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Dan Ariely - Payoff - Science of Motivation

Dan Ariely Explains the Science of Motivation

Dan ArielyDan Ariely is with us again today – his first visit was back in Episode 60. Dan’s work has been field-shaping since his first book, Predictably Irrational. In that phenomenal bestseller, he demolished the idea that people make fundamentally rational choices in their lives and purchases.

Dan’s newest book, Payoff: The Hidden Logic That Shapes Our Motivations, pulls together myriad studies to help us better understand motivation. He exposes motivation myths and tells us how we can better harness it.

Dan Ariely is the James B. Duke professor of psychology and behavioral economics at Duke University. With three NYTimes bestsellers under his belt, Dan’s work has convinced his readers to look beyond logic when trying to communicate and persuade. He is also a real-world business person – his newest role is Chief Behavioral Officer at Lemonade, a startup that intends to build trust between people and their insurance company.

Dan and I talk about the state of social science research today, including how his work has shaped the field and the replication crisis we’re currently experiencing. He also talks about the importance of trust in work and society, and how we can impact everybody when we try to weed out bad apples. We also chat about some of the experiments from his new book and why money isn’t the all-powerful motivation we think it is.

Dan’s work has long influenced the field of persuasion, so don’t miss this chance to hear from one of the best!

If you enjoy the show, please drop by iTunes and leave a review while you are still feeling the love! Reviews help others discover this podcast and I greatly appreciate them!

Listen in:

On Today’s Episode We’ll Learn:

  • How individuals, businesses, and governments have started to embrace the idea of irrational decision-making to improve their marketing and policy.
  • Dan’s thoughts on the replication crisis in social science, and why it’s important to adjust your own beliefs and hypotheses in light of new data.
  • Why Dan has become fascinated with building trust into the insurance business.
  • The research into why money isn’t the most effective motivation for work, and what people want in addition to being paid.
  • The most interesting, off-the-radar social science research Dan has encountered recently.

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Full Episode Transcript:

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Welcome to The Brainfluence podcast with Roger Dooley, author, speaker, and educator on neuromarketing and the psychology of persuasion. Every week, we talk with thought leaders that will help you improve your influence with factual evidence and concrete research. Introducing your host, Roger Dooley.

Roger Dooley:    Welcome to the Brainfluence Podcast. I’m Roger Dooley. Our guest this week is a repeat visitor here. Dan Ariely in the James B. Duke Professor of Psychology and Behavioral Economics at Duke University. He visited us way back in episode 60, and that episode proved to be one of our most popular. I’m sure that’s in part because with his first book, the huge best-seller, Predictably Irrational, Dan persuasively demonstrated that people are driven by non-conscious motivation, emotion, and cognitive biases. With his own research, and that of many other social scientists, Dan convinced his readers to look beyond logic when trying to communicate and persuade. Since Predictably Irrational, Dan has had two other New York Times best-sellers. Now, he has a new book out, Payoff: The Hidden Logic That Shapes Our Motivations. Dan, welcome to the show.

Dan Ariely:          My pleasure, nice to be back.

Roger Dooley:    Great. Dan, it’s been over eight years since Predictably Irrational came out. Do you think that mainstream business people, and maybe even government people have a significantly greater appreciation today for non-conscious drivers of human behavior, or do you still find that people don’t really buy into that?

Dan Ariely:          One of the nice things about moving from about zero recognition to even small recognition, it is infinitely better. I think we’ve made tremendous progress but only a small fraction of the progress we need to make. Yes, I do think people recognize all kinds of things. On the government side, you can think about evidence that the British government opened an office for behavioral economics, the US government opened, we’ll see what happen to that office, Singapore, Australia, Israel, Holland. We see lots of interest in this from the policy perspective. You also see more and more arguments from social science in the legal profession, and of course, companies are starting to adopt things in a very, very different way.

I think, overall, the place we’ve had the biggest impact I think is just with people who read, the next impact has been with business, and then governments are slowest but they’re getting there.

