Duke professor schools financial advisers on self-control
Who would give up the Garden of Eden for an apple?
According to Dan Ariely, a professor of psychology and behavioral economics at Duke University, we’re all doing that sort of thing all the time.
Ariely spoke about self-control and ways to motivate ourselves to overcome temptations and achieve longer-term benefits at a conference for investment advisers Tuesday.
The talk at the Washington Duke Inn & Golf Club’s Executive Conference Center was part of the two-day Investment Management Consultants Association 2014 Summer Institute Behavioral Economics Lab, which was led by Ariely.
About 150 people registered for the conference, said Chase Squires, a spokesman for the association, in an email. He said the idea for the conference was to give the advisers a chance to learn what might be going on in their clients’ heads.
Ariely said people often face “now versus later” decisions in which they must choose between something they want now, and a long-term benefit. He asked how many people in the past month have eaten too much, exercised too little or texted while driving.
People often give in to short-term temptations. He added that we’re surrounded by temptation in our day-to-day lives from advertisements, websites and other sources that want us to act right now and “don’t really care about our long-term being.”
“Is Dunkin’ Donuts about getting healthy today?” he said. “Is Facebook about us checking Facebook one more time today, or being successful in the long term?”
And although people often give into short-term temptations time after time, there are ways to try to motivate ourselves or others to act in our longer-term interest. One approach is through “reward substitution.” In that approach, people give themselves short-term rewards for acting in their longer-term interest.
In his own personal life, Ariely said he put the principal into practice to encourage himself to take a medication that had a lot of side effects. Although he said the drug was expected to be beneficial in the long term, each time gave himself the injection, he would experience side effects including vomiting and fever. So he motivated himself to take the shot by putting in a movie at the same time that he had to take the drug.
“I connected something I did not want – an injection – with something I did want,” he said.
Another example he gave was brushing teeth. It’s one of our few good habits, he said, that we do regularly. He suggested that the reality is that we brush our teeth because we crave toothpaste, which isn’t the real value in the ritual.
“The reality is, we crave toothpaste,” he said. “(We are) convinced that unless we feel minty fresh, there’s something wrong with us.”
He asked the audience to apply that same concept to a longer-term goal, like helping the environment. In answer to the question of whether it’s something we actually care about on a daily basis, “the answer is basically no.”
“You don’t see anyone suffering, and anything we do as individuals are a drop in the bucket,” he said.
He took suggestions for ways to reward people to care about the planet, such as financial incentives for recycling, or creating a social reward for encouraging people to act in more environmentally friendly ways.
“If you think about our natural motivation to care about the environment – it’s not that much,” he said. “But we can add all kinds of things: we can add social pressure, we can add taxes…we can add costs -- we can add all kinds of things – we can add prestige,” he said.
Another trick in motivating long-term behavior is through the use of “self-control contracts.” That is a strategy of taking steps now to prevent our future selves from misbehaving. Suggestions included not buying ice cream in to prevent ourselves from eating it, and another was for paying personal trainer in advance as a financial incentive for exercise.
Bringing the talk home for the investment advisers, he said his hope is that they can use mechanisms to help people deal with temptation.