How Behavioral Economics Can Help You Achieve Your Goals

Over the last two months, I discovered many online behavioral economics lectures given by Sendhil Mullainathan (Harvard), Eldar Shafir (Princeton), and David Laibson (Harvard). I have seen many economics presentations, but these stood out because what I learned from them changed my life Immediately. I am not exaggerating. Understanding how psychology interacts with decision making had instant impacts on my life. In particular, two ideas changed the way I organize my life: (1) that mental bandwidth is scarce and (2) that there are commitment tools that help people overcome their present bias.

The first idea, that the human mind’s multitasking ability is limited, seems obvious. But, Dr. Mullainathan and Dr. Shafir demonstrate that this matters in surprising ways. For instance, they show that being poor can occupy bandwidth and reduce IQ, that dieters cannot concentrate well when prompted to think about food, and that lonely people focus obsessively on social cues. Furthermore, Dr. Mullainathan frequently relates bandwidth to daily decisions. For example, if you have your phone with you at a social event, you may receive emails that occupy your thoughts even while you are not using the phone. Thus, your bandwidth will be partially occupied, making it difficult to focus on the people you are with. Bandwidth also matters if you are trying to change your behavior. For example, if you are trying to work out more frequently, having a complicated and ill-specified plan forces you to think about when in the day to work out, which occupies bandwidth. Instead, coming up with a rule like, “I will work out every morning at 9am” allows you to form a habit that does not require much thought.

In my case, I have taken this idea and organized the way I work out to preserve bandwidth. First, I have created times every day that I work out so that I don’t have to think about it, I just do it. Second, I enter the gym thirty minutes before the gym closes so that I stay focused. This second change is not obvious but valuable. Under time scarcity, I know that I must squeeze a good workout into thirty minutes, which incentivizes me to be very focused.

The second idea is not so obvious. Dr. Laisbon explains that people are present biased, and thus don’t feel the same about doing something now as opposed to later. In particular, humans tend experience future costs and benefits with less magnitude. This is why procrastination is a universal phenomenon. If there is a task that will take some effort, it is much easier to plan to experience that cost in the future instead of in the present. Present bias also explains our love of immediate gratification. If you have two tasks, one in which there is an immediate payoff, like scrolling through Twitter, versus one that has a longer term payoff, like writing a paper, people often choose the immediate payoff because they are present biased.

In my case, I took Dr. Laibson’s advice to get a web blocker. Web blockers give you a credible way to limit the amount of time you can access specified websites. The web blocker I found even has a setting that requires that I complete an annoying and timely task if I want to change the amount of time that I can spend on blocked sites. I conceive of tools like this as weapons against my future self, where I can create costs that restrict my future actions. In fact, I wrote this blog post at least partially because I have run out of my allotted time on Netflix.

Economics research can be overly technical, boring, and inaccessible to the average person. On the contrary, Dr. Mullainathan, Dr. Shafir, and Dr. Laibson all produce research that is thoughtful, stimulating, and immediately applicable. I recommend that anyone interested in life-changing work read them.

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