Roger Dooley:    Yeah, I’ve seen quite a bit of change, I think in particularly the digital space, where you’ve got digital marketers that are very performance-oriented, and they have the ability to measure different effects. In other words, they can try different things and see what works. I think that, as business people, they’re very open to trying new ideas that might give them an edge over their competition, or perhaps improve their conversion rate from 6% to 8% even, which would be a huge change in revenue and profits. I think they’ve adopted many of these principals much more aggressively than those businesses that really have more difficulty measuring the results of their marketing. If you’re doing big TV ads, pretty hard to tell if a particular commercial drove sales or not.

Dan Ariely:          I think the reason is the ease of measurement, but I think it’s mostly because there’s nothing as humiliating as having an idea, testing it, and see that it failed. It’s kind of offensive in a very deep way, and all of a sudden you have to re-think about your beliefs in life. I think it’s a really good exercise, but if you put big ads on TV and you never see that you’re wrong, you can hold to the belief that you’re amazing. Then you just keep on following your intuitions. But if you get reminders from time to time of how something that you thought was great actually backfires, you do start reading, you do start looking, you do start expanding your horizons a bit more and looking for other ideas.

Roger Dooley:    Yeah. I think in the academic world, that pretty much is par for the course, not every hypothesis is going to prove out once you test it. I think that, too, the performance marketers have kind of that same attitude. In other words, if you’re constantly testing stuff, it really doesn’t matter if one out of 10, or even one out of three fail, if you are overall producing good results and things are getting better and better. Actually, that is a great segue, Dan, the academic piece, and research that doesn’t pan out.

In the last couple of years, there’s been a lot of talk about this replication crisis. I base a lot of my work on the good work that you folks, and other social science researchers do, and I feel like I’m standing on the shoulders of giants, but this new conflict is suggesting that some work is actually not that good. Even some very well-known work, like Amy Cuddy’s Power Posing, or John Bargh’s Priming work, that maybe that work isn’t really statistically sound, and that other labs have had difficulty reproducing it.

On the other hand, I’ve seen very persuasive arguments that it isn’t always to just say, “Oh, I’m going to reproduce this,” and do it if you really don’t follow the exact same protocols, and so on. Where do you fall on this argument?

Dan Ariely:          Yeah, I think all of those things are valid. I think there’s some work that falls into the “not so good” category. Part of it is the way we practice science. You do an experiment, it doesn’t work, you do it again, you do it again, you do it again. At some point, by lack of chance, the data is significant and you stop, and you say, “Hey, it worked.” You publish only the thing that worked and not the thing that didn’t work. That’s kind of the way scientific publications are, and that’s basically the “not so sound” research.

Then the real question’s about replications. Replications in social science are very different from biology. Somebody is now trying to replicate my study on getting people to think about The 10 Commandments, and then showing that they cheat less. I’m very happy for people to replicate it, but it turns out it’s really hard. People in different countries have to translate the questions into different languages and they have questions. They come back to me and say, “Hey, is it this translation or this translation?” I don’t always know. We ran the experiment in a big class with about 500 students. The people who are trying to replicate don’t have a class with 500 students. They ask, “Is 10 students okay?” They hope so, and when we run experiments we hope that what we think is the essential is the essential, and what we think is the not essential is not essential. Often the replication is not an exact replication, and you wonder whether they missed something important, whether it’s that the research was not sound in the beginning or whether the replication just tells us that there’s a difference than if you run it in slightly different situation.

For example, there’s one person who wants to replicate this study and their participants are older. I don’t mind, I think it’s perfectly fine. I’m just saying it’s not a real replication, and if it’s different that will be incredibly interesting, but I would prefer for them to test it on both young and old. If there’s a difference, we would know something about where the difference is coming from.

I think there’s some research that is not sound, no question about it. There is some bad incentives in science, no question about it. There are some replications that are not truly replication, it’s not as easy to do. I think that category bothers me the most because we, as social scientists, supposedly know a lot about the influence of the environment on behavior. We’re supposed to be incredibly attuned to the fact that small details matter. I see lots of replication attempts that don’t adhere to that. I think we should use different terminology when we call it replication.

