The Power of Matching Donations

August 28, 2014 BY danariely

Donations Please for BlogPost from Forbes.com

In a study conducted with Lalin Anik and Dan Ariely of Duke University, social norms were used to incentivize employees to give money to charity. Results were published in the paper Contingent Match Incentives Increase Donations.

In the study, the researchers told a set of contributors to a charitable giving website that their donations would be matched by the charity, but only if a certain percentage of contributors that day either 25, 50, 75, or 100 percent – “upgraded” to a recurring monthly donation. They found that the contributors in the “75 percent” condition contributed at a much higher rate than the other three groups, with as much as a 40 percent increase in committing to recurring donations.

Norton speculates that the higher number is due to a desire to conform to the social norms of other contributors – and not be the cause for the charity to deny matching funds. “No one wants to be the chump that spoils it for everyone else,” Norton says. In other research, that 70-75 percent threshold seems to be the point that has the biggest effect on on behavior – any higher and people may feel like the result is unattainable. The research also shows that the number doesn’t have to correspond to actual rates of participation. Just setting that goal institutes a standard that other people will strive to match.

To read more visit Forbes.com to read Michael Blanding’s article here.

It's time to play cupid!

February 10, 2014 BY danariely

In an episode of “The Office,” Michael Scott takes on the role of matchmaker at a Valentine’s Day party. In an attempt to fix geeky Eric up with awkward Meredith, he helpfully points out their similarities: “So, Eric, you mentioned before that you are in Tool & Die Repair. Meredith recently had a total hysterectomy, so that’s sort of a repair. [uncomfortable silence] Alright, I’ll let you guys talk.”

Like Michael, most of us have made matches between people, from grabbing two strangers by the arm at a party and introducing them to each other to mediating preexisting romantic interests. Michael Norton of Harvard Business School and I wondered about the nature of this common behavior: why do people like to be matchmakers? Is it a desire to be popular, to fulfill social goals or to have an instrumental role in social networks? In our newest paper* that is being published in Social Psychological and Personality Science this month, we show that it is simpler than that: people get a happiness boost from matching others!

We explored the impact of matchmaking behavior on happiness in different non-romantic scenarios. After being asked to make matches, our participants reported that they were happier post-matchmaking. We measured their happiness with a 7-point scale (1: very unhappy to 7: very happy) and examined their persistence in matchmaking (“would you like to make another match?”)

We first looked at whether people get a happiness boost when they make any type of match (à la Michael Scott). We found that matchmakers are happier when they make matches between two people they actually think will get along rather than on a random dimension such as looking alike. Furthermore, people enjoy matching those who are least likely to know each other; introducing a banker colleague to an artsy cousin makes people happier than introducing two philatelist co-workers from their workplace.

Another important dimension in matchmaking, of course, is the actual success of these matches. Do people still feel happy even when their matchmaking ends with a dating horror story rather than a happy marriage? When asked to think about previous matchmaking experiences, participants who recalled making a successful match (e.g., “my mom got along very well with my emo friend”) reported a happiness boost while failed matches (e.g., “my neighbor made my aunt uneasy”) was actually costly for well-being.

Though Michael Scott is rather hopeless at bringing lonely hearts together, given our findings we would recommend that he continue with his efforts but change his strategy; stay away from random introductions, match people who have a low likelihood of meeting but would enjoy each other’s company and aim for the matches to work out. Fewer awkward silences and happier matchmakers guaranteed.

~Lalin Anik~

*Anik, Lalin and Michael I. Norton, “Matchmaking promotes happiness,” Social Psychological and Personality Science. Prepublished February, 10, 2014.

A New Model for Bonuses: Shift that bonus from self to others!

September 23, 2013 BY danariely


(All the rights of this illustration belong to our talented lab member M.R.Trower)

Before writing personal bonus checks to your employees this December, have a look at our paper — hot off the press! If you are hoping that a bonus would allow them to buy whatever they wish and as a result be happier at work and more productive, we have a better idea! Rather than giving your employees more personal bonuses, make a minor adjustment and offer them prosocial bonuses, a novel type of bonus to be spent on others.

Across three field experiments, we tested the efficacy of prosocial bonuses against the standard model of personal bonuses. We found that when companies gave their employees money to spend on charities or on their colleagues (as opposed to themselves), employees 1) reported increased job satisfaction and 2) performed notably better.

In one experiment, an Australian Bank gave some of their employees a charity voucher and encouraged them to spend it on a cause they personally cared about. Compared to their coworkers who didn’t receive a charity vouchers, bankers who redeemed the prosocial bonuses reported increased job satisfaction and were happier overall.

Next, we examined whether prosocial bonuses were still effective if they were spent on others people personally knew rather than on charities. We ran experiments in two very different settings – one with recreational dodge ball teams in Canada and another one with pharmaceutical sales teams in Belgium – where we encouraged spending on co-workers and teammates. In both cases, we gave cash to some members of each team to either spend on themselves (personal bonuses) or spend on their teammates (prosocial bonuses). We found that teams that received prosocial bonuses performed better than teams that received money to spend on themselves.

