DAN ARIELY

Updates

Ask Ariely: On Tesla, To-Do Lists, and Knowing the News

October 14, 2013 BY danariely

Here’s my Q&A column from the WSJ this week  and if you have any questions for me, you can tweet them to @danariely with the hashtag #askariely, post a comment on my Ask Ariely Facebook page, or email them to AskAriely@wsj.com.

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Dear Dan,

I was thinking about buying a Tesla electric car, and I was very excited about it, but given the recent news, I am not sure this is a wise decision. Is it too risky?

—Karl

Indeed, earlier this month a Tesla Model S drove over a large metal object, and the object punched a hole through the plate protecting the battery, and the battery pack caught on fire. But this is only one part of the story. In August, the model S received five stars in all test categories—an unusually high rating—by the National Highway Traffic Safety Administration. In the two days after we all learned about the crash test ratings, the stock of the company went up by 2%.

We now need to add one more data point to this body of evidence: The fire happened on Oct. 1. The share price fell by 10% over the next two days. By the way, this means that the effect of one small piece of bad news can be four times more effective than good news based on much more data. (A rare downgrade of the stock by the R.W. Baird brokerage from “outperform” to “neutral” probably also contributed to the drop.)

Elon Musk, Tesla’s CEO, pointed out in a statement Oct. 4 that no one was hurt, that the car warned the driver to pull over, and that gas cars are in no way safer. After the statement, the stock price increased by 3%, making the overall losses 6.2% from the day before the accident.

From a psychological perspective, this overreaction to one very salient (and very sad) accident is nothing new. It is a consistent way that we react to salient news, and it is perfectly irrational.

And after all of this, my suggestion to you? If you had decided to buy a Tesla before this accident, get one now—because the event didn’t add much to the information you used to make your original decision. In fact, given that other people might have an irrational fear of buying a Tesla, maybe the prices will go down a bit.

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Dear Dan,

Why do people love to write to-do lists?

—Joe 

I suspect there are rational and irrational reasons for the very large amount of list-making activity we see around us. On the rational side, lists help us with faulty memory and allow us to share tasks with other people simply and efficiently. On the irrational side, making lists and checking items off these lists give us the false sense that we are actually making progress. The term for this by the way is “structured procrastination.” It’s an attempt to capture the momentary feeling that we are progressing—whereas in fact when we look back at the end of the day on what we achieved, we realize that we did not get much done. I also suspect that all the apps that help us make lists and then make it fun for us to check things off are reducing our collective productivity, by replacing real work and focus with structured productivity.

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Dear Dan,

I am always upset by bad news online when I turn on my computer. But negative news is pervasive, so what can I do to make myself feel better and get down to work immediately?

—Liz

One approach is to start each day with the most depressing set of news around for about five minutes and then move to the regular news. The idea here is that contrast between the highly depressing and the regular will make you feel good in comparison.

See the original article in the Wall Street Journal here.