The thing about habits is that for good and bad they require no thinking. An established habit, whether getting ready for work in the morning or having a whiskey after, is a pattern of behavior we’ve adopted—we stick to it regardless of whether it made sense when we initially adopted it, and whether it makes sense to continue with it years later.  From a human irrationality perspective this means that something we do “just once” can wind up becoming a habit and part of our activities for a longer time than we envisioned.

To get some insight into this process, consider the following experiment:  We asked a large number of people to write the last two digits of their Social Security number at the top of a page, and then asked them to translate their number into dollars (79 became $79), and to indicate if in general they’d buy various bottles of wine and computer accessories for that much money. Then we moved to the main part of the experiment and we let them actually bid on the products in an auction.  After we found the highest bidders, took their money and gave them the products we calculated the relationship between their two digits and how much they were willing to pay for these products.

Lo and behold, what we found is that people who had lower ending Social Security numbers (for example 32), ended up paying much less than people who had higher ending Social Security numbers (for example 79).  This is basically the power of our first decisions: if people first consider a low price decision (would I pay $32 for this bottle of 1998 Cote du Rhone?) they end up only willing to pay a low amount for it, but if they first consider a high price decision (would I pay $79 for this bottle of 1998 Cote du Rhone?) they end up willing to pay a lot more.

So this is the double-edged sword of habits, they can save us time, energy and unpleasant thinking, but on the other hand, it’s all too easy to start down an unwholesome path. Now onto “ The 7 Habits Of Highly Ineffective People”…

1) Procrastination. Joys untold attend this particular bad habit. And it’s one people indulge in all the time, exercise, projects at work, calling the family, doing paperwork, and so on. Each time we face a decision between completing a slightly annoying task now and putting it off for later, battle for self-control ensues. If we surrender, procrastination wins.

There’s nothing inherently wrong with delaying unpleasant tasks at work from time to time in order to watch a (crucial) football game at the pub with friends.  But, the problem is that as we get close to our deadline we start thinking differently about the whole decision.  As we stay up all night to finish a task on time we start wondering what were we thinking when we succumbed to the temptation of the football game, and why didn’t we start on the task a week earlier.  Moreover, as with all habits one procrastination leads to another and soon we get used to watching deadlines as they zoom by.

2) The planning fallacy. This is more or less what it sounds like; it’s our tendency to vastly underestimate the amount of time we’ll require to complete a task. This hardly needs illustration, but for the sake of clarity, recall the last time you delegated time to a complex task. Cleaning your flat from top to bottom (couldn’t take more than two hours right? Wrong.); finishing the paper or project at hand (who knew the people in department X could be so impossibly slow?). The problem is that even if we try to plan for delays, we can’t imagine them all. What if the person you’re working out a deal with gets hospitalized? What if an important document gets deleted or lost? There are infinite possible delays (procrastination of course being one of them), and because there are so many, we end up not taking them into account.

3) Texting while driving. Let me start by saying that in my class of 200 Master’s students, 197 admitted not only to doing this regularly, but also to having made driving mistakes while doing so. Also, one of the three abstainers in the class was physically blind, so we should not really count him as a saint, and who knows maybe the other two were liars. Texting while driving is clearly very stupid.  If we were not intimately familiar with our own Texting behavior, we might think that it’s insane to think that anyone would knowingly increase their chances of dying 10 fold rather than waiting a few minutes to check email, but this is the reality.  Moreover, the issue here is not just Texting, it is much more general than this particular bad habit.  The basic issue has to do with succumbing to short-term desires and foregoing long-term benefits.  Across many areas in our life, when temptation strikes we very often succumb to it (think about your commitment to always wearing a condom when you are not aroused and when you are).  And we do this over and over and over.