Then the other thing is that I think we need to not just try to replicate, but we try to replicate in extent. I would like to see attempts that are not just trying to do the same thing, but trying to say, “Hey, let me do what this other person does, but let me try and expand on it. When would their fact be even stronger? When would it be weaker?” Try to, at the same time, both replicate what people have done but also give us a bit more insight, at the same time. Why wouldn’t you?

Roger Dooley:    Right, I think a short of answer to folks asking about it is to trust those ideas that have been demonstrated many times and in many labs much more than a sort of one-off finding that, gee, if you show people pictures of aliens they become more creative. You might want to not bank on that one as much as, say something like, the social proof effect that’s been proven many, many times in many different situations.

Dan Ariely:          That’s absolutely right. I think in that regard it’s good to be a statistician, and statistician says, “You have a belief about everything, and every piece of information can change your belief in the strength that it deserves.” You see one experiment, don’t get convinced. No matter what the experiment is, don’t be convinced 100%. Change your belief a little bit in the direction of the data. You see another experiment, change your belief a little bit more in that direction. If you follow kind of principal, you would not be that influenced by one-offs, you shouldn’t. You also would not be completely swayed by one failed replication.

Roger Dooley:    Right. Makes a lot of sense. One other thing that I did not mention in your intro, Dan, is that you’ve gotten into the insurance business, which I have to admit I did not see that coming. You are the Chief Behavioral Officer at a start-up, called Lemonade, and they launched with, I guess, $13-million from Sequoia Capital and they’ve raised another $34-million just a month or two ago. What’s the story there and why do they need a Chief Behavioral Officer.

Dan Ariely:          Yeah, so I met Danielle and Shai about a year and a half ago, and they said, “We’re starting an insurance company that’s going to be only digital, and quick to use, and easy to do this, and would you join us?” I said, “Look, the only condition I’ll be interested in joining something is if we have an insurance company that has no conflicts of interest.” Now, what does it mean having no conflicts of interest? Think about the regular structure of insurance company. You give the money every month, they keep your money in some pool, and at some point it’s their time to pay you but at that point, they are better off not paying you. It’s not because they’re bad people, but it’s the cost incentive that when you just say it, you say, “I would never want to be in that situation. Why would I want to give people money and then be at their mercy that they might not give it back to me and slow me down, and whatever they want?” We said, “Let’s be an insurance company that we’re never in the situation that we have a conflicts of interest.”

What does it mean? People join around the charity, charity of their choice, something that they really love. It could be a local PTA, it could be something else, whatever it is. Then we manage the pool and we charge some money for managing the pool, and we charge premiums and we pay back. Then, if there’s money left over at the en of the year, we give it back to the charity. What that means is that we don’t make more money if we accept or deny a claim. It’s not our money. This is kind of the old idea of insurance, it was still a mutual, where you basically said, “It’s mutual collateral.” We’re kind of going back to that situation.

Why is it so important? It is so important because if you’re in a confrontational insurance situation, which is the current situation, you start the exchange with lack of trust. You say to yourself, “I know that these bastards on the side” … or you say some other words … “are going to try not to pay me, so let me exaggerate my claim from the beginning.” Right? You get this cycle of distrust and deception that is bad for everybody, and we’re hoping to basically not get into this cycle of distrust and deception. We’re doing everything we can to do things quickly, trust people, give people credit. We just posted something that we processed a claim in less than three seconds. The algorithm say, “Great.” People got things back. The whole point is to say, “Let’s re-build elements of trust into the system.”

Then the other thing, as you know, I do all kinds of research on dishonesty. What we find that people basically want to be honest but from time to time, we can justify being dishonest. If you think that the other party has either lied to you before, or is about to lie to you, you’re much more likely to be dishonest. We’re building lots of things into the product that will basically remind people about their own moral fiber. We basically want to create an honor system.

By the way, with honesty, the moment there is dishonesty, everybody loses. A system where people are suspected that they will be cheated and they actually get cheated, claims take longer, there are more people involved, you have to verify lots of things. There’s lots of things that everybody suffers because of it. We hope to create a system with high trust, high transparency, and not to get into this bad equilibrium.

