DAN ARIELY

Updates

Ask Ariely: On Economic Drinking Games, Regulating Relationships, and Wedding Ring Woes

September 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’m turning 30 in December, and I want to have a “nontraditional” celebration. I’m thinking about re-creating some economics experiments at my party.

Here’s the plan: Lots of alcohol and yummy appetizers at a fancy place here in Dallas. Computers scattered across the room with small apps, each running a different experiment. After all, how many parties do you go to where you get to have fun, have too much to drink and learn something about economics? Any advice?

—Virginia

I really love your idea—and here is a suggestion for an experiment relating to dishonesty. Give each of your guests a quarter and ask them to predict whether it will land heads or tails, but they should keep that prediction to themselves. Also tell them that a correct forecast gets them a drink, while a wrong one gets them nothing.

Then ask each guest to toss the coin and tell you if their guess was right. If more than half of your guests “predicted correctly,” you’ll know that as a group they are less than honest. For each 1% of “correct predictions” above 50% you can tell that 2% more of the guests are dishonest. (If you get 70% you will know that 40% are dishonest.) Also, observe if the amount of dishonesty increases with more drinking. Mazel tov, and let me know how it turns out!

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Dear Dan,

My daughter started dating a lazy, dumb guy. How can we tell her gently that he is wrong for her without preaching to her, causing her to ignore us or go against our advice?

—Concerned Mother

It seems that you are experiencing the same reaction most mothers around the world have toward their daughters’ boyfriends. Let’s assume, for the sake of argument, that you are, in fact, correct, and that your daughter’s new boyfriend really is dumb, lazy and up to no good. Nevertheless, don’t tell your daughter your opinion and instead ask her questions. Naturally, people tend not to ask themselves certain questions. But if someone else asks them, these questions get planted in their minds, and it is hard to keep from thinking about them. So thoughtful questions can make people think differently about what they want and how they view the world around them.

For example, you can ask, “How do you and your boyfriend get along? Do you ever fight? What do you love about him? What do you like less about him?” I admit it’s a bit manipulative, but I hope it will get her to think about her relationship in more depth. And maybe she will reach the same conclusions you have.

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Dear Dan,

My wife-to-be really wants to get a two-carat ring, but I’d rather get a smaller ring and spend the rest of the money for future expenses—house, wedding, etc.

Her view is that most of her friends have big rings, plus she’s been dreaming about this for a long time. What do you think about this irrational behavior? Any advice?

—Jay

First, there is a difference between irrational and difficult to understand, and for sure it is irrational to call your future wife irrational in public. If you get her a ring, realize that comparison to her friends is part of the game you are buying into and try to get her a ring that will make her happy with this comparison.

At the same time, what if you could switch to a different jewelry category—maybe a wedding necklace or bracelet? In this case comparison will not be as clear, and you could probably get away with spending much less.

Finally, has it occurred to you that she may want this so much because you are so against it?

See the original article in the Wall Street Journal here.

Ask Ariely: On Audiobooks, Idle Waiting, and Public Transportation

August 31, 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,

From time to time, people around me discuss a book they have read recently. While I know the book well, and I want to participate in the conversation, I hesitate because I listened to the book on tape. My first question is why am I embarrassed to say that I listened to the book? My second question is what can I do about it?

—Paula

We learn how to listen and comprehend at a young age and therefore we don’t really remember how difficult it was for us. On the other hand, we learn how to read and write at a later age and we all remember the difficulty of the early struggles with reading and writing. Because of that, people associate greater difficulty with reading than listening. As a consequence, we take greater pride in reading than listening.

My first suggestion is that you realize that it isn’t necessarily the case that reading is more difficult. It’s just that we forget how difficult it is to learn to comprehend. When I got your question I purchased an audio book and I listened to it on a long flight–and for what it is worth, I find it is harder to focus when listening to a book than when reading one.

A second suggestion is that you to find a different word to describe your experience. For example, for books you loved, maybe you can say: “I inhaled that book.” For more difficult books, maybe you can say: “I struggled with it,” or some other phrase.

If these don’t work, perhaps it is time to change the meaning of the word “read.” Maybe we should acknowledge that today there are many ways to get information — audiobooks being one of them. This might seem dishonest, but you might be able to start a revolution, and help lots of people who listen to audiobooks feel more comfortable with what they’re doing. Good luck!

