behaviour

Just say no – to marshmallows

Posted on by carolynemitchell

This week I’ll be looking at self-control, something I have very little of when it comes to eating good food and spending money. These posts are inspired by Dan Ariely’s behavioural economics MOOC A Beginners Guide to Irrationality. I’d recommend it to anyone who wants to understand why people do what they do and why they won’t do what we as local government, health professionals and central government want them to do.

The problem with self-control is that it’s the difference between now and then – I really want that cake just now and the heart attack later seems so far away.

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We all have a present focus bias – the tendency to give more weight to our current environment or state. In the future we are all wonderful – next week we’ll start eating healthily and by next month we’ll have transformed into a gym bunny. But we never get to live in that future.We only live in the present.

So how do we get round this? Dan’s answer is reward substitution – using an alternative reward that is immediate and therefore more motivating. He came up with this idea when he was diagnosed with hepatitis. He was offered a treatment that would mean he had to self-inject once a week. If he didn’t have the treatment, although he felt OK now, he would be seriously ill in the future. He knew that an hour after the injection he would be violently sick for a few hours and feel rotten. Most of the other people on this treatment gave up after a few injections but Dan kept going. He loves watching films so on the way home from uni he would stop off at the video shop and hire a film. He would set up the room – covers on the couch, TV on, film loaded, remote control in reach, bucket and tissues close by – then give himself his injection. It was the films that were his reward and the thing that got him through his horrible treatment.

Can we use reward substitution to encourage eco-friendly behaviour?

Well, the problem with climate change is that it maximises human apathy. Why?

  1. It’s in the future
  2. It affects others first
  3. We don’t see its progression
  4. We don’t see a particular person suffering
  5. Individual efforts to mitigate are a drop in the rising ocean

We could encourage better environmental behaviour with the following rewards:

  • money
  • making the required behaviour easier than the normal behaviour
  • recognition
  • reputation

Gamers have devised many ways to motivate people, such as leader boards. Reward substitution can get us to act like we care about the world when all we really care about is our image.

Inflating the incentive with the principle of loss aversion may also work – pre-pay people then take the money away for non-compliant behaviour.

Regret is the comparison between where we are in life and where we could have been. Analysis of the podium photos from the Olympics shows that the gold winners smile most, closely followed by bronze and the least smiley are the silver winners because they can imagine what they could have done differently to win gold.

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What is happiness? We pick a reality and compare our lives to it. If that reality is better than our actual life we are miserable but if that reality is worse, we feel good.

The regret lottery – everyone gets a ticket but you can only claim our prize if you have been compliant.

Ulysses contracts

These are self-control contracts. With self-control contracts you:

  • know you will be tempted
  • bind your current self to prevent your future self from misbehaving

A great online version of this is Stickk where you set yourself goals and if you don’t meet them you give money to charity. If you really want to make sure you manage to reach them, set up donations to a charity you hate!

The importance of self-control

Self-control at a young age is highly predictive of self-control as an adult. In experiments tempting three-year-olds with marshmallows shows that self-control, even at that young age is predictive of success as an adult. The kids who couldn’t resist were more likely to flunk school, get involved with drugs and even end up in jail. But where does self-control come from? Is it a skill or are we born with it? When we distract ourselves from temptation we are more likely to resist. However when we are continually exerting self-control our ability to resist temptation weakens. This is called ego depletion.

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But how much does self-control depend on innate ability and how much relies on tricks we develop to enhance our abilities. How much does self-control suffer as we are tempted throughout the day and what role do rules play?

We live in a commercial world where companies want us to act now in a way that benefits them, not us in the long-term. This is only going to get worse as the commercial world gets more and more sophisticated and this makes Ulysses contracts super important.

Human mortality can be attributed to bad decisions. In the US in 1900 the percentage of deaths cause by bad life choices was only 10% – the rest were down to accidents and diseases caused by the environment such as diphtheria and cholera. In 2000 bad decisions caused 46% of deaths. This is because technology invents ways to help us kill ourselves for example obesity, diabetes, even texting while driving. Technological advances create more and more opportunities for us to succumb to temptation.