Roger Dooley:    It’s a really fascinating business model because the company is able to make money, presumably, from the percentage that it’s taking, but in terms of people filing false claims or inflating claims, they may feel that they are taking away from the charity that they designated. Although, I suppose that you could get a bad actor who really doesn’t care. Oddly enough, just yesterday I was talking to Paul Zak, the Oxytocin guru, and one of his mantras is that, “Trust begets trust.” There’s a fair amount of research on that, that the more you demonstrate trust to somebody else, they’ll trust you more. Isn’t there some danger that if you operationalize this concept it’s going to work with most of the folks but there will be people … Sort of like if a bank didn’t lock up their money, most people would probably be fine just sort of transacting on an honor basis but there would be a few folks who would not want to do that.

Dan Ariely:          You know, generally in society, we work very hard to minimize the few bad apples, but we don’t think about the cost it creates for society as a whole. Let’s say you have 0.1% bad apples. Now, what you could do as a consequence, you could say, “You know what, from time to time there will be bad apples. When we identify them, we’ll try to ask them to go to a different insurance company.” Or you could say, “Let me make the insurance process so cumbersome and detailed, and so on, that these 0.1% of the people could never defraud me from the beginning. But by doing so, I show mistrust in everybody, and I create a cost for everybody else.” It’s not that there are no bad apples, I’m not that naïve.

Roger Dooley:    Right. No, what that really relates to in my mind, Dan, is the world of online security. If you look at Amazon, in certain respects their security seems pretty minimal. They don’t have strong password requirements. You can have a five-letter word as your password, as far as I know, and they don’t log you out. They keep you logged in on your computer. They never force you to generate a new password. I mean, they do all these things that would horrify the typical the typical security manager. What it does is, it makes it very easy for their customers to buy. When you go there you don’t have to remember, “What the heck was my password for Amazon?” You don’t have to enter it. You don’t have to enter your credit card information because they keep that for you, and all these things that make it a very, very simple, smooth transaction.

Yes, there are some people who might try and take advantage of that. They do have security procedures but they’re more in the background. You won’t really encounter them unless, if you say, “Well, I’m going to send out $500 in gift cards,” that would be maybe a little more dangerous transaction so on that one they will give you a little bit more friction as you conduct your order. For most of their business, they say, “Okay, we’re going to trust you, by and large, and not make you jump through all kinds of security hoops.” I think it’s brilliant.

This will be interesting to see, and good luck with that.

Dan Ariely:          Thank you. By the way, there was a website, I forgot their name, and you basically bought things, they shipped it to you, and they asked you to pay after the fact. That’s a tremendous amount of trust. Most people paid and everything was fine. I’m sure it was less than 100% of the people who paid. For a website to get introduced this way to people without the barrier of a credit card and so on, also creates a very different starting point, a different reputation, different trial. Right? Overall, I think it worked very well for them.

It is interesting to say, “How much are we willing to make everybody suffer because of some bad apples?” With terrorism-

Roger Dooley:    Right, that’s a very similar thing. Look at how we suffer in airport, all the money and time, and so on that’s wasted because of that.

Dan Ariely:          With terrorism, we can make one decision, and maybe with buying books we’ll make a different decision. Yeah, I think it’s important to realize how much hassle we’re inflicting on everybody to eliminate the very few bad apples?

Roger Dooley:    I think that is a great thought for people to hold in their mind across many domains, not just insurance, or not just website security. That’s a great thought.

I want to get onto your new book, “Payoff,” Dan. This is really different than your previous books. For our listeners who haven’t seen it yet, it’s a short book, it’s less than 130 pages. It can be read in a couple of hours. It includes some really amusing illustrations, by Matt Trower. It’s published by TED Books and has its roots in a TED Talk that you did, which was, “What makes us feel good about our work?” By the way, I checked on that video today, and it was just show of 5-million views. I watched it a couple times but couldn’t quite put it over the top, but I’m sure in a day or two you’ll get there.

Dan Ariely:          I’ll tell my mother to try and reach it too. I think she’s the one, she’s the force behind it.

Roger Dooley:    Right. TED specializes in bite-size keynotes, and this is kind of a bite-size book. Did you find the format liberating or constraining?

