Economists on How To Make Better New Year’s Resolutions

The search for better economic policy.
Dec. 31 2012 5:15 AM

How To Make Better New Year’s Resolutions

Vow to do less, not more.

(Continued from Page 1)

The time-scarce contestants played the Feud with greater focus, throwing out more answers and getting more correct responses per second. They were exhibiting the tunnel-vision brought on by scarcity. But a funny thing happened when the experimenters introduced the opportunity to borrow against future rounds, at a usurious interest rate of one second now in exchange for two seconds in subsequent rounds. The time-scarce, focused as they were on the round in progress, were much more likely to borrow. Introducing the possibility of borrowing resulted in lower scores for the time-poor overall—the seconds they borrowed in desperation during early rounds resulted in very short times later on, so short that it hindered their performance rather than helping it.

The Feud contestant who shortsightedly undermines his future by trading two future seconds for one second in the present helps to illustrate the mindset of a person making a decision when faced with scarcity. A time-starved person rushes to meet deadlines without taking the time to order his affairs for the future, and thus sinks further and further behind. And the further behind he falls (on time or money) the more his mind wanders away from what he should be thinking about, like his long-term finances or his crammed calendar, and back to the mess of the present.

When you think about the distracting and sometimes paralyzing effects of scarcity in this way, you can appreciate how someone living paycheck-to-paycheck and intent on paying this month’s rent and utilities may end up so focused on this immediate goal that he digs a deeper financial hole, by taking out payday loans or otherwise mortgaging the future. The stresses of scarcity leave insufficient energy and attention to make sensible long-run decisions. Essentially, Mullainathan and Shafir argue that the poor aren’t necessarily impoverished simply because they make bad financial decisions. Rather, it’s the stresses of poverty that lead to bad financial decision-making in the first place. And again, the same goes for the time-deprived: Harried people make bad decisions about their time because they’re so starved for it.

Advertisement

Which is why I, like other time-crunched professionals, would do well to resolve simply to take on fewer obligations in the new year, rather than resolving to learn Mandarin or pick up moose hunting. By taking on more, odds are I’d compensate by being a lesser parent, researcher, and writer.

Of course, many resolutions this time of year are more about what we want to give up, rather than add, to our lifestyles—quit smoking, eat less, and so forth. Here, too, Mullainathan and Shafir’s theories provide some guidance. Recall that we spend much of our lives in tunnel vision focused on immediately pressing tasks. Long-term goals and self-improvement rarely sit within our narrow view.

But occasional periods of self-reflection—like the days of reckoning that arrive in late December each year—provide an opportunity to think about what we want to put in the suitcase that constitutes our lives. The advice that Mullainathan and Shafir have for resolution-makers isn’t that you refrain from trying to better yourself, but rather that you lock in commitments to self-betterment that won’t require vigilance or attention in the year ahead. So while it’s on your mind, go ahead and increase the default contribution to your pension plan; buy a smaller fridge that won’t hold as much ice cream; force Outlook to block off every Friday afternoon to clean up your desk and the rest of your affairs; and use both the time and mental space that commitments like these can free up to stay on top of the workload and pressures that are already part of your daily life.

Video Explainer: How do astronauts celebrate New Year's Eve in space?

Ray Fisman is a professor of economics at the Columbia Business School and co-author of The Org: The Underlying Logic of the Office. Follow him on Twitter.

  Slate Plus
Working
Dec. 18 2014 4:49 PM Slate’s Working Podcast: Episode 17 Transcript Read what David Plotz asked a middle school principal about his workday.