4) Checking email too much. If it seems that there’s too much about email on this list, I assure you, there isn’t. Checking email is addictive in the same way gambling is. You see, years back the famous psychologist B.F. Skinner discovered that rats would work much harder if the rewards were unpredictable (rather than a treat every 5 times they pressed a bar, one would come after 4, then 13, etc). This is the same as email, most of it is junk, but every so often, it’s fantastic: an email from the woman you’ve been chasing for instance. So we distract ourselves from work by constantly checking and checking and waiting to hit the email jackpot. And to be perfectly honest, I’ve checked my email at least 30 times since starting writing this article.

5) Relativity in salary. The fatter a sea lion is, the more sea lionesses he has in his harem. He doesn’t need to be immense, just slightly bigger than the others (too fat and he won’t make it out of the water). As it turns out, it’s the same for salaries; we don’t figure out how much we need to be satisfied, we just want to make more than the people around us. More than our co-workers, more than our neighbors, and more than our wife’s sister’s husband.  The first sad thing about our desire to compare is that our happiness depends less on us, and more on the people around us.  The second sad thing is that we often make decisions that make it harder for us to be happy with our comparisons: Would you prefer to get a 50,000 pound salary where salaries range from 40,000-50,000 or a 55,000 pound salary where they’re between 55,000-65,000? If you’re like almost everyone, you’d realize that you would be happier with the 50,000 pound salary, but you would pick the 55,000.

6) Overoptimism. Everyone, except for the very depressed, overestimates their chances when it comes to good things like getting a raise, not getting a divorce, parking illegally without getting a ticket. It’s natural—no one gets married thinking “I am so going to be divorced in 4 years”, and yet a large number of people end up getting divorced.  Like other bad habits, overoptimism is not all bad.  It helps us take risks like opening a business (even though the vast majority fail) or working to develop new medicines (which take many years and usually don’t pan out). Ironically overoptimism often tends to work out well for society (new restaurants, cures for disease) while endangering the individuals who take them (financial ruin, stress-induced insanity).  Sadly we are often overoptimistic – my most recent example of this was just a few hours ago when I sat down to write an essay entitled: “The 7 Habits Of Highly Ineffective People.”  If I only didn’t go out last night…..

Irrationally yours

Dan

I have “a friend” who will head over to a coffee shop to get work done. Not because she’s unable to work at her desk or because she needs the presence of other people, but rather because it lets her get away from the Internet and all its distractions.

True, she could easily stay put by just keeping her browser closed. But that requires self-control, and as we all know, keeping ourselves in check is easier said than done. Whatever the resolution (start dieting, start saving, stop procrastinating, etc.) we routinely stick to it for a bit and then cave. We make the resolution in one state of mind – a cool, rational state – and then break it when temptation strikes.

That’s the reason for my friend’s coffeeshop strategy: precommitments allow us to commit upfront to our preferred course of action. In her cool, rational state, my friend can decide not to surf the web and make a point to leave the wireless behind; later, when temptation strikes, she’ll be out of luck. Access denied.

On the whole, I like my friend’s strategy. But there’s a potential problem: what if she needs the Internet to do her work? What then?

Not to worry – there’s an app to the rescue: SelfControl, a free Mac-only software program that blocks access to incoming/outgoing mail servers and websites and was thought up by artist Steve Lambert. (As the son of an ex-monk and an ex-nun, he’s well-versed in self-control.) The app only takes seconds to install and comes with all the flexibility that my friend’s coffeeshop strategy lacks.

Instead of taking leave of the Internet all-together, you can pick and choose what you can and can’t access, and for how long. If Facebook is your particular time-suck, then add its URL to SelfControl’s blacklist and the program will block Facebook and nothing else. If Twitter is another danger zone, then by all means, throw its URL into the mix. Next, figure out how long you want to block them for – anywhere from one minute to twelve hours – and move the slider accordingly. Then press start and you’re good to go.

But here’s the key part: once you click start, there’s no going back. (No wonder the app has a skull and crossbones symbol as its icon.) Switching browsers won’t help you, and neither will restarting your computer or even deleting the app. You won’t get those websites back until the timer runs out. As such, it’s as effective of a precommitment as seeking out a wireless-free zone.