Dan Ariely:          I actually found it liberating. It was very interesting. I kind of liked it. I don’t think I would have liked to write all my books this way, by starting by saying I have 20-25,000 words, and basically saying what is the essence and how do I want to think about it, was really wonderful. I think I allowed myself to be a little philosophical in the introductory chapter, and the last chapter, and a bit more empirical in the middle. I enjoyed the process. It’s an interesting different book. It’s not the regular book that is just shorter. For me, it feels very different.

Roger Dooley:    I think it reads differently, too. I think it’s very accessible information, and kind of in the manner that TED Talks tend to be very accessible to really a wide range of audiences. Payoff is all about motivation, and it seems like a lot of businesses are still locked into the mindset that money is the reason people show up for work, and that more money will get you better output and better results, but I guess you’d take issue with that.

Dan Ariely:          Yep. By the way, I’m not saying that you should stop paying people. Right? There’s maybe two things to think about. The first one is that yes, money is important, but so are many other things. By not paying attention to these other things, we’re not making people happier and we’re not making people efficient. If you think about things like a sense of meaning, and contribution, and comradery, and a sense of progress and ownership, and so on, all of those things matter. We often kind of re-engineer bonuses but we don’t pay attention to these other things.

Then the other thing is that when we pay people, and there are ways to pay people to make them excited, motivated, interested, and there are ways to pay people in the way that gets them to be de-motivated. Sadly, by not thinking very clearly, we often use the approaches where we pay people and de-motivate them at the same time.

One example for this, of course, is the No Child Left Behind policy in the US. Basically, we took a group of teachers who thought that they joined that profession because they wanted to help, and contribute, and educate a new generation, and so on. We used to have something, like the title teacher, and people were proud about it, and so on. All of a sudden we say, “You know what? Really what we care about is the performance on this one test that we’re going to give once a year. It’s not about education, it’s just about performance on this test. You have very stringent criteria of what success means, and we’ll give you $400 a year more if your kids do very well on this test.” As a consequence, we got, of course, more cheating, we got teaching to the test, and we got dramatic decrease in motivation.

Now, I don’t think that the people who designed this system intended for this to happen, but we took autonomy from teachers, for example. Teachers who could before decide what is the right thing to do for their kids, all of a sudden became automatons. All of a sudden you say, “Oh, no, no, no. There’s this plan. You’re on day 31 of this 72-day program, and this is what you need to do, and this is what needs to be on the board, and we don’t care about the fact that your kids are faster on this or slower on this, or need more help on this or something is happening in the world. No, no, no. This is exactly what you need and you need to stay on the curriculum.”

By getting people to be automatons, we basically take away any kind of connection that they could get to their job. It’s not their job anymore, they’re just producing it but they don’t take ownership, there’s no accountability in the same way, they don’t feel that they’re connected to it. We basically just kill motivation.

Roger Dooley:    I’ve seen that in the online community area. I’ve been a community moderator and admin, and owner and operator even, for years and years, just about as long as there have been such things. One of the pieces of general wisdom in that industry is that if you have volunteer moderators … Now, obviously somebody like Facebook can’t really use volunteers to run their business, but many, many online communities with special interests and so on do rely on volunteer moderators to keep the discussion civil, and get rid of spam and so on.

About the worst thing that you can do is offer your moderators a little bit of money because you appreciate their efforts so much. It’s a legitimate thing, because maybe the community now is earning some advertising revenue, and the operator says, “Well, gee, I ought to share this with the moderators in some small way.” They can’t really put them on salary but they can give them some money. What happens is suddenly all of their reward for doing this has been intrinsic, has been the recognition of other community members that they’re a leader, the fact that they’re helping other people. In some cases, depending on the purpose of the community, they might be really helping people change their lives in some way. Suddenly now, “Gee, they gave me $200 this month,” and they translate that into the number of hours they’re spending in the community, and say, “Wow, I’m working for 37 cents an hour, so forget this. This is really a waste of my time.” That’s kind of an extreme example, but I think that can happen in many kinds of situation.