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Dear Dan,

I noticed that when I drive around the block looking for parking I spend a lot of time too far away from my destination (I live in Chicago, and hate the cold), so instead, I just wait until somebody leaves and take the spot. It proved to be more efficient, but my friends can’t seem to stand it, and I can’t do it when I’m not alone in the car. My question is why my friends find in intolerable waiting for someone to leave.

—Danny 

The phenomenon you’re encountering is aversion to idleness. There was a story a while ago about an airline that tried to optimize which carousel that the luggage would come out of. There was an engineer with this airline that realized that some carousels were close to some gates, and others were close to other gates. He wrote an algorithm to try to figure out which carousels to send the luggage to so that it would be closest to where the plane was landing. Before this algorithm was created, travelers would get out of the plane, walk for a while and get to the carousel. Sometimes it was such a long walk that their luggage was waiting for them already, and they would pick it up and go home. In the new system, the carousel was much closer and people would walk a little bit, find the carousel and wait for their luggage. People hated this new system because they were standing in one place to wait for their luggage. This idleness was so unpleasant that people complained and the airline rejected this algorithm. My understanding is that they have not gone the whole way in the reverse and tried to get the luggage in the farthest carousel possible, but maybe it is something they are still working on.

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Dear Dan,

Many people justify evading paying for public transportation by rationalizing that “public transportation services aren’t value for money,” that “it’s a victimless crime,” and that “as a tax paying passengers, we’ve already paid for my journey once.” Do you have any advice on counteracting these rationalizations?

—Julian

Make these people buy some shares of the public transportation company.

See the original article in the Wall Street Journal here.

Ask Ariely: On Cross-cultural Obesity, Taking Time for Exercise, and Smoking Surcharges

August 17, 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 just got back from a trip to Europe, and although I knew that Europeans were much less obese than Americans, it was still shocking to see the difference. It is also not true that they don’t have fast food joints. Can you shed some light on these national differences? 

—Alvin

Some think that the key factor is the European diet: more homemade food and less prepackaged food, smaller portion sizes, less sugar and corn syrup, etc. I have no doubt that there is some truth to this, but I would propose that our differences in weight also have to do with the fact that Europeans use kilograms while Americans use pounds.

Here is my proposed logic, using me as an example: I weigh 170 pounds, which is also 77 kilograms (well, the truth is that right now I might be closer to 174 pounds, but my real weight is 170). Depending on the time of day and what we eat, our weight fluctuates by a pound or more, as most of us know. This kind of fluctuation lets us convince ourselves that when the scale shows 172, our real weight is still 170, even if it has not shown 170 for a while.

If one day our weight is 174, would we say to ourselves “I am gaining weight, and I need to change what I eat” or would we be able to justify this as part of the random fluctuation around our supposed real weight of 170? By contrast, if we were using the kilogram system, the fluctuations would be much smaller, and when we learned that we were one kilogram heavier, we might act on this change more quickly.

My suggestion: Switch to kilograms (and while we’re at it, maybe we can move to the metric system more generally).

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Dear Dan,

There are people in my office who have a hard time focusing for even 20 minutes on their jobs. Nevertheless, they seem perfectly capable of exercising for long stretches, and they are quite persistent in that. Can you explain this contradiction?

—Michael

This might actually not be a contradiction but rather, as I learned recently, two faces of the same mechanism. A few weeks ago, I flew to California for some meetings. I left home at 4:30 a.m. and got to San Francisco at 10 a.m. I had a few meetings, and by 5 p.m. was exhausted. I had a lot of work-related tasks and was determined to get at least some of them done, but I felt devoid of energy. So I went for a run.

Ordinarily, I go for a run maybe once every 10 years. But this run was fantastic! I ran a bit, walked a bit, listened to music along the way. It was challenging, and I ran out of breath, but in no way was it even close to the mental exhaustion of doing the things I was supposed to work on.

Here is my new understanding: I think that people who either don’t enjoy what they’re doing for work or don’t have the mental stamina to focus on it can take long breaks for exercise. On top of that if your co-workers took a two-hour book or movie break, they would be seen as selfish slackers, wasting time. But because society tells us that exercising is good for our health, it is a perfectly good excuse to escape work. Now that I have discovered this way to take time for myself and not feel guilty about it, I am going to do more of it.

