New Year's resolution: relax

RAY FISMAN
Last updated 05:00 06/01/2013
relax
Cool off: Spending more time in the slow lane helps with long-term goals.

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 It's that season again, when we resolve to accomplish a list of goals in the coming year. Frequently, these are the goals that we were resolved to accomplish during the preceding year.

If you were to ask Princeton psychologist Eldar Shafir or Harvard economist Sendhil Mullainathan for a better New Year strategy, they would likely suggest that the best resolution you can make is to do fewer things this year.

The researchers argue that, when busy people get busier, it leads to ignored deadlines, a cluttered desk and a vicious cycle of falling further and further behind.

Amid the disorder, a lot of bad decisions are made and the best means of escape from this cycle may be a moratorium on new obligations.

Shafir and Mullainathan are leaders in behavioural economics, which aims to apply insights from psychology to the study of economic decision-making.

In their recent work, summarised in the forthcoming book, Scarcity: Why Having Too Little Means So Much, they use behavioural economics to explain why conditions of scarcity, whether of time or money, often lead people to make bad decisions.

Shafir and Mullainathan describe the problem of managing money as being akin to packing a suitcase.

Someone with plenty of time has a near-empty suitcase, and it requires little attention or effort to decide whether to go to a movie on the spur of the moment.

By contrast, those with crowded schedules have a full suitcase - adding a new item means removing something that has already been packed.

Deciding how to rearrange your metaphorical suitcase takes time and energy and can lead to sleepless nights. Indeed, the shortage of space itself can be responsible for bad decisions which, in turn, make the problem worse.

This may sound contrary to your experiences. Some people feel they are at their most productive when work has piled up and deadlines are looming. Shafir and Mullainathan do not disagree, but they caution that these pressures cause what they call "tunnelling" - a laser-like focus on the tasks immediately at hand, which often results in a disregard for the bigger picture. You may be focusing on that deadline at the expense of your long-term happiness.

It's not that the poor don't think enough about money, or the busy about their time - it's that they think about it too much.

Shafir, Mullainathan and other researchers have been performing laboratory experiments to understand the impact of time pressures on decision-making.

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Together with University of Chicago psychologist Anuj Shah, they did an experiment based on the old game show Family Feud, using Princeton undergraduates as their subjects. Contestants were asked to name items that belonged to categories like "Things Barbie could auction off if she needed money fast".

The "right" answers were those that had been most popular among 100 Americans who were surveyed before the "show". For example, the answer "Barbie's dream car" earned 35 points, because 35 out of the 100 people had offered that as an answer.

The contestants were given only a few seconds to come up with a set of answers, but some experienced more scarcity than others. "Rich" ones had more time for each round than "poor" ones.

The time-scarce contestants played with greater focus, throwing out more answers and getting more correct responses per second. They exhibited the tunnel vision brought on by scarcity.

However, a strange 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. The further behind he falls, with 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.

When you think about the distracting and sometimes paralysing effects of scarcity in this way, you can appreciate how someone living from payday to payday 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-term decisions.

Essentially, Shafir and Mullainathan 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. Again, the same applies to the time-deprived: Harried people make bad decisions about their time, because they are so starved for it.

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

Of course, many resolutions at 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, Shafir and Mullainathan's theories provide 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 - such as 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 Shafir and Mullainathan have for resolution-makers isn't that you should refrain from trying to better yourself, but rather that you should 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 icecream; 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.

--SLATE

- Sunday Star Times

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