The second case I want us to think about in terms of reward substitution is the
case of a medication called Coumadin. So, Coumadin is an anti-stroke medication.
It's a relatively good anti-stroke medication.
It reduces the chances of a second stroke for about 24% to about 4%.
Now, think about it. If you had a stroke and this was how much
this medication could reduce your second stroke, wouldn't you take it?
And Coumadin, by the way, has a few side effects, particularly ones that have to do
with eating and how you can eat leafy vegetables and some with bleeding, but
generally has low side effects. But, sadly, compliance is very low.
It's the same problem. What's good for you now, and what's good
for you in the future. Okay, so we have this problem, people had
a stroke don't want to take Coumadin or at least behave as if they don't want to take
Coumadin. And we can take this as an indication that
they don't care about taking another, getting another stroke or we could take it
as an indication that something is wrong about the incentive structure on how they
get discounted over time. So, to get into reward substitution we
want two things. We want to be able to measure something,
and we want to start rewarding or punishing it.
So, for the measurement perspective there's a new technology out there.
Maybe not so new, called Internet-enabled pillbox.
These are pillboxes that every time you open them it registers on the internet
somewhere and somebody can know that you've opened the pillbox.
Now, right now, they don't yet measure if you've taken the pill or not.
But we're going to assume that it's going to measure both, that you opened the
pillbox and took the pill. So, now we have this measurement approach.
The question is, how can we reward it? And how can we punish it?
So, think to yourself for a minute, you have this pillbox, people are on Coumadin,
what can you do? So, there's lots of things that we can do.
The easiest thing that probably comes to mind is paying people.
We can pay people. Maybe we can charege them.
Maybe we can tell their kids about it or their parents about it.
Maybe we can tell the doctor about it in hope that their parents or their doctors
would get them to feel guilty about it. Maybe we could create a competition
between people who are doing it. Maybe you can do something more extreme.
Maybe we can create a situation that unless you take your pill, you can't open
the refrigerator. Or maybe we can take the pills and cover
them with chocolate, creating immediate incentives.
But anyway, you could see there's a whole range of things you could do, the moment
that we need to add incentives to make that happen.
So, now I want to tell you about the few experiments we've done on this, and of
course, the potential range of experiments is just huge and we haven't done many of
them. So, these are experiments that we have
tried out on George Lowenstein and Kevin Volpp, and some of their colleagues have
tried it as well. I'm going to kind of give you a
combination of all of those experiments. So, what do you think would happen if we
gave people $3 a day to take their medication on time?
Turns out, nothing much. What do you think would happen if we gave
people $1,000 a day to take their medication on time?
I think much like you, the prediction is that yes, people would take their
medication on time for $1,000 a day. The problem is we don't have $1,000 a day,
we only have a little bit of money. So, the next task is to think about how we
can take a small amount of money and make it look larger, what is called super-size
the incentive. How we can take the same amount and make
it look larger. So, one of the things we try is to use a
principle called loss aversion. And loss aversion is the basic idea that
people like gaining, but we hate losing. Gaining 3 dollars is exciting, but losing
3 dollars is really miserable and the misery is much, much larger than the
happiness. And because of that, if we get people to
lose, it will be more effective. So, for example, what do you think would
happen if we pre-paid people as if they took their medication for 3 months, and
then, we would take money away from them for every day they don't take their
medication, turns out that's more effective.
You could come up with another idea. You could say, what if instead of giving
people $3 dollars a day, we would give a $100 dollars if the took their medication
for awhile. Then, the amount is larger, but remember
also the discount is higher and future events need to be much, much larger to
influence us today. So, you want to bring something to today,
the immediate reward. By the way, here is something I haven't
tested, but I would love to try it out. You go to people who are taking Coumadin,
and every morning you wake them up by showing them a particular kid in Africa
who might get fed today if they take the medication on time.
It's against $3 and not only that, that money might go to that kid, they also know
that kid would get to see them in the evening and say good night to them,
whether they've taken the medication or not.
And I've predicted under those conditions, it would be incredibly hard for people not
to give the money, because it would go to somebody else, to fulfill a really
important goal and you'll have to look into this person's eyes later in the
evening and feel incredibly guilty, if they haven't taken their medication.
There's lots of ethical problems, as you can see, with all of these, but we'll
continue. Now, here's some stuff that Kevin and
George have done which I think it incredibly inspiring.
The first thing they did was they said, you know what?
Money is great, but people love lotteries. In fact, the columnists often call
lotteries a taxation on stupidity because they expected value is usually quite very,
very low. But nevertheless people love lotteries.
That's why we have Vegas. That's why we have random reinforcements.
So, what do you think would happen if instead of giving people $3 in cash for
sure, you give them 10% chance of making $30?
Turns out, that's much more exciting. In fact, the ideal way to create a lottery
is to create a lottery with two things. You have one big reward that you could
dream about, but get very, very infrequently.
But that fulfills the aspiration level. And then, you have smaller rewards that
have a higher probability of actually being given out.
