Hi my name is Leslie John, and I am a professor of marketing at Harvard
Business School. In my job I study why people make
irrational decisions. And I try to use these moments of
irrationality to help people help themselves.
In other words, I try to take all the silly things that we do and I try to use
them to people's own benefit. So have you ever wondered why we often
fail to do things that we know are good for ourselves?
For example, we buy gym club memberships only to see the membership cards collect
dust. We regularly pledge to exercise more, but
then day after day we come home to veg out in front of the computer.
People try to take their prescription medications on time, but they regularly
fail to do so. Or put differently, have you ever
wondered why people knowingly engage in harmful behavior like risky sex?
We'll, a lot of these behaviors can be explained by lapses in self-control.
And today, I'm going to talk to you about a way that we can try to overcome some of
these problems. So it should come really as no surprise
that if you pay people to do things, they'll often do things for you.
But it turns out that this is not the most efficient way to get people to do
things. My colleagues and I, Kevin Volpe and
George Lowenstein, we've been working on ways to make these expenses work even
better as in change more behavior. So lots of employers, they will pay for
their employees to use the gym, hoping that their employees will then use the
gym and be healthier. But we've been finding that these simple
direct subsidization, they're not really that efficient in getting people to go to
gym. It turns out that there's a way that
gives you much more bang for your buck. So what we do is we, the trick is instead
of just paying people to do things, we capitalize on people's irrationality.
So, in other words, we try to take these biases that people have in their
decisions and use them to people's advantage.
So today, I'll tell you about some work we've done where we've used two biases to
try to help people to lose weight, that is one, the over weighting of small
probabilities and two, loss aversion. Let me explain, so over weighting of
small probabilities. Have you ever wondered why people play a
lottery even though there's almost zero chance that they'll win?
Or why people bet on underdogs? Well, it turns out that we human beings,
we're actually really bad at understanding and estimating
probabilities. So, we tend to overestimate, extremely
unlikely events. So, extremely unlikely events feel to us
like they're much more likely to happen than they actually are.
So in other words, these low probability events exert a disproportionate influence
on our judgments and decisions. And this can explain a lot of crazy
beliefs that people have. For example, an ungodly number of
Americans think that they will win the lottery and in fact some people truly
believe that Winning the lottery. For them, winning the lottery is their
retirement plan. So how can we use this normally
pernicious bias to help people? Well, what let me explain how we did this
with weight loss. So instead of just paying people to lose
weight we took advantage of lotteries. So instead of paying someone a dollar to
lose weight. We gave people, say, a 1% chance of
winning $100. So importantly, the cost is the same, but
the difference in the impact on human behavior is actually quite extraordinary.
So what we did was we gave participants in our study a weight loss goal, so we
told them every day what their weight loss goal was.
And at the beginning of the study, each participant got to choose a lucky number,
a two digit lucky number. And now, every day of the study, we put
all the numbers into a hat and we drew out one lucky number every day.
So if your lucky number was drawn, you could win $100, pretty great.
But there was one catch and there was one aspect that made this lottery scheme way
more potent. That is, you would only get the $100 if
you had actually attained your weight loss goal that day.
So, what we did was, suppose your number was drawn, but you hadn't lost the weight
that you were supposed to lose that day. What we did, we sent you a really mean
text message that said well congratulations, you're number came up,
but unfortunately, you didn't meet your weight loss goal today.
You would have won a $100 if you had only lost the weight.
so this incentive scheme, not only does it leverage the power of over weighting
of small probabilities, it feels like you're more likely to win than you
actually are. But it also harnesses the strong
motivations that people have to avoid regret, avoid that sense of, oh, what if
my number came up and I hadn't lost the weight.
so the second bias that I'll to you about before I tell you about the results of
this study. We also in this study made use of loss
aversion, which is a classic bias, loss aversion.
So loss aversion, refers to how the pain of losing something is much more poignant
to us, then is the pleasure that we get with an objectively equivalently sized
gain. So in other words, people hate losing
money way more than they enjoy getting money.
And just like the over weighting of small probabilities, this bias can explain a
lot of suboptimal behavior, for example, it explains why investors hold onto
losing stocks for far too long, when really they should.
They should see their losers. They should get rid of their losing
stocks. And again just like with the over
weighting small probabilities we use this bias in this case to help people lose
weight. How do we do this?
So what we did was we gave dieters the opportunity to put their own money down
towards losing weight. So they could wager their own money
towards losing weight. So they put their money down, and if they
didn't lose their weight, if they didn't lose, if they didn't attain their weight
loss goal, then they forfeited or lost their money.
If they did attain their goal then they would get their money back, plus a match.
So in other words, they were make, they were making a bet.
They were begging on themselves that they would lose weight.
Now, how do these two different incentive systems that are designed to capitalize
on irrationality, how do these incentive systems fare when we compare them to a
control incentive condition? Well, the results after four months,
participants that were randomly assigned to use these incentive schemes, they lost
way more weight than the people in the control condition, good news.
however, the tricky thing, even trickier than losing weight in the first place, is
keeping weight off once we remove the incentives.
And I think I'll save that for another lecture or two altogether because that's
another big problem that we're currently trying to solve.
so summing up, today I've talked about how we can leverage or capitalize on
people's irrationality to help people make better decisions and live better
lives. Thanks.