Though temptation routinely deflects us from our long-term goals, our struggle with self-control isn’t a lost cause. Once we realize and admit our weakness, we can do something about it by taking on clever precommitments that save us from ourselves. In an ideal world we wouldn’t need the SelfControl app, but in this world it sure is useful.

Irrationally Yours,

Dan

P.S. For more on precommitments, check out this post on self-control and sex.

Sex, Shaving, and Bad Underwear
Or how to trick yourself into exerting self-control

Recently, I gave a lecture on the problem of self-control. You know the one: At time X you decide that you’re done acting a certain way (No more smoking! No more spending! No more unprotected sex!), but then when temptation strikes, you go back on your word.

As I mention in Predictably Irrational, this predicament has to do with our inherent Jekyll-Hyde nature: We just aren’t the same person all the time. In our cold, dispassionate state, we stick to our long-term goals (I will lose ten pounds); but when we become emotionally aroused, our short-term wants take the helm (Oh but I am hungry, so I’ll have that slice of cake). And what’s worse, we consistently fail to realize just how differently we’ll act and feel once aroused.

Fortunately, there’s a way around the problem: pre-commitments, or the preemptive actions we can take to keep ourselves in check. Worried you’ll spend too much money at the bar? No problem, bring just the cash you’re willing to part with. Afraid you’ll skip out on your next gym visit? All right, then make plans to meet a friend there. And so on. Pre-commitments can take many a form, and some get pretty creative.

For example, I surveyed my audience at the lecture hall for their pro-self-control tactics, and I received two noble suggestions. One woman reported that when she goes out on a date with someone she shouldn’t bed, she makes a point to wear her granniest pair of granny underwear. Similarly, another woman said that when faced with that kind of date, she just doesn’t shave.

Both are great ideas, I think, and are likely to work — well they’re certainly better than only relying on the strength of your self-control — but there is a risk. Let’s say the woman with the ugly underwear finds herself uncontrollably attracted to her date and decides that, you know what, ugly underwear be damned, there will be sex tonight! Chances are she will wake up in the morning wishing she had worn her silk lingerie after all.

Irrationally yours

Dan

p.s if you have any personal self control stories that you are willing to share — please send them my way

Sad story out in the New York Times describing growing concerns about texting while driving. In Britain, a woman was sentenced to a 21-month sentence after it was found that she had been texting while driving, which resulted in the death of a 24-year old design student. In many ways, texting while driving illustrates a case in which tiny, individual irrational decisions can accumulate and cause widespread suffering, not only for the individuals who are texting, but their unsuspecting victims. Unlike cases of drunk driving, in which the driver’s decision making abilities are impaired, drivers who text are at their full wits to wait until they’ve pulled over to check their texts, and yet in the process they routinely underestimate the risk they impose to themselves and others.

Aside from being another example of a common irrational behavior (and who among us did not text or checked their email while driving), this leads me to wonder, what is the best way to solve this problem? While presently the issue is being hotly debated here in the US on a state-by-state basis, England has taken a tough national stance on texting while driving, which includes hefty minimum point penalties on the offending party’s license, and fines upward of 60P. If you watch the video in the linked article, you’ll also find a very graphic video depicting the carnage of a texting accident–shocking and informative public service announcements are yet another option. Alternatively, we can hope that cell phone companies are continuing to explore voice activation technologies that can read text messages aloud and also transcribe them from voice — thereby by-passing the problem altogether.

We have lots of irrational problems to deal with, and the realization that tiny, seemingly innocent little ones, like 10-second text messages, can cause so much damage should make us look around for more such problems.  perhaps ones that are not as obvious (think health care), but are potentially just as damaging.

Irrationally yours

Dan

Money is an integral part of modern life. We constantly make decisions about whether we’re willing to pay for different products and, if so, how much we are willing to pay. In fact, we make decisions about money so often that we consider money to be a natural part of our environment.