It is difficult to measure the return on investment of corporate social responsibility. With prosocial bonuses, however, we were able to measure the dollar impact on the bottom line. On sports teams, every $10 spent prosocially led to an 11% increase in winning percentage, whereas it led to a 2% decrease in winning when team members received personal bonuses. For the sales teams, every $10 spent prosocially earned an extra $52 for the firm.

Our results come at an important time. Job satisfaction is at a 20-year low in the U.S., and people are spending more and more time at work. If you do what you have always done, you will get what you have always gotten. So, we suggest that you try something new this year: Shift the focus of the bonuses from the self to others and create a more altruistic, satisfying and productive workplace!

~Lalin Anik~

P.S. If you are interested in testing prosocial bonuses, please feel free to send a gift to lalin.anik@duke.edu

iPhone 5 or Samsung Galaxy S3?

July 5, 2012 BY danariely

Retro iPhoneMy 2-year cell phone contract was up last month, and even before the date when I could opt for an upgrade, I began to experience the pain of indecision: which was it going to be – a Samsung Galaxy S3 or an iPhone 5? I was one of the only Android (HTC Evo) users in our Center for Advanced Hindsight team, and swayed by the rest of the group’s dedication to Apple, I was looking forward to switching to the new iPhone as soon as my contract was up. But I was not going to be able to befriend the newest iOS 6-adorned Siri until the iPhone’s release in a couple of months. In today’s impatient tech age, that is an eternity. My longing for an Apple clashed with my itching desire to get a new phone.

After watching a hopeless number of face-off videos, reading about the features and specs of Galaxy S3 compared with the endless mock ups of the rumored iPhone 5, and even throwing the question around at dinner parties, I decided to come to my senses, listen to what research has to say, and make an irrationally rational decision. Though surely evidence from decades of research is not limited to the following considerations, I picked a number of conceptual tools from decision-making research that could help shed light on this quandary of iPhone vs. Samsung:

  1. Now vs. Later: I should pit my short-term interest in having a new smartphone now against my long-term interest in having an iPhone later. Temporal discounting suggests that we have the tendency to want things now rather than later, and delaying gratification depends on whether we are convinced that what will happen in the future is going to be better than what we can have now. In other words: howmuch better is this nebulous iPhone of the future when I could have this immediately awesome Galaxy S3?  Given that the specs of Galaxy S3 are available but those of the iPhone 5 are not, it might be smart to bet for what is certain. (Winner: Galaxy S3)
  2. Misremembering the past vs. mispredicting the future: I can go with the certain specs of Galaxy S3, or potentially recall my past experiences with iPhones and decide accordingly. Sadly we are bad at remembering past feelings; rather than correctly weighing the positives and negatives we remember the peak moments and selected experiences. Since I am unable to accurately recall my past emotional states, then maybe I can imagine how much pleasure each of these phones could bring me in the future? Unfortunately, we are also notoriously bad at predicting the duration and intensity of future feelings. (Winner: Galaxy S3)
  3. Want vs. need: Do I want a new phone? Yes. Do I really need a new phone? No, because my old one is still in good shape. With the irresistible discounts of signing up for a new 2-year plan, I am conditioned by the cell phone market to switch to a new phone as soon as possible. This conditioning moves me from casually wanting a new device to absolutely needing it to survive (!). I feel that the longer I wait, the more I am giving up on a perceived opportunity. (Winner: wait until my current phone gives up, and then get an iPhone 5).
  4. Decoy options iPhone 4s vs. HTC Evo: In my indecision, I can introduce a third option that is asymmetrically dominated either by Galaxy S3 or iPhone 5. If I consider iPhone 4S as a potential option, it would (hopefully) be dominated by iPhone 5 but could still be superior to the Galaxy S3 with the ease of its use, compactness and such. If I am leaning more towards the Android options, then I can consider staying with HTC Evo as a potential third choice, and given that Galaxy S3 surpasses my old Android in nearly every domain, I would lean towards upgrading to Samsung. (Winner: Depends on the decoy option)
  5. Reactance to unavailability: The brands also complicate the issue as they control supply and increase demand by playing with the availability of their products as well as the timing of their release. This can create several types of responses:
  • Since iPhone 5 is currently unavailable, I experience a pressure to select iPhone 4S which is a similar alternative. If I perceive this as a limitation on my freedom to choose, I might react by selecting a dissimilar option. (Winner: Galaxy S3)
  • The unavailability of iPhone 5 could also lead me to perceive it as more desirable. (Winner: iPhone 5)
  • Or I can just despise what I can’t have. (Winner of the sour grapes story: Galaxy S3)

So, what should I do? Given the considerations above, there is still no clear winner for me. Yes, I have the plague of newism: I run after the genuine, exciting proposition of the emerging trends and products. Yes, I know there is something good now, but possibly something better around the corner.

At the end of the day, I will toss a coin: not because it will settle the question for me, but because in that brief moment when the coin is in the air, I will suddenly know which side I hope to see when it lands in my palm. And besides, whether I purchase my new phone from Apple or from Samsung, I will stick to my commitment, almost immediately forget about the forsaken option, and justify my choice infallibly in retrospect.

~Lalin Anik~