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Dear Dan,

The health-care benefits provided by my employer have just been updated to include a hefty monthly surcharge to smokers. I put little effort into quitting smoking, although I know this is the right thing to do. This smoking tax might motivate me to quit, but at the same time it infuriates me that my employer has the power to charge me for smoking. What is your opinion?

—Anonymous 

The smoking rate in the U.S. is about 20%, and companies that add such smoking surcharges usually find that the smoking rate drops overnight to less than 10%. Or, more precisely, they find that the smoking surcharge dramatically reduces the number of people who say that they smoke.

See the original article in the Wall Street Journal here.

Ask Ariely: On Deadlines, Getting Promoted, and the Art of Multitasking

August 3, 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,

From personal experience, I know that some people delay making a choice as long as possible, while others make quick decisions. What differentiates these two types and what advice would you give to get people to make decisions faster and to feel better about them?

—Amy 

In my own studies, we hardly ever find large differences among individuals. In the social sciences in general, individual differences are usually smaller than people expect and matter less than the environment. So if we look at your question, I would phrase it slightly differently and ask, “What kinds of things get people to delay decisions and what kinds of environments get people to take immediate action?”

I would suggest that things like deadlines are incredibly helpful. One British granting agency used to have two deadlines for professors to submit grant applications. When this system was in place, everybody was rushing to submit papers and proposals in time for those grant deadlines. Then the agency let people submit proposals whenever they wished, with decisions on grants made twice a year. No more rushing! But the number of proposals submitted dropped dramatically. Why? Because deadlines allow us to clarify our thoughts and create an action plan. They are good at getting people to perform a particular act, like submitting a grant proposal.

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Dear Dan,

I work in high tech but can’t seem to get ahead. A good friend of mine on the police force gets promoted all the time. He claims that it has to do not with him but with the lower quality of the people working there. Would it be better to choose a line of work where everybody is mediocre and I’m the best, instead of a high-profile workplace?

—David

The problem has to do with the joy people derive from feeling that they are advancing and developing in their careers. This sensation really is important. It provides gratification, self-esteem and recognition from your peers.

Widespread recognition of this need explains why so many companies have invented titles and intermediate positions for senior executives, vice presidents and deputy CEOs. They want managers to experience the gratification of moving ahead even when they have reached the top of the ladder.

At first, this trend only affected management—engineers remained engineers, even when their salaries increased and responsibilities expanded. But over the years, companies made up new titles for lower-level employees as well. And for clear and justified reasons, it seems that you are in need of such a title.

Your predicament is whether to be a small fish in a big pond, as you are now, or a big fish in a small pond, like your friend—a situation that would seem easier and more gratifying.

But before you quit your job for one where the people aren’t as good, I would advise you to try two things: First, see if you can receive, or even create, a promotion. Speak to your boss. Try for a change in your responsibilities and thereby your feeling of accomplishment. Second, talk to more friends, maybe even find some new ones who are not doing as well as your policeman friend. You may find that you are extremely successful compared with some.

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Dear Dan,

I spend a lot of time in not-very-interesting conferences calls using Skype and Google Hangout. I try to get things done during this time by using my computer to answer emails: I turn off the video capability, so that no one can see me, and try to type quietly, so that no one can hear. But the sound of the keyboard seems to vibrate through the computer, and the person on the other side knows I am not paying attention. Any advice?

—Kristen 

This is exactly what tablets are for.

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See the original article in the Wall Street Journal here.

Ask Ariely: On Commuting, Being One’s Own Advisor, and Democracy

July 20, 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,

We recently got married and are having a hard time deciding where to live. Should we live in the city, close to where we work? Or would we be better off finding some place cheaper, greener and farther away from the city?

—A Couple from the Center

Your decision should take a few things into account. First, most of us can get used to most things: houses of different sizes, for instance, or a neighborhood that is green or drab. And we adapt to most changes faster than we expect. Many years ago, for example, I suffered a serious injury that changed my life dramatically. But over time I got used to these changes, and now my life is much better than I would have expected.