However, money is a relatively recent invention, and despite its incredible economic usefulness it does come with its own set of problems. In particular, it turns out that decisions about money are often non-intuitive and, in fact, quite difficult. Consider the following situation as an example: You are thirsty, tired, and annoyed and just want a cup of coffee. You see two coffee shops across the street from each another. One is a specialty coffee shop that sells handcrafted, designer coffee and the other is Dunkin’ Donuts which sells standard, decent coffee. The price difference between the two options is $1.75 for your cup-a-joe. Now, how do you decide if the benefit of the handcrafted coffee drink is worth the additional $1.75?

What you should do (if you wanted to be rational about it) is consider all of the things that you could buy with that $1.75, now as well as in the future, and decide to buy the expensive coffee only if the difference between the two coffees is more valuable than all of those other possibilities. But of course this computation would take hours, it is incredibly complex, and who even knows all the possible options to consider?

So what do we do when we need to make decisions but making them “correctly” is too time consuming and difficult? We adopt simplifying rules, which academics call heuristics, and these heuristics provide us with actionable outcomes that might not be ideal but they help us to reach a decision. In the case of coffee and other, similar decisions, one of the heuristics we often use is to look at our own past behaviors and if we find evidence of relevant past decisions, we simply repeat those. In the case of coffee, for example, you might search your memory for other instances in which you visited regular fancy coffee shops. Assess which one of those two behaviors is more frequent and then you tell yourself “If I’ve done Action X more than Action Y in the past, this must mean that I prefer Action X to action Y” and as a consequence, you make your decision.

The strategy of looking at our past behaviors and repeating them, might seem at first glance to be very reasonable. However, it also suffers from at least two potential problems. First, it can make a few mediocre decisions into a long-term habit. For example, after we have gone to a fancy coffee shop three times in a row, we might reason that this is a great decision for us and continue with the same strategy for a long time. The second downfall is that when the conditions in the market change, we are unlikely to revise our strategy. For example, if the price difference between the fancy & standard coffee shop used to be 25¢ and over the years has increased to $1.75, we might stay with our original decision even though the conditions that supported it are no longer applicable.

In light of our current financial situation, many people these days are looking for places to cut financial spending. Once we understand how we use habits as a way to simplify our financial decision-making, we can also look more effectively into ways to save money. If we assume that our past decisions have always been sensible and reasonable then we should not scrutinize our long-term habits. After all, if we’ve done something for five years, it must be a great decision. But if we understand that long-term, repeated behaviors might reflect our habitual decision-making in the face of complex financial decisions more than they reflect what is truly best for us, we might first examine our old habits and carefully consider whether they indeed make sense or not. We can examine our subscription to the ESPN Sports Package, our annual subscription to the opera, our yearly Disneyland vacation, or our monthly visit to the hairdresser. By examining these habits, and quitting them when it makes sense to do so, we might actually discover ways in which we could reduce our spending on a long-term basis.

Yes, money is complex, and it is incredibly difficult for us to carefully examine every purchasing decision we make. But the advantage of examining our habits is that it might lead us to create good ones that will benefit us for a long time.

Dear Irrational,

I recently met a great guy – let’s call him George – and now I can’t stop thinking about him. Though we’ve only been on a couple dinner dates, he’s officially won me over.

Now here’s my problem: Smitten as I am, I’m ready to hop into bed with George this very minute, but I’m not sure that’s the best idea. After all, there must be some reason that all those books and magazines (not to mention my mother) champion the make-him-wait rule. But does it really work? I’ve never followed it in the past, but then, I can’t say I have the best dating track record either.

What do you think? Should I play hard to get, or no? Help!

Sincerely,

Unsure

——

Dear Unsure,

Your mother is right: making the guy sweat a little (no, not like that) is in your best interest if you want to maximize the chances f a long term relationship. The reason lies in cognitive dissonance, which refers to what we do when our beliefs and actions misalign: Can’t change the cold, hard facts? Then change your beliefs!

