the fo­rum

The Weekend Australian - Review - - Contents - Deirdre Macken

NEW year res­o­lu­tions may be an ex­er­cise in hope over ex­pe­ri­ence but that’s be­cause we don’t arm our­selves with the tools to get fitter and richer — and to spend more time kick­ing goals than play­ing Candy Crush. What we need is a nudge to do the right thing: some­one to stand over us and give us a poke with an el­bow when­ever temp­ta­tion over­comes good in­ten­tions. Guardian an­gels and stern moth­ers used to pro­vide this ser­vice, but in their ab­sence we have econ­o­mists. Nudges are a big area of study to­day. Econ­o­mists have dis­cov­ered that we don’t just re­spond to fis­cal stim­uli and break­fast talks on mi­croe­co­nomic re­form, but also to gen­tle hints and sen­si­ble sug­ges­tions. Brain­wave, I know.

The Bri­tish and US gov­ern­ments now em­ploy ‘‘ nudge units’’ to en­cour­age cit­i­zens to do things that are good for them and the gov­ern­ment bud­get. Th­ese units have used rev­o­lu­tion­ary tools such as sim­ple gov­ern­ment forms, re­spect­ful re­minders and peer pres­sure to get peo­ple into work and su­per­an­nu­a­tion and away from fast-food coun­ters. Nu­mer­ous books have been writ­ten on sen­si­ble econ- omics (should we call it sen­so­nomics?), but if you look at just two of them, Nudge and Sim­pler, you can de­vise a plan for stick­ing to your 2014 res­o­lu­tions. Think of it as a mi­croe­co­nomic plan for your­self. First, keep it sim­ple. If you present a com­plex doc­u­ment to av­er­age con­sumers, they’ll toss it in the bin or sign up for a phone plan re­sem­bling a mort­gage. So for­get the clauses and con­di­tions and give it a one-line treat­ment.

Make a de­tailed plan. You have to walk your­self through your res­o­lu­tion — the time of day you are go­ing to ex­er­cise, what you’re go­ing to wear — so you have a clear idea of what your res­o­lu­tion is go­ing to feel like. It’s an eco­nomic fact that de­tailed plans in­crease the suc­cess rate 20 per cent.

Write it down: some peo­ple don’t be­lieve things un­til they’re on pa­per. They don’t even be­lieve them­selves un­less they write it down. Con­tract lawyers un­der­stand this, be­havioural econ­o­mists swear by it and way­ward boyfriends know to avoid it.

Pe­nalise your­self. If you’re tossing up be­tween re­ward­ing your­self for good be­hav­iour or pe­nal­is­ing your lapses, go with the lat­ter. Peo­ple are more loss averse than re­ward driven. Penal­ties help col­lect com­pany tax, they turned guardian an­gels into fallen an­gels and they’ll work for your body mass in­dex.

Build choice ar­chi­tec­ture. This is a fancy way of say­ing put the good choice up front, the bad choice in the garage. So if you want to ex­er­cise ev­ery morn­ing, put the Ly­cra gear where you’ll see it when you wake up; put the choco­late jar in the garage and Candy Crush on the last page of your phone screen.

Use opt-out rather than opt-in. This works for or­gan dona­tion and su­per­an­nu­a­tion sav­ings and it can work for group ex­er­cise. If you com­mit to work­ing out with friends, you’ll have to ring your mates if you want to opt out. You’re not go­ing to do that — not un­less you want to be pil­lo­ried for the rest of the week.

Build a sup­port­ive en­vi­ron­ment. This is eco­nomic-speak for choos­ing your friends well. Ev­i­dently, if you hang out with big eaters, smok­ers or drinkers, you’re much more likely to be a big eater, smoker and a lush. As it says in Sim­pler, if you want to eat less, in­vite some­one thin­ner for din­ner. Now, you may not have too many friends left by the end of the year, but you’ll be look­ing good.

Bring the fu­ture for­ward. We have trou­ble imag­in­ing our fu­ture selves: when the choco­late bar is in front of us, we see that; we don’t see the dou­ble chin the choco­late bar will cre­ate next month. So, here’s a novel way of in­cor­po­rat­ing this into your mi­croe­co­nomic plan: take a photo of your­self, get a clever kid to Pho­to­shop it so you look 10kg heav­ier and pin that to the choco­late jar.

OK, we’ve got the tool­box, it’s time to com­mit to the res­o­lu­tion. Time to turn the wis­dom that’s used for gross do­mes­tic prod­ucts and Gini co­ef­fi­cients into a plan for BMIs and liver func­tions. And don’t fret, you’re not turn­ing into a Homo econo­mus, you’re mak­ing eco­nom­ics more Homo sapi­ens.

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