Dan Ariely:          Yeah, and this is what is called crowding out. You add an incentive, and rather than add to the motivation you detract from the overall motivation. You could say, if I asked you for a favor now and let’s say you were going to do it, I say, “Hey, would you help me, I don’t know, write an essay?” You would say, “Sure, I’ll read it over and give you some feedback.” If I said, “Hey, would you read over this essay and give me feedback, I’ll give you $3,” you don’t get the motivation of the social good and the motivation of the $3. Th $3 come in, social motivation goes out. That’s one thing that happens.

The other thing that happens, maybe even more important, is that payment changes the framework of time, of how we think about things, that if I pay you for a very particular thing for a very particular performance, it’s basically, you’ve done something for me and I’ve paid you back. It makes the relationship more tit-for-tat, where in fact what you want is you want long-term relationship. You want things to be about like, “I’m investing in your future.” Instead of paying you back on this, I want to put money in your kid’s savings account.

Roger Dooley:    I think the other key thing in the book is the importance of meaning in work. People have to feel that their work has some kind of meaning. You had a great experiment involving Legos. If you want to briefly explain that one, it would be great.

Dan Ariely:          This was an experiment in which people build Bionicles, and they build Bionicle in what we call in the “diminished pay wage.” They got, let’s say $3 for the first, then $2.70 for the next, and $2.40 for the next. Less and less money for each one of them. We asked the question of, “When will they stop?”

In the first condition, that we called the “meaningful condition,” it was not really meaningful but what happened was people build a Bionicle, they finished, we said, “Hey, would you like to build the next one for 30 cents less?” If they say yes, we gave them the next one and they kept on doing it until they said, “No more.”

In the second condition, we call this the “Sisyphic condition.” It started the same way, they build the first one, they finish, we said, “Hey, would you like to build a second one for 30 cents less?” If they said yes, we handed them the second one but when we took the first one from them, we started breaking it apart in front of their eyes as they were building the second one. We put all the pieces back into the box and when they finished building the second one, we said, “Hey, would you like to build a third one for 30 cents less?” If they said yes, we gave them the first one, the one that they built and we disassembled back into the box.

A couple of things happened. The first one was that people build many fewer Bionicles, so somehow the moment they saw the work destroyed in front of their eyes, their joy diminished dramatically. The second thing was, when we describe this experiment to people and we say, “How much do you think people would work less in the meaningless condition, the Sisyphic condition, than the control condition?” People thought that the effect would be about a difference of one Bionicle, when in fact it was three. People understand that meaning is important, but we dramatically under-weigh the importance of this.

The last thing that happened was that when we measured the correlation between how much people loved Bionicles … some people love Bionicles, some people don’t … and how long they persisted in the task, in the regular condition the correlation was very high. People who loved Bionicles persisted longer at lower pay, people who don’t like Bionicles stopped faster. In the Sisyphic condition the correlation went down to zero, which suggests that we have sucked the joy out of them. The fact that there was no difference suggests that the individuals who enjoyed the work more usually did not enjoy the work more in the Sisyphic condition, which basically just comes to tell you how easy it is to de-motivate people.

Roger Dooley:    Yeah, it’s interesting too because even the group that was in the more meaningful condition knew that their work was going to be destroyed. I can’t imagine what the difference would have been if you said, “You’re Bionicles are going to be placed on permanent display in the center of campus.” Then they probably would have kept on building free ones forever. You would have to up your Lego budget.

Dan Ariely:          That’s right, that’s right. Of course, you could do much more of this. This is actually an important point. We did not deal with high motivation, we call it motivation with the little m. It was a little motivation, but even in the little motivation you can change quite dramatically.

Roger Dooley:    Now, what about situations in businesses or, I guess, agencies, where wasted effort is sort of built in and unavoidable. I’m thinking of maybe a government contractor who has to bid on big contacts. They put huge amounts of resources, and people, and time, and so on into preparing the bid but then maybe only one out of three times do they win, and the rest of the time they lose. At a more human scale, you’re in the insurance business now, the life of the sort of traditional old-fashioned insurance agent might involve contacting lots of people, preparing lots of quotes, answering a lot of questions for a relatively small number of closes. Do you have any research on how that might be affected, or do you think in these cases, the occasional wins are basically off-setting whatever de-motivating aspects there might be from the losses?