An example of Ulysses contracts being used in health was a drug abuse program in Denver. It attempted to help heroin addicts recover. It required them to write a self-incriminating letter to the person they did not want to find out about their habit and the letters would be sent out if the recovery agreement was violated. There was a three-week waiting period and after that most subjects complied with their contracts. However, the program had to be stopped because it violated human rights. Ulysses contracts must be binding to be effective – it’s human freedom versus the human temptation to do the wrong thing. It’s difficult to study Ulysses contracts because researchers are required to let participants leave a study if they want to.

We must find a balance between the amount of freedom we crave and the controls we need to shield us from temptation.

 

Tune of the week

Edith Piaf – Non, Je Ne Regrette Rien

Why you love your Billy bookcase

Posted on by carolynemitchell

Apologies if you’re getting fed up of these behavioural economics posts, inspired by Dan Ariely’s behavioural economics MOOC A Beginners Guide to Irrationality on Coursera. I personally find the subject fascinating and I truly believe it’s a must for all comms people to get their heads round this economics/social psychology/behaviour junction.

Anyhoo, this week we’re looking at motivation and the IKEA effect.

Extrinsic versus intrinsic motivation

Even although mountain climbing can be a miserable experience at the time, people continue to repeat the experience. Why? Well they claim it’s about:

  • overcoming nature
  • a sense of achievement
  • a sense of accomplishment
  • competition
  • proving something to yourself

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But what would you do if you knew you couldn’t get to the top or if, once you came back down, you’d instantly forget everything about it.

Effort made in vain is de-motivating and the purpose of the activity contributes to its meaning. This applies as much to everyday work as it does to mountain climbing.

It turns out money is not the best motivator – people derive value from a wide range of sources.

The issue of meaning

We are motivated to do things that we find meaningful. Doing the same task over and over without a sense of progress can be the ultimate de-motivator. People understand the value of meaning but not the extent to which it matters. Not having meaning can choke the joy out of an activity you would otherwise have enjoyed.

Purpose and meaning are so important that they can be worth a substantial investment of time and money. An example of this is Google – they allow their employees to spend 20% of their time on other projects to make them feel more valuable.

Acknowledgement

Acknowledgement is just as important as meaning. It’s relatively easy to make people feel good about their work just by acknowledging their contribution. Simply ignoring people can be as demotivating as destroying their work. Dan proved this with a series of experiments where people’s work was either acknowledged, ignored or put through a shredder without being looked at.
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The IKEA effect

How does labour lead to love?

Our liking of something isn’t just judged by what it is but by how much effort we have put into it. The more effort, the more we like it. This even extends to our children – the effort we expend on our kids increases our love for them and blinds us to the perspective of others. Another example of this is customisation such as T-shirts – this is about more than individual preferences as the effort invested also increases the liking of the product. However, too much effort can have negative consequences so it’s important to strike the correct balance.

Dan first noticed this when he realised he was more attached to a self-built piece of IKEA furniture than other more expensive ready-built pieces. He has also carried out many experiments asking people to place values on Lego models they’ve made themselves and models mad by others.

The not-invented-here bias

Are we over-committed to our own ideas? Investing even a small amount of energy in a solution makes people like it much more. This has a plus and a down side:

  • plus – it results in more time and passion devoted to our own ideas
  • down – it hinders our ability to consider the ideas of others

Cognitive dissonance

This is the tension that results when there is a mismatch between our beliefs and our behaviours.

Dan’s example of this at work is Zappos. Instead of interviewing customer services people they train them for a week then offer $2000 not to take the job. Why? When we work harder for something we value it more therefore Zappos employees believe they must love working there because they gave up $2000 for the chance. Retaining happy and motivated employees and eliminating the rest helps maintain a quality customer service.

Next week it’s monetary stress, social stress and performance under the spotlight.