The classic experiment here comes from psychologists Leon Festinger and James Carlsmith, who had participants perform a boring task and then paid them either $20 or $1 to convince someone else that the task had been great fun. Everyone then rated the task, with the result that the $1 participants rated the task more positively than did the $20 crew. While the $20 group could explain away the dissonance between their action (“I told someone the task was riveting”) and their belief (“It actually bored me to tears”) via money (“I was paid to promote the task”), the $1 individuals could not because they could not justify misleading others for such a small amount of money– so they changed their initial belief (“I must really like the task, to have promoted it”) and they ended up rating the task more positively.

To give you an example that is closer to our social life, look at fraternities: loyalty to frats increases with the amount of hazing, since pledges tell themselves, “I did a lot of embarrassing stuff for my frat – it must really matter to me.”

So, going back to your dilemma, Unsure, cognitive dissonance suggests that if you really want a guy, you have to create a dissonance for him, so that he will say, “Wow, if I put in all this effort for the woman – I must love her.”

This means that instead of putting out early, you have George pursue you. Instead of splitting the check, you let him pick up the entire tab. Instead of calling him up and suggesting dates, you leave the calling and planning up to him. In other words, make him work, and he will rationalize it by deciding he loves you.

Good luck.

Irrationally yours,

Dan

p.s please don’t tell George about my advice, and who gave it to you

Here is a video dedicated to the start of a new academic year.

Today we all have good intentions but what will come of these intentions in the future?

Happy semester

I am teaching today in class about self control problems, and approaches to regain self control.  Here is a story of Buffett and his attempts at self-control:

Even the most analytical thinkers are predictably irrational; the really smart ones acknowledge and address their irrationalities. We find a great example in Alice Schroeder’s “The Snowball: Warren Buffett and the Business of Life.”

Warren Buffett is a numbers-driven investor whose life choices and business decisions would make the vulcan Mr. Spock seem over-emotional. A teenage horse handicapper who grew up into a deep reader of Moody’s and Standard and Poor’s reports, Buffett is the archetypal quant: a data-processing, information-consuming, hard-thinking, analytical machine. His ability to outperform the market by basing his decisions on hard data and on an uncanny understanding of business fundamentals earned him the moniker “Oracle of Omaha.”

Buffett’s success as an investor required not only deep analysis of financial documents but also a large measure of self-control to avoid getting caught in market bubbles and panics. Buffett’s rule “buy when everyone else is selling, sell when everyone else is buying” requires enormous self-assurance to execute.

And yet, even the Oracle of Omaha is not immune to the allure of irrational behavior. He is what Behavioral Economists call a sophisticate: someone who understands his irrationality and builds systems to cope with it. (The other types of people are the “rational,” who never deviates from optimal behavior, and the “naif,” who is unaware of his irrationality and therefore doesn’t do anything to address it.)

Uncommon a person as he was, Buffett had a very common concern: he feared gaining too much weight. Rational agents don’t gain weight because they always consider all the possible consequences of all actions. Naifs plan to start their diet tomorrow.

But Buffett — who breakfasted on spoonfuls of Ovaltine — understood his predictable irrationality: people eat without consideration for the long-term effects; that’s why they gain unwanted weight. Being a pragmatic person, he decided to curtail overeating with a commitment device.

He gave unsigned checks for $10,000 to his children, promising to sign them if he was over target weight by a certain date. Many people use commitment devices to try to keep their weight down, but Buffett’s idea had a big flaw: his children, spotting a rare opportunity to get money from the notoriously frugal billionaire, resorted to sabotage. Doughnuts, pizza, and fried food mysteriously appeared whenever Buffett was home.

In the end the incentives worked: even with his children’s sabotage, the Oracle kept his weight down, and his checks went unsigned. But had he been purely rational, no commitment device would have been needed.