Apply Behavioral Economics for a Better New Year

"The Framing of Decisions and the Psychology of Choice," by Amos Tversky & Daniel Kahneman

“The Framing of Decisions and the Psychology of Choice,” by Amos Tversky & Daniel Kahneman

As 2013 came to a close, many of us took the time to reflect upon our shortcomings to find areas of improvement. Whether it was to exercise more, eat healthier, get to bed earlier, earn better grades, reconnect with old friends… the possibilities are endless for New Year’s resolutions. Most likely, you have started off well, but how long will that actually last? Another week? Maybe a month? Will you be able to recall your resolution by the time summer rolls around? Maybe you have already forgotten them?

Too often, people are misguided in how to properly enforce their resolutions, turning goals into empty promises. I’ve come up with guidelines to help better execute future goals, through concepts learned in behavioral economics class and my experience as a student athlete.

1. Be Specific and Realistic.

It is very tempting to impose broad, open-ended goals for ourselves. Just as easy is how we can alter or forget about those goals when adversity sets in and time goes by. Only saying, “I want to lose weight” is not explicit enough to keep us motivated and on track, likely leading to goal manipulation. Based on the simulation heuristic introduced by psychologists Daniel Kahneman and Amos Tversky, we can determine the likelihood of an event by how easily we can visualize the outcome. By setting a goal such as “I want to lose 10 pounds by April,” there is a much clearer picture of the proposed endeavor.

Additionally, creating impractical and longshot goals has the same effect, and the goals inevitably lose their effectiveness. For example, striving for the lead role in an upcoming production when you have never stepped onstage before is unrealistic and can quickly become demotivating instead. George Loewenstein, a famous behavioral economist from Carnegie Mellon, would say we systematically misrepresent our future abilities when we are in “hot” states such as the joyous, year-end festivities or directly following an accomplishment. To avoid this pitfall, devise your goals when you are in a stable emotional standing so that your self-assessment is objective and then scale up only when your progress demands it.

Carnegie Mellon's Prof. George Loewenstein

Carnegie Mellon’s Prof. George Loewenstein

2. Pre-Commit Yourself.

First coined by Nobel Prize winning economist Thomas Schelling in the late 1960s, pre-commitment is broadly defined as the act of committing the agent in advance to a particular course of action. In practice, this is the equivalent of paying for a yearly gym membership, signing up for a marathon in the spring or confirming a meeting date with a colleague. There is obvious preparation necessary for each of these events, so by binding ourselves to future event(s), we have stronger motivation behind the day-to-day actions leading up to the event(s). For example, each semester students will pre-commit themselves by registering for classes.

Robert Cialdini, author of Influence: The Psychology of Persuasion, echoes this with his “commitment and consistency” principle. He demonstrates that people who commit in words or on paper to a given goal are more likely to follow through because they merge that goal with their self-image. Without these pre-commitments, we are more vulnerable to procrastination and accepting the status quo. Consequently, the more we vocalize our goals to ourselves and others, the higher probability we will have of succeeding.

The same concept holds true for athletics. With the dates for the upcoming season’s game days and championships determined beforehand, coaches will devise practice schedules that best prepare their athletes for personal and collective goal attainment on those future dates. In many sports, there are phases of the season with a particular emphasis that build upon the last phase—ultimately to have the athlete set for peak performance by the championship period.

3. Be Accountable.

Accountability is the final element of crafting and fulfilling your future goal(s). First and foremost, stay accountable to yourself and do not tolerate cutting corners or cheating. Subsequently, it is important to be accountable to others. This can be done in a variety of ways, including vocalizing your goals to your peers and allowing them to administer consequences if they discover you’re straying from the plan. You can be accountable to your professors by pledging to attend every available office hour session in hopes of improving your class standing. By expressing your pledge to professors directly, they will hold you liable when you are absent.

In sports, athletes are accountable to their teammates. Ivy League athlete-scholars are constantly self-improving in all areas of their lives. In the short term, they are accustomed to facing tribulations and setbacks, so they must quickly learn, adjust and ultimately achieve. In the long term, they must take a critical look at their shortcomings and execute the best plan to overcome them.

Michael Jordan once said, “Obstacles don’t have to stop you. If you run into a wall, don’t turn around and give up. Figure out how to climb it, go through it or work around

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