 

Tune of the week

Beat Mafia & Diaz Grimm – Motivation

Do you want ibuprofen with the bill sir?

Posted on by carolynemitchell

This behavioural economics series is turning into an epic.

This week’s hot topics are the pain of paying and mental accounting – those who know me realise that my accounting skills are a bit off the wall but I don’t think that’s what we mean here.

The pain of paying

The pain we feel when paying for something is magnified when our feelings about spending money are coupled with consumption:

  • paying per bite for a meal makes economic sense but you wouldn’t enjoy the meal with the waiter hovering over you counting every mouthful
  • paying for a holiday on the day you come home makes more financial sense than paying the balance three months before you leave as you’d accrue more interest with the money in your own account. But you probably wouldn’t enjoy the holiday as much, especially the last day.

The pain of paying adds a moral tax to consumption and the timing and method of payment changes our enjoyment.

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If you want to increase the pain of paying:

  • pay with cash
  • receive notification whenever money is spent
  • increase salience i.e. watch the petrol pump meter spin round as you fill your car, use an electricity coin meter or add consumption meters to all your household appliances

To decrease the pain of paying:

  • pay with credit cards
  • keep payments hidden
  • prepay before you consume

Prepayment can focus our attention on the enjoyment of an experience – think of all-inclusive holidays.

All the men out there if you’re looking for the perfect gift you need to know two things:

  1. it should remove the pain of paying
  2. it should be something that she wants but the pain of paying is preventing her from buying it

So, the pain of paying involves the opportunity cost, the hassle component, the moral tax with its associated guilt, the method of payment and the timing of the payment.

We experience less pain of paying when the form of payment is distanced from the pure representation of money, e.g. credit cards, casino chips as prepaid money is easier to spend.

That’s all from the perspective of a customer but organisations, especially local authorities should consider the pain of paying because let’s face it, who actually wants to pay their council tax or a parking fine.

Mental accounting

Once money is assigned to a certain category it is non-transferable. In our heads we assign money to certain categories and spend it accordingly. Assigning money to categories controls how we feel about that money and we treat unassigned money differently. Just the other day I lent HimIndoors £40 at the cashline. In my head that became lost money so when he gave me it back I spent it on rubbish instead of holding onto it and paying for food shopping or something useful. It is mental accounting that allows us to have a low interest savings account yet at the same time have a high interest loan because we see them as two different domains – spending and saving.
If we were all perfectly rational, mental accounting wouldn’t make sense. However, it can be an adoptive strategy. It allows us to partition our spending and make financial decisions more manageable.

So, there are two approaches for helping people think about their money:

  • assume they are rational and can effectively manage money between categories
  • optimise existing mental accounting techniques, even if they are irrational

If you want people to pay their bills instead of spending it on chocolate and wine get them to compartmentalise their money into funds. Make it as easy and as painless to pay – this is tricky for councils though. Credit cards may be the pain-free method but removing people completely from money and the pain of paying makes it too easy to buy unnecessary items on the never-never and so the debt spiral begins.

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The council I work for is closing its cash halls and removing the ability to pay council bills in cash in council offices. Our preferred way to receive money is by direct debit or online payment but for a lot of people cash is simply the safest method to keep it all real and prevent money becoming some airy fairy notion and credit considered there to be spent, whether the monthly balance can be paid or not. Cash at a PayPoint or a Post Office may be the best option in the long-run for these people. otherwise we run the risk of future rent and council tax arrears because financially vulnerable people think we’re encouraging them to get debit cards and the overdrafts that go with them or worse, credit cards to pay council bills.

You can sign up to a watch list for Dan Ariely’s Beginners Guide to Irrationality course on Coursera but next time I’ll be sharing his thoughts on fairness and reciprocity, loss aversion and the endowment effect.