Dan Ariely:          Yeah, I don’t think it’s efficient, the occasional win. I think what we need to do is we need to celebrate our efforts rather than the success. Imagine, let’s go back to the case in which you say we submit grants … Let’s take a case in which you apply for jobs. Applying for jobs is a very tough thing to do. I think people need to submit about 100 applications to be successful. It’s incredibly de-motivating to submit applications and get nowhere, day after day after day. You can say, “What’s the right thing to do?” You know, there’s lots of things that are outside of your control. What you need to do is you need to celebrate success, not by getting a job but by submitting five resumes today. The world is sarcastic and random, and you have competitors, and you have lots of things you don’t have under your control, so because of that we need to reward people … by the way, people might be ourselves, as well … for doing the right thing regardless of whether the world agreed or not.

Roger Dooley:    Right. That makes a lot of sense because clearly, if you put together an amazing bid for a project, that itself was an achievement, it was a creative effort and so on. You can’t just look at it as, “Oh, we lost, so it was a total waste of time.”

I know we’re running a little bit low on time here, so let me ask you one last question. Dan, with the exposure social science research is getting these days, we seem to hear often the same research cited over and over. Some of it’s really good research and that’s why you keep hearing about it. That’s a good thing, in academia particularly, if you’re the one that’s getting cited all the time, but business people are always looking for new, fresh ideas. I’m curious whether, say in the last year or so, you’ve run across any findings, either in your own labs or work done by other people, that you found particularly surprising or significant?

Dan Ariely:          One of the students in the lab, Aaron has been doing this research I really love. He gives people an appointment letter for a job and then he says, “How much do you want to put in short-term savings and how much do you want to put in 401K?” What he change is, is whether the job is defined as an hourly job or a yearly job. Hourly pays $35, yearly job $70,000 a year. The amounts are the same, and he’s looking whether people are saving different amounts. What he finds is that in the yearly contract, when people think it’s for the year, people save more.

You can say, “Oh, maybe people are wrong. Maybe people make the math wrong, they say $35 an hour is $60,000, they don’t have enough money.” But no, people can make the translation. In fact, even when you tell them, “$35 an hour which means $70,000 a year,” or “$70,000 a year which means $35 an hour,” people make this.

It’s amazing small manipulation of mindset that gets people to behave very differently. I think it’s incredibly important because most of the low earners in the US are hourly wages, and we define it as hourly wages. Basically, what we’re doing is we’re creating a mindset for them that is all about short-term and not long-term, and basically hampering their ability to think long-term and save.

Roger Dooley:    Do you think that’s an anchoring effect, the small number sort of makes them think smaller?

Dan Ariely:          It’s not anchoring effect because it’s not within that range, but I think it is a timeframe perspective. Is your job making you think long-term or is your job making you think short-term?

Roger Dooley:    Right. That makes sense. Of course, to some degree, many hourly jobs have that feeling of impermanence, too. In other words, “We’ll keep paying you as long as there’s work.” Whereas with salary jobs, there’s at least the implication that this is a long-term situation. Of course, as we know, that’s not always the case. Anyway, that’s really interesting. I look forward to reading more about that.

At this point, let me remind our listeners that we are speaking with Dan Ariely, Behavior Scientist and best-selling author. His latest book is Payoff: The Hidden Logic That Shapes Our Motivations. If you enjoy the entertaining and efficient way that TED Talks introduced concepts, then you’ll like this short and engaging book.

Dan, how can people find you and your content online?

Dan Ariely:          Maybe the best way is my website, which is www.danariely D-A-N-A-R-I-E-L-Y .com. We have lots of information there.

Roger Dooley:    Great, we will link there along with any other resources today that we mentioned, on the show notes page at rogerdooley.com/podcast.

Dan, it’s always a pleasure to speak with you. Thanks for being on the show today.

Dan Ariely:          Thank you, and looking forward to next time.

Thank you for joining me for this episode of The Brainfluence podcast. To continue the discussion and to find your own path to brainy success, please visit us at RogerDooley.com.

 

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