Many of us struggle to find real happiness. Why is that? Studies in psychology suggest that part of the reason is that most of us are very bad at predicting how we’ll react when faced with many of life’s experiences. Consequently, we end up making choices that are potentially harmful to our emotional well-being. According to Harvard psychologist Daniel Gilbert, we tend to overestimate, by a long way, the extent and duration of the emotional impacts of, say, a pay rise, the death of a loved one, or even moving to an area that’s sunny all year round. This is simply because, when we’re trying to imagine how an experience will affect us emotionally, we tend to focus too much of our attention on the most salient features of the experience in question.

In our minds, Los Angeles = sunny weather; money = nice cars and luxurious holidays. In reality, however, the many other less salient features that we often fail to consider will have emotional consequences. Los Angeles, for instance, is actually thousands of miles away from our friends and family; we need to work harder in order to earn more. This explains why happiness often eludes us when we blindly follow our imaginations or what conventional wisdom tells us about what makes us happy.

So where should we look for happiness? New research in psychology and economics suggests the answer lies in what we already have – things like friends and family. The secret to being happy is simply to devote more of our time and attention to these happiness-rich and fulfilling experiences.

As the US rabbi Hyman Schachtel once famously said: “Happiness is not having what you want, but wanting what you have.”

The rest is worth the read.

We do seem hardwired to base our perception of value in relativistic terms, which definitely pulls us into situations where “keeping up with the Joneses” dictates what we think of as happiness.  Turning off that relativistic sensor is quite hard, but if the research is correct it is likely worth the effort.

One day in 1939, Berkeley doctoral candidate George Dantzig arrived late for a statistics class taught by Jerzy Neyman. He copied down the two problems on the blackboard and turned them in a few days later, apologizing for the delay — he’d found them unusually difficult. Distracted, Neyman told him to leave his homework on the desk.

On a Sunday morning six weeks later, Neyman banged on Dantzig’s door. The problems that Dantzig had assumed were homework were actually unproved statistical theorems that Neyman had been discussing with the class — and Dantzig had proved both of them. Both were eventually published, with Dantzig as coauthor.

“When I began to worry about a thesis topic,” he recalled later, “Neyman just shrugged and told me to wrap the two problems in a binder and he would accept them as my thesis.”

Dantzig, coincidently, served as the inspiration for the movie Good Will Hunting (at least as far as his mathematical skills are concerned).

The story got me thinking about how the framing of a problem can affect our ability to solve it.  More specifically, to what degree does the way in which we frame a problem as difficult or simple affect our ability to solve it?  Now obviously Dantzig was a world-class mathematical mind, but other world-class minds had wrestled with the very same problems and failed to find a solution.  I wonder to what extent his mental framing of the problems as routine homework assignments–problems that he should be able to solve rather easily–made it more likely that he would succeed.

We know that framing expectations has an impact on experience and decision. In Predictably Irrational, Dan Ariely spends an entire chapter discussing the various experiments he and his colleagues conducted in order to determine how people’s expectations influenced their experience of things like beer, music, and cars.  But what Ariely doesn’t examine is the extent to which framing a task as easy or hard affects the likelihood of success by participants.  The notion of positive thinking and reinforcement is not novel, but I am curious what scientific studies have say regarding it’s validity.

So how might the framing of difficulty affect performance?

My first guess is that the framing of difficulty might work via the same mechanism as “choking” or “the superstar effect”:

Recent research on what is known as the superstar effect demonstrates that such mental collapses aren’t limited to chess. While challenging competitions are supposed to bring out our best, these studies demonstrate that when people are forced to compete against a peer who seems far superior, they often don’t rise to the challenge. Instead, they give up.

The intense focus of competing against a star forces other competitors to over think the details of their performance, which leads to failure:

A little experience, however, changes everything. After golfers have learned how to putt—once they have memorized the necessary movements—analyzing the stroke is a dangerous waste of time. Ms. Beilock has found, for instance, that when experienced golfers are forced to think about their putts, they hit significantly worse shots.

This is what happens when people “choke.” Because the performers are nervous, they begin analyzing actions that are best performed on auto-pilot.

Just as competing against superior or more difficult to defeat opponents causes most to perform poorly it may be that competing against a difficult to solve problem has a similar effect.  Being freed from this frame and assuming the opponent/problem is easier to deal with might allow people to perform better by preventing a crippling focus on details.

Just a thought.

Beggs is a Ph.D. Candidate at Harvard and focuses on behavioral economics (incentives, generally).  She has a great sense of humor and does a great job of relating the sometimes complex and arcane concepts of economics to the average reader through her humor.  As she notes:

In a perfect world I would be some sort of odd hybrid of Steve Levitt (see Freakonomics), Demetri Martin (see here) and Jon Stewart (hopefully you don’t need any clarification on that one). Stated another way, I want to trick people into learning stuff and entertain them in the process.

Enjoy!

I once tried setting my watch ahead a few minutes to help me make it to appointments on time.  At first it worked, but not because I was fooled.  I would glance at the watch, get worried that I was late, then remember that the watch is fast.  But that brief flash acted as a sort of preview of how it feels to be late.  And the feeling is a better motivator than the thought in the abstract.

But that didn’t last very long.  The surprise wore off.  I wonder if there are ways to maintain the surprise.  For example, instead of setting the watch a fixed time ahead, I could set it to run too fast so that it gained an extra minute every week or month.  Then if I have adaptive expectations I could consistently fool myself.