Tune of the week

Gentleman June Gardner – It’s Gonna Rain

Ranting – it’s what I do best

Posted on by carolynemitchell

I think I can kiss goodbye to certificates from any of the courses I’m doing because I’ve fallen so far behind. You can take them at your own pace but they all have written parts that have to be handed in by a certain time and my week’s holiday in France has left me struggling. If I’d just been doing one course I’d probably have caught up but three is impossible.

As you know the Complexity course is just to test out me and maths, who have been uneasy partners ever since I failed my maths prelim so badly I wasn’t allowed to sit my Higher. Surviving Disruptive Technologies is really interesting but so far hasn’t told me anything I didn’t already know, although I think I’ll be learning new stuff soon.  Dan Ariely’s Introduction to Irrationality has been marvellous so far. His books are amazing and even just to be on the receiving end of one of his video lectures is a privilege. I’ve already learned lots of stuff that is applicable to campaign work.

However it’s the academic reading that I’m finding invaluable – just being pointed in the right direction and being given free access to academic journals in the fields of consumer behaviour and behavioural economics has told me a lot about how we behave around money, how different payment methods make us buy different things and how money actually demotivates us. It’s all gold dust when it comes to welfare reform and channel shift.

For instance when one of our tenants starts to fall behind with their rent we send a letter detailing all the ways they can pay. My gut feeling was to give them just one option, and not the option that suits us best but the one that suits the customer best. These papers back up my hunch with scientific experiments and research. As a council we would prefer it if people paid by direct debit but that means having a bank account and a debit card. Even that one step away from using cash changes the way we think about money and what we buy. The pain of paying is reduced if cash doesn’t change hands making it easier to buy the things we shouldn’t, even if it means we don’t have enough to pay the necessary bills. Already vulnerable people become more vulnerable when they’re hit with bank charges to pay for overdrafts. Not only that, once you have a bank account you’re open to the ‘suggestion’ of a credit card. Research shows that the pain of paying is even less with a credit card and when it comes to food we’re far more likely to fill our trolleys with unhealthy food if we’re paying by credit card so those financially vulnerable people’s health also becomes an issue.

So if we’re really serious about helping the most vulnerable of our customers we should concentrate on face-to-face contact using cash or at the very least a payment card they can pay their bills with at a PayPoint. We shouldn’t be forcing them online with a debit card because we’re only creating more problems further down the line with rent arrears and all the problems ill health brings. Ideally it’s the people on the cusp of moving from phone to online and the cusp of moving from face-to-face to phone we should be targeting so that there is more face-to-face time available for the most vulnerable in society. Not only that our face-to-face customer services officers are trained to look for the signs of domestic abuse and the risk of someone becoming homeless – that’s not something that can easily be picked up the phone, never mind online.

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Anyway, that’s my rant over for tonight. I rarely know where these posts will go and all I meant to talk about tonight was the courses but look where it ended up! If you fancy a doing one of these free online courses there’s a database of 338 (and counting) courses, provided by 62 universities and you’ll be joining an international campus of nearly 3.5m students – see you at the bar in the Union 😉

Today I have learned:

  • I am a hoarder of travel tickets, most of which are now too old for me to claim back
  • I can remember most of the theories but have forgotten most of the vocabulary from 1st year chemistry
  • this shouldn’t bother me – it was 33 years ago
  • I am old

Today’s track

Cos summer’s coming 🙂

Today’s recipe

Meatloaf

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I thought the kids would love this because it’s basically a square burger. They didn’t. It was an epic fail for them so now HimIndoors and I will have to eat it all – such a cross to bear!

Ingredients

500g steak mince

500g lamb mince

1 onion, grated,

2 cloves of garlic, grated

1 tbsp tomato ketchup

50g Parmesan cheese, grated

1 egg beaten

seasoning

100g fresh breadcrumbs

Method: Heat the oven to 180C/Gas 5.

Put everything in a bowl and squelch together well with your hands. Force the whole lot into a loaf tin and shove in the oven for 60-70 minutes.

Remove and let it stand for 5 minutes. Drain the juices then remove from the tin and serve in slices with the tomato sauce from a previous post.