But there are some things that we don’t get used to, at least not that easily. One of these, sadly, is commuting—that annoying daily trip from the small neighborhood where we live to our place of work in the big city. We don’t get used to such trips because we never know what’s in store for us in traffic. If we know that we can leave home each day at 7:30 a.m. and arrive at 9 a.m., we can live with that. But because of traffic and bottlenecks, we never know when we might arrive. And this uncertainty makes it difficult to get used to commuting, making each day start out so badly.

This is why I suggest that you take distance from work into account as a significant factor in deciding where to live. It will play a larger role in your life than you think.

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Dear Dan,

What is the best way to inject some rationality into our decision-making?

—Joe 

I am not certain of the best way, but here is one approach that might help: When we face decisions, we are trapped within our own perspective—our own special motivations and emotions, our egocentric view of the world at that moment. To make decisions that are more rational, we want to eliminate those barriers and look at the situation more objectively. One way to do this is to think not of making a decision for yourself but of recommending a decision for somebody else whom you like. This lets you view the situation in a colder, more detached way, and make better decisions.

For example, in one experiment we told people, “Imagine you went to your doctor and the doctor recommended a very expensive treatment. You’ve been seeing this doctor for 10 years. Would you go for a second opinion?” Most people said “no.” We asked another group to imagine a friend in the same situation. Would they recommend that a friend seek out a second opinion? Most people said “yes.”

This suggests that when we think about other people, we take our emotions out of the picture and are able to recommend something more useful—such as going for a second opinion.

But when it’s us, and we have a longtime commitment to a particular doctor, it’s hard to ignore this relationship and our feeling of obligation. Taking the advice approach may not be the best way to inject some rationality into your decision-making (and it’s certainly not the only way), but it is useful to imagine how you would advise another person, particularly someone you care about.

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Dear Dan,

What do you think about democracy, since everybody gets the same right to vote, whether they are smart or less smart? Because the number of the less smart is so large, in a democracy they end up having greater influence. Is this kind of equality in choice good for society?

—Dina 

Churchill answered this one: “Democracy is the worst form of government, except for all those other forms that have been tried from time to time.” (from a speech in the House of Commons, Nov. 11, 1947)

See the original article in the Wall Street Journal here.

Ask Ariely: On Traffic Tension, Handshaking, and Manipulating Stock Markets

July 6, 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,

As you creep along in a traffic jam, someone inevitably tries to enter your lane from the side. Now here is the issue: If I let the car in, I feel good about it. But when I see others in front of me let someone in, I feel cheated, because I’ve been waiting longer than the car entering the lane, and I am upset with the driver who acted kindly at my expense. Any idea why I feel so different about these two situations?

—Walt

The issues here are control and credit. When you let someone into your lane, you’re the one making the decision—and you’re the one getting the nod or the hand-wave as an expression of gratitude. In contrast, if someone else is letting the needy car in, you have no control over the decision, and you’re not getting the credit—you only see the downside of the increased delay.

Consider a more moderate version of this case, one where you simply keep a large distance between you and the car in front of you. By doing this, you’re allowing the cars from the merging lane to come into your lane at will, but it doesn’t require a separate act of generosity on your part (you aren’t slowing down to let them in).

My guess is that this version of accommodating other drivers also would not feel very good for you, not to mention that you’re not going to get any credit for your kindness.

What‘s the conclusion? First, to feel good about the good fortune of someone else, we need to feel that the positive outcome is a result of our own actions. Second, we want other people to recognize how wonderful and helpful we are.

Still, given how many other people are stuck in traffic ahead of you and that they’ll keep on letting other cars merge, maybe you should start thinking that real altruism consists of allowing good things to happen both directly and indirectly—and even when other people are getting the credit for it. Taking this attitude won’t be easy, but if you manage it, good things will follow.

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Dear Dan,

I’m reading your book “The Upside of Irrationality.” As I read your description of the burn injuries you suffered as a teenager, I wondered the following: If you and I were ever to meet, and we shook hands, would it hurt you? My own hand was injured many years ago, and people can cause me pain by squeezing it when shaking. Basically, I worry when shaking hands with a new person. Do you have a similar worry? How would you like people to shake your hand? 