This reminded me of an older post of mine that discussed the potential for a “novelty curve” with various nudge strategies. It was in relation to the Volkswagen-sponsored Fun Theory project.  Here is what I wrote:

One question that I have is to what extent are these tactics sticky. There seems to be a “novelty curve” whereby people are initially intrigued and engaged by something new and fun. However, as time goes by what was once new and intriguing becomes old and stale. Will the musical staircase above be able to maintain the same distribution of stair-to-escalator use over time? Or will people revert to convenience over fun? More than likely the distribution will settle into a new equilibrium that is different than before the staircase was altered, but tactics like these will likely need to include a ‘refreshing’ element, whereby the nudging mechanism is altered or alternated in order to prevent the suboptimal behavior from gaining ground or becoming dominant again.

Bottom line: people adapt. It strikes me that nudge-like strategies could fall prey to behavioral adaptation (either conscious or unconscious). Like any strategy, once it’s deployed, parties will attempt to adapt to it. In cases where we are trying to ‘fool ourselves’ into a different behavior, its likely that we will have to deal with the inevitable unconscious adaptation to strategies we ourselves implement. And this should hold for strategies that use a different incentive other than fun. Even financial- or shame-based nudges likely will not retain their motivational power forever. It is unlikely that the general tendency for people to try and avoid losing that which they already posses (even if it is small in relative terms) is immune to the brains ability to adapt over time.

Does anyone know of longitudinal studies of nudge-strategies and the half-life of their effectiveness?

The project appears to include a contest-based crowdsourcing element to encourage people to come up with their own inventive way to nudge people towards optimal behaviors through fun.

One question that I have is to what extent are these tactics sticky. There seems to be a “novelty curve” whereby people are initially intrigued and engaged by something new and fun. However, as time goes by what was once new and intriguing becomes old and stale. Will the musical staircase above be able to maintain the same distribution of stair-to-escalator use over time? Or will people revert to convenience over fun? More than likely the distribution will settle into a new equilibrium that is different than before the staircase was altered, but tactics like these will likely need to include a ‘refreshing’ element, whereby the nudging mechanism is altered or alternated in order to prevent the suboptimal behavior from gaining ground or becoming dominant again.

The essence of behavioral economics is that humans fail to meet the assumptions made by economists in important ways.  As a result, economic models of human behavior often fall short in their predictions of what people “should” do.  By understanding the limitations that actual people have in terms of their knowledge, computational ability, and emotions organizations can design products, services, and processes that lead or ‘nudge’ actors towards better choices. The article mentions a few examples, such as using peer pressure (people do not like being outliers, or being left behind by trends) and short circuiting the inertia of past choices (once we make a choice it tends to stick, regardless of how suboptimal it may be), that have been shown to significantly alter behavior.

One theme that I have heard again and again from some critics is that businesses are using strategies that are underhanded or manipulative in order to get customers to spend money in ways that run against their interests.  No doubt, some may use nudge strategies to take advantage of others, but using a behavioral approach does not necessarily imply that a business is simply trying to manipulate customers into making choices that run counter to their interests–in fact, I would argue the opposite is true.

Because none of us are perfectly rational actors (i.e. homo economicus), we all need help from time to time understanding what action or choice is truly in our self-interest–what choice maximizes value for us. What behavioral economics tells us is that this isn’t as straightforward as previously thought. How a choice and/or information is presented to us makes as much of a difference as what is presented. To me, the lesson to be drawn from behavioral economics is not that businesses need to manipulate their customers, but that they need to be more strategic and more precise in how they make their case for their product or service.  Businesses have a tremendous amount of information about how their service is used by a wide range of actors.  This means they are in a unique position to analyze 1) the most efficient and effective ways to use their services 2) the relative use of their service by different types of clients.  Most clients don’t have access to this kind of information and are therefore at the mercy of their supplier for these insights, or frankly they just guess.

Successful businesses take into account what service will be of the greatest value to clients and customers. By providing great value they ensure that clients will stick around, building a long lasting and reciprocal relationship. If businesses manipulate clients into less valuable purchases in exchange for short term sales, both parties will be worse off in the long run.  The key is to align interests; businesses have an interest in recurring revenue and clients have an interest in finding high quality solutions to their problems–when these interests are aligned both parties will be better off.  (The “Shadow of the Future” plays a significant role here.)

However, as behavioral studies have shown, people don’t always make the best choices for themselves.  Why should customers be any different?  How businesses present choices and service options to clients is just as important as the content of those services.   Clients are people, and therefore have the same barriers to overcome in terms of choices that serve their interests.  In order to nudge clients towards optimal services and service utilization, businesses should present solutions to clients in a relational way–e.g. people like you use this version of the service, or use the service at this rate–presenting solutions in this way can help to counteract the inherent inertia of human behavior.

The key to a relational strategy is data and the visualization of that data.  You have to present the right data in a way that tells a compelling story to the client or else they will not be jolted off of their current path.  Looking back on situations where I was nudged it was typically the result of a profound story about my peers told through compelling data.  It is important to remember that data isn’t just important for bean counters–its critical to story tellers.  The better story you tell with your data about how a client’s peers leverage your service the more likely they are to choose the same behavior, see greater value as a result and appreciate your helping them get there, and, most importantly, remain clients in the future.