their patients, and they know that if they don’t give them what they want, some other physician will (or at least this is how they justify their overprescription).

A common case of this sort is the case of the influenza virus. When patients contract the flu, they go to their doctors, feeling miserable and begging for help. Doctors know that they shouldn’t prescribe anything for their viral patients (and that the best thing to do is nothing), but they feel a pressure to give the patients something as they walk out the door. And so, they prescribe antibiotics, which don’t treat the flu but do build up drug-resistant bacteria that may cause trouble in the future.

Doctors in this situation face a conflict of interest, between what the patient wants from them, what is good for their own wallet (to keep the patient happy), and what is the right medical thing to do.  Moreover, the situation is not perfectly clear because while it is unlikely that the patient has a bacterial infection (one where antibiotics could help) it is still possible – creating a gray zone of medical practice.

The thing about medical gray zones is that they become grayer, more blurred, when patients are more powerful or high-profile. The minute a doctor has a patient like Michael Jackson who is wealthy and used to getting his way, the pressure to succumb has to be much higher.

In thinking about Michael Jackson’s physician, consider this. It’s easy to find someone guilty and lay the blame solely on that individual, one man who shamefully deviated from the standard of care, but it’s much more challenging to put ourselves in his position and think about what we would have done if we were in his position. I suspect we too would have prescribed those meds.

P.S. I can’t believe that I am writing a blog about Michael Jackson