Tag loss aversion

{ Testing Commitment Contracts } [Mis]Adventures in Motivation, Integrity & Anti-Charities …*

{ Testing Commitment Contracts } [Mis]Adventures in Motivation, Integrity & Anti-Charities ...* |rethinked.org

stickK.com homepage screen shot

Sometime last month, I read an article in the New York Times about StickK–an “online Commitment Store,” which helps you set and achieve your goals by enabling you to create a commitment contract with yourself.

The Commitment Contract concept is based on two well known principles of behavioral economics:

1.People don’t always do what they claim they want to do, and
2.Incentives get people to do things

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A Commitment Contract is a binding agreement you sign with yourself to ensure that you follow through with your intentions—and it does this by utilizing the psychological power of loss aversion and accountability to drive behavior change.
By asking our users to sign Commitment Contracts, stickK helps users define their goal (whatever it may be), acknowledge what it’ll take to accomplish it, and leverage the power of putting money on the line to turn that goal into a reality.

I was intrigued by the idea and since my last mostly self-devised motivation strategy (eating one (or several) donuts as a reward for each time I went running) had completely backfired and turned me into a bona fide sugar addict, I decided to give StickK a try. The service is very simple to use– you create an account on StickK.com; select a commitment; decide how much money you will pay each week if you fail to fulfill your commitment; select either a charity or anti-charity for your money to be donated to; add friends to your network of supporters and are given the option of nominating a referee to report your progress. A referee is someone who will report whether you have indeed fulfilled your commitment each week, but since I couldn’t think of who could reliably vouch for me, I opted to self-report on the honor system. Finally, you pick a day of the week to report whether you’ve met your goal for that reporting period and each week StickK sends you an email prompt to remind you to report your performance. That’s pretty much it, all that’s left is to actually go out and fulfill your commitment.

You can set as many commitments as you like but I decided to try this out with a single goal: to exercise three times a week. I like this goal, it’s achievable, has big payoffs for mental, emotional and physical well-being but it’s also one of those things that I tend to forgo when I feel stressed or overwhelmed by other commitments. I figured StickK would help me reframe this goal as a top priority and give me the little nudge I needed to transform this goal into a lifelong habit. I selected an anti-charity that I despise and set my weekly fee at $10. It’s not much, but the thought of giving so much as a penny to this organization makes my skin crawl with disgust.

It all went well for the first two weeks, and riding the high of new resolve, I fulfilled my weekly commitment with gusto. It all went well, until it didn’t, and I failed to meet my goal one particularly busy week. Sunday afternoon (my reporting day) arrived and I realized with horror that I had only exercised once that week. All those “tomorrows” on which I’d promised myself to exercise had flown by unnoticed and I hadn’t fulfilled my commitment. I considered exercising twice that day. And yes, I considered lying. What if I said I’d met my goal, and then promised myself to exercise six times next week and never again mess up? What would be worse? Lying or donating to this organization that stands so directly against what I believe in and value. This wouldn’t be a big lie, no one would be harmed by it and in fact no one would ever know that I lied, other than me. The problem with integrity, of course, is that you can’t opt out when doing the right thing is inconvenient. After having spent most of the day going over this, (time I probably could have used to exercise twice…however shady a strategy that may have been), I finally decided I wouldn’t lie on my report, it just felt too dishonest. And so I reported that I had failed and $10 went to that dreadful organization.

I felt guilty and disgusted with the idea that I had donated to this organization, and in an effort to assuage my guilt, I donated another $50 to the counter charity. Bringing my total that week for not exercising to $60 on top of my regular gym membership, plus about three hours of my Sunday trying to do mental (moral) gymnastics over how to resolve this issue, plus–and by far the heaviest cost–the sense that I had really let myself down. It wasn’t so much that I hadn’t fulfilled my commitment–I’m convinced exercise is good for me physically, mentally and emotionally and I hold it as a value, but I’m also not a fanatic about it and missing two work-outs is not catastrophic by any means. What made me feel really disappointed was the idea that I donated to this anti-charity even though avoiding that ‘punishment’ was really quite simple and only required exercising three times a week. Yet, that week, I somehow didn’t make what I value and believe in a priority, and as a result, I gave money to a cause I find abhorrent. It wasn’t the missed exercise, it was the ethical dissonance between what I believe in and my failure to act on it that I found crushing.