—Donni 

For me, the question of shaking hands is a mix of potential pain and the feeling that I am not part of normal society. If people shake my hand too strongly, it is painful, and if they shake too loosely, it reminds me of my injury and how I am still perceived by the outside world as someone who looks different. With this trade-off in mind, I prefer that people shake my hand, even if it causes me some pain. It may be irrational, but I like being able to share in this ritual of greeting. It lets me feel that I am part of the wider society.

Taking a different approach, I have started to switch from handshaking to hugs, which are not only less painful on my hands but more personal, more enjoyable and maybe even less likely than handshakes to transmit germs—so maybe this is a good direction for society as a whole.

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Dear Dan,

Are the stock markets manipulated or are they truly a mathematical outcome of buyers and sellers?

—Dave

Markets are a mathematical outcome of the interaction between buyers and sellers—some of whom successfully manipulate the prices.

See the original article in the Wall Street Journal here.

Ask Ariely: On Disappearing Socks, Grandparents with an Agenda, and Arming Teachers

June 22, 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 have a question that has been bothering me for a very long time: Why is it that socks always get lost in the laundry?

—Jamie

This is a deep and important question, and I actually looked into it some time ago with one of my Israeli friends, Ornit Raz.

We discovered that belief in the supernatural is very strong when it comes to the disappearance of socks. Otherwise reasonable people, who think that they have a strong grasp of the forces of nature, feel at a loss when it comes to this universal mystery, and it deeply shakes their faith in the laws of physics.

We also found one mechanism that can explain this mystery—the overcounting of missing socks. You have many socks, and if you see one of them and don’t immediately find its partner, you say, “Oh! A sock has been lost!” You remember that a sock is missing, but you do not exactly recall its type or color.

Later on, you see the matching sock, but you don’t remember that it forms a pair with the first sock, and you say to yourself (again): “Another sock is missing. Where is its partner? I can’t believe so many socks go missing.”

So we often count as lost each sock in a pair—even though neither is really lost. At the end of the day, the mystery is not due to the suspension of the law of physics but to the much larger puzzle of how our memory works (or doesn’t work). Yet I still feel that, at the back of my laundry machine, there may be a black hole that is suitable just for socks.

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Dear Dan,

Our daughter has been married to a bullying control freak for the past five years. We have no sympathy for her; she is an admitted gold-digger, and her hubby has boatloads of money. Knowing our feelings about the marriage, they have shut us out. My wife and I would like to see our grandson, but grandparents have no visiting privileges in our state. Any advice?

—Reg

It is hard to give advice on this complex issue, but here are a few suggestions. First, try calling your daughter and her husband and simply saying that you’re sorry about previous negative encounters. You don’t sound sorry to me, but that’s OK—just say it and say it repeatedly. In experiments, we found that saying sorry works rather well, and it works even if people don’t mean it. It works even if the person from whom you ask forgiveness knows you don’t really mean it.

The point is that, when someone says he or she was wrong and asks forgiveness, it’s hard to keep on being mad at them. You might find it hard to swallow your pride, but think about this relationship as a game of chess. You really care about the king (seeing your grandson), and pride is just a pawn in the game (well, maybe a bishop)—so it’s OK to sacrifice it.

If this approach doesn’t work, and if you’re serious about getting access to your grandson, I would recommend that you move in next door. This will force some interaction between you, and hatred is going to be harder to maintain—particularly if you are nice to your grandson (what parents can hate people who love their kids?) and if your grandson wants to spend more time with you (what parents can resist their kids?).

Finally, I should mention that my personal experience is that living next to my parents-in-law is not only incredibly helpful, meaningful and useful, but that the pleasures of an extended family have been beyond my expectations.

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Dear Dan,

With the recent debate over gun control and protecting school children, should we arm schoolteachers to make schools safer?

—Ron

Hard to know from the point of view of policy, but here’s one thing that is clear to me: If my own schoolteachers had been armed, I would not have survived middle school.

See the original article in the Wall Street Journal here.

Ask Ariely: On Tipping, Attachment, and Hoarding

June 8, 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 work as a waiter in Waikiki, and sometimes to pass the time I conduct mini-experiments with customers, altering my behavior and attitude from day to day and seeing if it increases tips (in case you were wondering, seeming sad nets the most tips).

I have noticed that those paying with credit cards leave bigger tips, but it varies by card: American Express users tip the most, those with Visas a little less. Discover card users are by far the worst. I can’t quite figure this out.

