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This holiday season, behavioral economics could be a gift that keeps giving

December 18, 2014 at 6:20 PM EDT
Do you struggle with slouching, overeating or oversleeping? This holiday season, there’s a gift for that. Economics correspondent Paul Solman talks to Sendhil Mullainathan about consumer innovations that promise to improve your life through behavioral economics.
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HARI SREENIVASAN: We’re getting to that time of the holiday season when people are scrambling a bit to lock down that special gift, often wondering what would make a good choice.

But what if behavioral economics and behavioral science could actually help determine more useful choices?

Our economics correspondent, Paul Solman, has been looking into that very question, part of his ongoing reporting on Making Sense of financial news.

PAUL SOLMAN: Demoing a favorite gadget coming out of Santa’s workshop in recent years, an ideal gift for the hard-to-rouse, a behavioral economics alarm clock.

Clocky is among numerous products based on insights from one of the newest and fastest growing branches of economics.

Harvard’s Sendhil Mullainathan is a pioneer.

SENDHIL MULLAINATHAN, Harvard University: We’re used to biological science or semiconductors leading to new inventions. But now we’re starting to see how behavioral science, just not new technologies, but new understandings of the human mind, are leading to new inventions

PAUL SOLMAN: So, we asked Mullainathan and his team here at ideas42, a New York-based behavioral economics consultancy, to suggest some holiday gifts already on the market.

The first is a simple new take on an old invention, for the overeaters among us, a smaller plate.

SENDHIL MULLAINATHAN: This plate is actually the size of plates from the 1960s. So it’s not just our waistlines that have gotten bigger. It’s our plates that have gotten bigger.

And research shows that when you eat with plates like this, you just eat a lot more. And so you want to eat less, just go to your kitchen cupboard, replace this with this.

PAUL SOLMAN: And when you let restaurants pick the portions of hamburgers, pizza, and the like, today’s dwarf those of just 20 years ago.

But my problem is going to be that I might load up the smaller plate with more food a second, third time even.

SENDHIL MULLAINATHAN: Yes. You need portion control.

PAUL SOLMAN: Right.

SENDHIL MULLAINATHAN: So, let’s move to a more intensive intervention.

So this is a product that basically measures out and tells you, this is how much vegetables and fruit, this is how much starch, this is your proteins. And so what you do is, you put this on your plate. The starches go in here. We put our vegetables into here.

PAUL SOLMAN: Brussels sprouts, very big now.

SENDHIL MULLAINATHAN: This is the Brooklyn vegetable, so you are going to get a lot of hipster demand for this one.

And then once we have got it all loaded up, voila. Now, that’s portion control.

PAUL SOLMAN: But for those of us who really can’t resist seconds, fourths, there’s the kitchen safe.

SENDHIL MULLAINATHAN: You have your Hershey’s Kiss.

PAUL SOLMAN: Yes.

SENDHIL MULLAINATHAN: You enjoyed it.

PAUL SOLMAN: Excellent. I’m looking for it to already.

(LAUGHTER)

SENDHIL MULLAINATHAN: Now what do you want? Another one.

PAUL SOLMAN: Yes.

SENDHIL MULLAINATHAN: So you go back, you reopen it.

And so there’s a problem with the way we design lids. Lids can be opened all the time.

PAUL SOLMAN: Yes.

SENDHIL MULLAINATHAN: This is a nice product where, you see what’s on here? There’s a timer.

PAUL SOLMAN: Yes.

SENDHIL MULLAINATHAN: You set it. This is set for 11 minutes. I have had my one Hershey’s Kiss.

PAUL SOLMAN: Right. That’s all we should have.

SENDHIL MULLAINATHAN: And then you hear the lock, and now you can’t get anymore.

PAUL SOLMAN: Just so that the immediate temptation is removed in time.

SENDHIL MULLAINATHAN: That’s exactly right.

The person before getting the chocolate wanted one chocolate. The person two minutes afterwards wanted only one chocolate. The guy in the middle is the problem. This prevents the guy in the middle from acting.

PAUL SOLMAN: Me and almonds, this would be life-changing.

SENDHIL MULLAINATHAN: Yes. Yes.

PAUL SOLMAN: My wife hides the almonds from me, and then I go around looking for where she hid them, I swear. It’s insane.

(LAUGHTER)

PAUL SOLMAN: Now the folks here at ideas42 aren’t simply thinking about gifts that improve your life.

Allie Rosenbloom says they’re always trying to improve the world, one behavioral nudge at a time.

ALLIE ROSENBLOOM, ideas42: Everything from international development to consumer finance.

NARRATOR: We have launched the $5 million Robin Hood College Success Prize.

PAUL SOLMAN: Helping the Robin Hood Foundation with its prize for anyone who can double the disturbingly low graduation rates at community colleges.

But since our project is a behavioral holiday gift guide, let’s go back and explain Clocky.

SENDHIL MULLAINATHAN: Think about when you set your alarm clock. You set it for 7:00. What time do you get up? 8:00? What came in between? The evil snooze bar, because evening self was like, 7:00, that sounds really good; 7:00 a.m. self was like, I don’t want to get up.

The snooze bar is like an evil invention.

(LAUGHTER)

SENDHIL MULLAINATHAN: It puts all of the balance of power on 7:00 a.m. self. Why should 7:00 a.m. self have all of the power?

PAUL SOLMAN: Clocky tips the balance. It rolls away so you have to get up to turn it off.

No doubt, runaway alarm clocks would pry anyone from the arms of even the most muscular Morpheus. But they might also drive anyone nuts.

Stop. Quiet. Quiet. They don’t look like they’re that ease to actually destroy.

Some of you may already use behavioral health gizmos, like Fitbit, or Jawbone, tracking your movements, your eating, your sleep. Now there’s Lumo Lift, the posture prod.

Jamie Kimmel modeled one for us.

JAMIE KIMMEL, ideas42: It’s a wearable device. You put it under a shirt and attach the magnet.

PAUL SOLMAN: Sit up proudly straight, shoulders back, head forward, all quiet on the pectoral front. But should you slump…

JAMIE KIMMEL: You see that it will buzz every few seconds. And that means that I’m slouching.

PAUL SOLMAN: Oh, yes, yes, yes.

JAMIE KIMMEL: I’m in a bad position. And what it’s doing is, it’s giving me active feedback on my posture.

PAUL SOLMAN: And nudging Kimmel’s overall commitment to health back into his consciousness.

JAMIE KIMMEL: It’s a really good product to kind of help us realize, like, our intentions.

PAUL SOLMAN: And that’s the point of behavioral products, sums up Sendhil Mullainathan, not assuming, like traditional economics does, that buying something means you actually want it, because what if there is more than one you?

SENDHIL MULLAINATHAN: You have seen these cartoons where the character has a devil on one shoulder and an angel on the other shoulder. A lot of life is like that. I mean, the angel tells you, wouldn’t it be nice to be a little thinner? Wouldn’t it be nice to get up on time? The devil says, oh, let’s just sleep a little more. Let’s just have the extra cookie.

I think of these as sort of angel technologies, that they’re kind of arming up the angel in the conflict between these two.

PAUL SOLMAN: And our angel self so often loses the daily struggle between naughty and nice.

Paul Solman from the “PBS NewsHour” reporting from one pole of modern economics, Sendhil’s workshop.

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