This all took place about three weeks ago, and I’m glad to report that since then, I have fulfilled—even exceeded—my commitment every single week. Whenever I try to find a way to talk myself out of exercising I Just remind myself how dreadful that Sunday felt and then I’m practically running to throw on my sneakers.

If you need a little nudge to keep you committed to your long-term goals, I’d definitely encourage you to give StickK a try. Have you tried it? What did you think? Let me know …*

Loss Aversion and Schools

Traditional economic models hold that we, being the rational beings we are, love getting things just as much as we hate losing them. Not actually the case, as Daniel Kahneman (Thinking, Fast and Slow) and others have pointed out. We are far more sensitive to actual and perceived losses than we are to gains.

What does this mean in practice? Well, it means all kinds of things, and in Kahneman’s words, “The concept of loss aversion is certainly the most significant contribution of psychology to behavioral economics” (300). If you compare the goodness (i.e., utility) of gaining two dollars with the badness (i.e., disutility) of losing two dollars, losing two dollars carries greater weight in our minds because we are more loss averse. We feel the pain of loss more deeply than we celebrate gains. Some might react to tax cuts with a smile and relief, but they might then react to tax hikes with pitchforks and protests (tax cuts being seen as a gain, tax hikes as a loss) . It’s an interesting asymmetry, with many consequences.

This loss aversion works at deep levels of our consciousness. Kahneman cites a study of golf putts by Devin Pope and Maurice Schweitzer at the University of Pennsylvania. They compared the success rates of golfers putting for a birdie with those of golfers putting to avoid a bogey. If you look at a birdie as a “gain” and a bogey as a “loss” (with par seen as breaking even), then you can see loss aversion at work here. After analyzing 2.5 million putts (!), Pope and Schweitzer found that golfers putting for par (i.e., avoiding the “loss” of a bogey) were 3.6% more successful than those putting or a birdie. Though it might seem small, that’s an enormous difference of more than 90,000 successful putts. It’s also one of the clearest, most interesting, most powerful illustrations of loss aversion that I’ve read.

How can the idea of loss aversion affect educational practice? One general way lies just in rethinking how we frame and conceive of things. Let’s say, for example, that your school has mandatory study hall, which students can liberate themselves from after one term of good grades. In that way, liberation from the study hall might be seen as a gain of more free time–a motivating incentive, right? But loss aversion would suggest that students might be more motivated to escape study hall in the first place (i.e., avoid losing their free time to study hall). Let’s say that only students with low grades after the first few weeks have to attend study hall, and you publicize that fact quite clearly. Research suggests that in this framework students will work much harder and seek more extra help to avoid the loss of free time that study hall represents.

I’ve also been playing around with how assessment practices could incorporate loss aversion. In such a framework assessment might end up looking something like scoring golf. First, we’d need clear rubrics for every type of assignment we give. Students would have to know exactly what the minimum expectations for an assignment should be, and the bar should be set high. Think of it as “par” for every assignment. If students meet all expectations, their grade stays the same. If they exceed expectations, their grade goes up one or two points. But if they fail to meet expectations, their grade decreases a bit, depending on how many standards they failed to meet.

In order for this to work, however, all students have to start with some grade that they can work to defend against loss. It’s up to the teacher, of course, what that number should be. In my mind I’ve been playing around with the number 90 (on a 0-100 scale), but maybe that just shows that I’m the product of a grade-inflated generation. Maybe it should be 85. Or lower. I don’t know–it’s open for discussion. It needs to be high enough for students to want to preserve it, but not so high that everyone walks away with A’s just for meeting expectations.

If the theory of loss aversion holds true, then such a grading system should be a powerful motivator for students. Students who need to get an A+ on everything have a way to aim high. Students who often struggle start the term with a high grade and a high incentive to keep working hard. This is not a fully formed idea, I concede, but I think it has some potential. I also recognize that this idea resides within a fairly traditional school framework, with grades, teacher-generated rubrics, etc. As with all my ideas, I wouldn’t be surprised to hear that many other people have already thought of it. If so, I’d love to hear about other people who might be doing something similar.

Works Cited

Kahneman, D. (2011). Thinking, fast and slow. New York, NY: Farrar, Strauss, and Giroux.

 

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