—V 

One possibility is that wealthier people get American Express cards, the less affluent Visa, and the least well-off Discover—and they tip accordingly. You should be able to test this hypothesis by looking at their spending patterns—for example, how much they spend on wine.

Another possibility is that credit cards have a priming influence. If a person takes out an American Express card and looks at it, its reputation as a premium card might make the owner feel richer and therefore more generous. These feelings would diminish with a Visa card and be present even less with a Discover card (which generally is of more modest repute).

My guess is that both of these hypotheses play a role in what you’ve observed. To be sure, we would need to experiment by having a group of people with multiple kinds of credit cards pay in similar situations using different cards. Then we’d see if and how they change their spending.

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Dear Dan,

I work with many entrepreneurs in their early innovation stage and am always intrigued by the strong (irrational) attachment they develop to their idea, often leading to their being blind to reality and to wasting time and money. How quickly do we get irrationally attached to our ideas? Is it based on elapsed time or on specific actions we take (such as presenting the idea to others)? What can be done to cure this?

—Omer 

The problem, of course, is not just with entrepreneurs. From time to time we all experience someone in a meeting who says something random, and not particularly smart, but then insists that we follow up on his or her brilliant suggestion.

A few years ago, Daniel Mochon, Mike Norton and I conducted experiments about what we called “the IKEA effect”: As the instructions to build something become more challenging and complex, we love even more what we have created. We also showed that this effect takes place rather quickly. In perhaps the most interesting and irrational part of the whole story, we found out that we also mistakenly think other people will share in our excitement over our inferior creations.

What can we do about this? We could try to create an environment where ownership is less powerful or less associated with particular individuals. But if we manage to reduce or eliminate the feeling of ownership, are we also eliminating commitment and motivation? Maybe we should try to increase this sort of proprietary attachment. (And by the way, now that I have finished, I love my answer and think that it is very insightful.)

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Dear Dan,

After I’ve bought an expensive or limited-edition scotch, I worry about drinking the bottle too quickly or being unable to find more once it’s gone. So partly opened bottles in my closet keep accumulating. Any advice on how to enjoy my scotch rather than hoarding it?

—Jonathan 

The problem with hoarding (collecting) is thinking about it as one decision at a time. I would either try to think about such questions from a broader perspective (“Would I be interested in getting 24 more bottles?”) or set up a rule for the number of bottles that you can have in your house at one time (let’s say 10). Then you’d have to finish a bottle or give it away before you acquire another.

See the original article in the Wall Street Journal here.

Ask Ariely: On Happy Money, Splitting Bills, and Unintended Stalking

May 25, 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 have worked very hard for most of my life, and I am getting to feel more secure and comfortable. But I don’t feel as happy as I expected, given all my achievements and financial success. I am not one of those hippies who think that money is not important, but it feels like something is missing. What am I doing wrong?

—Matt

Don’t worry. The fact that your financial achievements have not brought you contentment does not mean that you’re a hippie. Social scientists have long been troubled by the finding that people basically think money will bring them happiness but it does so less than they expect.

There are two possibilities: First, that money cannot buy happiness. Second, that money can buy some happiness, but people just don’t know how to use it that way. The good news is that this seems to be the correct answer.

In their fascinating book “Happy Money: The Science of Smarter Spending,” Elizabeth Dunn and Michael Norton say there are two ways to get more happiness out of our money. The first is to buy less stuff and more experiences. We buy a sofa instead of a ski trip, not taking into account that we will get used to the sofa very quickly and that it will stop being a source of happiness, while the vacation will likely stay in our minds for a long time.

Second, and more interesting, Drs. Dunn and Norton demonstrate that we just don’t give enough money away. Which of these would make you happier: buying a cup of fancy coffee for yourself, buying one for a stranger, or buying one for a good friend? Buying a cup of coffee for yourself is the worst. Buying for a stranger will linger in your mind and make you happier for a longer time, and buying for a friend is the best—it would also increase your social connection, friendship and long-run happiness.

So money can buy happiness—if we use it right.

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Dear Dan,

I’m going to an out-of-town concert next month with friends and, as usual, I ended up organizing everything, booking a hotel room and fronting the money. When I’ve done this with groups in the past, I always end up spending the most on shared expenses, because they are never divided up evenly.