So, from time to time, if you're in the system you can get some reward and it
reminds you that you have a chance of getting the big one.
If you only had the big one, then most days you don't get anything.
It's not that exciting. So, you want a combination of a really big
reward and some small rewards that keep people in the game and feel excited.
So, lotteries are good, but they didn't stop there.
They added another component called regret.
And regret is a really interesting idea and it's worthwhile stopping and thinking
about it for a while. So, what is regret?
Regret is about the fact that our happiness with where we are in life is not
about where we are, it's a comparison between where we are and where we think we
could have been. And if this other place where we think we
could have been is better than where we are, we feel terrible.
And if this other place where we think we could have been is worse than where we
are, we feel good about it. So, here's an example.
When do you think you would be more unhappy?
If you missed your flight by 2 minutes or by 2 hours?
Of course, by two minutes. But why?
You're stuck at O'Hare with the same bad airport food, with the same unpleasant
airport. Why you're more unhappy if you missed your
flight by 2 minutes? Because you can imagine the many ways you
would have made it. You could say to yourself, if the TSA
agent had one more IQ point, everything would have gone well, this is the security
people. You could say to yourself, if the person
in front of me understood what taking your shoes off mean, everything would have been
fine. There are many, many ways in which you can
imagine how you would have been in this other reality, and then, the contrast
between these two realities is incredibly salient.
If you missed your by 2 hours, there's no way for you to imagine that reality.
So, it's not creating the same contrast. By the way, it's a personal observation.
I should tell you that I think that one of the reasons that I think I'm generally
happy in life is that because after sustaining a very serious injury, I have
lots of reminders about that injury and the contrast between where I am now and
where I was for many years in hospital, is incredibly clear to me.
I think that if I had an injury that I had the same misery for a long time, but then,
it went away, I don't think I would have had the same benefit.
So, while these scars and some of the pain that they give me everyday is have some
unpleasantness, I think it is useful as a reminder of how things could have been.
It makes it harder for me to forget this contrast between where I am now and where
I was, and therefore, I think I am happier because of that.
This is not a good experiment, of course just my intuition.
In a very different domain, in some of the Olympics, they took pictures of people who
won medals. And they asked the question of what
determines the size of the smile. And you would think that the gold, people
with gold would smile the most, silver less, and bronze less.
But when you actually look at it, it's gold, bronze, silver.
The people with silver are the one who are smiling the least.
How could that be? Well, put yourself in the mindset of
somebody who just won the silver medal. What are they thinking?
What's going through their mind? They probably say to themselves, I was
this close. In fact, it's probably not something that
is this close like in the Olympics, like it could be milliseconds.
And what is the person with bronze thinking?
They say, well at least I'm here on this stage.
Look at all the other people that didn't get here at all.
So, now you can see how in this case, but also probably in areas of your own life,
happiness is not determined by where we are, but what reality we are comparing
ourselves to. And if this reality is better, we feel
miserable. If this reality is worse, we feel good
about it. So, let's take regret and roll it back for
experiment with Coumadin. Imagine that we have a big gorup of people
taking Coumadin. And imagine part of these people are
taking the medication on time and another part of these people are not taking the
medication on time. If we just do the, the rewards by
lotteries to the people who've taken the medication on time, we take all the people
who took the medication on time, we sample 10% of them and we give them the lottery
ticket. We call them up, we say congratulations
and we give them the lottery tickets. Now, there's no regret.
The people who are winning feel good and the people who are not taking their
medication, don't really know that anything bad has happened.
How do we add regret to the equation? We're doing it by giving a lottery ticket
for everybody in the sample. We give it to the people who've taken
their medication on time and we giving it to the people who did not take the
medication on time. And if it's somebody who did not take
their medication on time that comes up in the lottery, we call them up, and we say,
congratulations, it is your lucky day. The stars are smiling on you.
You're the winner of the coveted lottery. Sadly, you did not take your pill on time,
so you're not getting the prize, you're not getting the reward.
Now, think about it, this is the essence of regret.
Now, you can say to yourself, my goodness, there was a tiny little act in the morning
of taking the medication that if I would have engaged on that, I would been on the
other side of that fence. And I really don't want to be on that
other side of the fence again. And now what happens?
You combine lotteries and you combine regret and compliance rate goes up to
about 97%-98%. Now, here's the thing, when you look at
something like Coumadin, you say many people just don't take their medication
regularly on time, and it's terrible. It's a blood thinner.
You should take your medication on time if you're on Coumadin.
Luckily, we can add reward substitution. We can add $3, potentially could add
shame. We could add all kinds of other things and
not only that, we can think about how to maximize that incentive.
We can take, for example, $3 and think about how we super-size it.
How do we add lotteries to it, randomness? How do we add counterfactual thinking and
regret and by doing so, get people to behave as if they care.
About getting another stroke, eventually getting people to behave in a way that is
better for them, better for the families and of course better for the health care
system.