Perhaps I’m afraid to ask for large amounts of money, even though these are the true expenses that should be shared by everybody. What can I do to make sure that the bill for this upcoming show is split fairly?

—Scott

This is a question, in part, of how much you care about splitting the expenses evenly and how much responsibility you’re willing to take to improve the situation. I assume you’re willing to take this responsibility, so I suggest that you collect money from everyone in advance and pay all bills from this pool of money (and add 20% just in case, because we often don’t take all contingencies into account).

This way, everyone will pay the same amount, and bill-splitting will never come up. If there’s extra money, keep it for next year, or buy everyone a small gift to better remember the vacation.

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Dear Dan,

I have sometimes found myself walking behind a woman at night in an unsafe place and going in the same direction. Even though there is some distance between us, I can feel the doubt and worry in her mind. How do I handle this situation? Should I stop or say something? I have places to be, too, but clearly I don’t want the woman to feel unsafe.

—Steve

Simply pick up your cell phone and call your mother. In the world of suspicion, nobody who calls his mother at night could be considered a negative individual.

See the original article in the Wall Street Journal here.

Ask Ariely: On Sealed Bids, Netflix, and Laughing at Your Own Jokes

May 11, 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,

My parents are about to put their house on the market in Scotland, where there’s a system of setting an asking price and having interested parties make sealed bids. Any advice on how to get the highest sale price?

—Moses 

In auctions there are usually two forces: what people think the starting price of a house should be and how intense the competition gets between the bidders over time. Establishing a starting price for the bidding, it turns out, has an opposite effect on these forces.

If you set a high starting price, there’s a good chance that people will start thinking about the house from that point and offer a higher bid. On the other hand, if you set a low starting price, more people will get into the auction, the competition will be fiercer—and the outcome is likely to be a higher final price. (By the way, have you noticed that in auctions—on eBay, for example—the person who pays for the item at the end of the auction is called “the winner”? This suggests that competition is indeed a very strong driver.)

So if you have a sealed-bid auction in which people can submit a bid only once, go with a high starting price. But if there are multiple rounds of bidding, think of the starting price as a lure for getting many bidders involved at the get-go.

Last week I met with a friend in San Francisco (let’s call him JC) who is house-hunting. He said that the houses he has bid for sold for about 30% to 40% more than the asking prices. The competition has been intense, the process very frustrating, which brings me to a final point: A bidding frenzy might be good for a seller, but since we are all going to be buyers and sellers at some point, it’s not clear that the overall market for housing is better off with this procedure.

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Dear Dan,

I am a longtime Netflix customer. Recently, Netflix removed about 1,800 movies from its service, while adding a few very good ones. I know I probably never would have watched those 1,800 movies, but I am upset and am seriously considering leaving Netflix. Why do I feel this way?

—Kristine

As a movie man myself, I appreciate your perspective. The basic principle at work here is loss aversion: the idea that losing something has a stronger emotional impact than gaining something of the same value. Even though the deleted movies were probably not that great and the current library of Netflix may be, objectively, much better, having movies taken away from you feels like a painful loss.

One way to think about this is to contrast new and old Netflix users. A new one would just look at the overall quality of the movie collection, which may be better than it used to be. For the old user, however, the current collection is just one part of the experience, while the loss of all those movies is another. As a result, the longtime member may be much less happy.

My suggestion is for you to try thinking about Netflix as a service that provides you not with particular movies but with an optimal, curated variety of films. Compare it to a museum: We don’t think of ourselves as owning any of the art, so we aren’t upset when it changes what’s on view from its collection. If you can reframe your perspective this way, my guess is that you will enjoy Netflix more.

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Dear Dan,

A friend once chided me for laughing at my own joke. Is it wrong to laugh at your own jokes? After all, would I tell a joke that I didn’t think was funny?

—Norma 

Jokes often hinge on a surprise ending, so laughing at a joke though you know the end seems to be a great endorsement for it (please send me the joke!). The only negative connotation I can imagine is that maybe your friend assumed the laughter was not genuine and you were trying to manipulate her into a higher level of enjoyment. In that case, you might want to look for a different friend.

See the original article in the Wall Street Journal here.