A classic example of how alternative framing can change the emotional impact of a number is an advertisement that appeared on the London Underground in 2011, proclaiming that ‘99% of young Londoners do not commit serious youth violence’. These ads were presumably intended to reassure passengers about their city, but we could reverse its emotional impact with two simple changes. First, the statement means that 1% of Londoners do commit serious violence. Second, since the population of London is around 9 million, there are around 1 million people aged between 15 and 25, and if we consider these as ‘young’, this means there are 1% of 1 million or a total of 10,000 seriously violent young people in the city. This does not sound at all reassuring. Note the two tricks used to manipulate the impact of this statistic: convert from a positive to a negative frame, and then turn a percentage into actual numbers of people.
Then someone had a brilliant idea: proof always works better than a claim.
Don’t tell people, show them.
William ‘Bumper’ Harris was an employee who’d lost a leg in an accident.
He was told to come to Earl’s Court station and ride up and down the escalator.
Just that, ride up and down, nothing else.
People at the bottom would see a one-legged man with crutches nonchalantly hop onto the escalator and ride it to the top.
Then he’d turn around, and people at the top would see a one-legged man with crutches nonchalantly hop onto the other escalator and ride it to the bottom.
‘Bumper’ Harris just did that all day.
When frightened passengers saw him do it they were reassured an ashamed.
Reassured that if a one-legged man could do it anyone could.
And ashamed that they were ever frightened in the first place.
After a day of ‘Bumper’ riding up and down, everyone was using the escalator as if it was the most normal thing.
And once that happened, the problem disappeared.
Escalators became as accepted as the have been ever since.
The lesson was, it’s better to show people than to tell people.
Gilbert and colleagues measured the preferences, values, and personalities of more than nineteen thousand adults ages eighteen to sixty-eight. Some were asked to predict how much they would change over the next decade, others to reflect about how much they had changed in the previous one. Predictors expected that they would change very little in the next decade, while reflectors reported having changed a lot in the previous one. Qualities that feel immutable changes immensely. Core values — pleasure, security, success, and honesty — transformed. Preferences for vacations, music, hobbies, and even friend were transfigured. Hilariously, predictors were willing to pay an average of $129 a ticket for a show ten years away by their current favorite band, while reflectors would only pay $80 to see a show today by their favorite band from ten years ago.
An experiment by Michael Deppe and his colleagues from the University of Munster, quantified the importance of media context. In 2005, the neurologists showed 21 consumers 30 new headlines. The respondents rated the believability of the headlines on a seven-point scale, with one being the most credible and seven the least.
The headlines appeared to come from one of four news magazines. Each headline was randomly rotated between the magazines so that each viewer saw the headlines in the context of every magazine. This allowed the researchers to address the effects of the context on the credibility of the headlines.
The scores were significantly influenced by the magazine. Headlines in the most respected magazine scored on average 1.9, compared to 5.5 in the least regarded magazine.
Information is not process neutrally. We are swayed by contextual cues.
A group of Canadian psychologists led by Tara MacDonald recently went into a series of bars and asked the patrons to read a short vignette. They were to imagine that they had met an attractive person at a bar, walked him or her home, and ended up in bed — only to discover that neither of them had a condom. The subjects were then asked to respond on a scale of 1 (very unlikely) to 9 (very likely) to the proposition: “If I were in this situation, I would have sex.” You’d think that the subjects who had been drinking heavily would be more likely to say they would have sex — and that’s exactly what happened. The drunk people came in at 5.36, on average, on the 9-point scale. The sober people came in at 3.91. The drinkers couldn’t sort through the long-term consequences of unprotected sex. But then MacDonald went back to the bars and stamped the hands of some of the patrons with the phrase “AIDs kills.” Drinkers with the hand stamp were slightly less likely than the sober people to want to have sex in that situation: they couldn’t sort through the rationalization necessary to set aside the risk of AIDS. Where the norms and standards are clear and obvious, the drinker can become more rule-bound that his sober counterpart.
Why do guests do this? In 2011, Francesca Gino from Harvard and Frank Flynn from Stanford conducted an experiment to find out. They recruited ninety people and then allocated them to one of two conditions. Half became ‘senders’ while the other half became ‘receivers’. The receivers were then asked to go to Amazon and come up with a wish list of gifts priced between $10 and $30. Meanwhile, the senders were allocated to either choose a gift from the wish list, or a unique gift.
The result were emphatic. The senders expected that recipients would prefer unique gifts – ones they had chosen themselves. They supposed that recipients would welcome the personal touch. But they were wrong. Recipients would welcome the personal touch. But they were wrong. Recipients, in fact, much preferred gifts from their own list. The psychologist Adam Grant reports the same pattern with friends giving and receiving wedding gifts. Senders prefer unique gifts; recipients prefer gifts from their wedding list.
Why? It hinges upon perspective blindness. Senders find it difficult to step beyond their own frame of reference. They imagine how thy would feel receiving the gift that they have selected.
How you say something may well be more important than what you say.
But you have to have something to say in the first place.
If you have nothing to say that will soon be apparent.
No one will be fooled.
Think of it as an oyster.
You start with a piece of grit, and build a pearl around it.
People buy the pearl, they don’t buy the grit.
But no grit, no pearl.
The students were unanimous. And full of bravado. Of course they would honk. And they certainly wouldn’t make any distinction between the two cars. Some claimed they would honk sooner at the high-status car. But what actually happened on the roads that subsequent sunny Sunday morning told a different story. Whilst overall close to 70 percent of waiting drivers sounded their horns in frustration, the distribution of results was unevenly split between the two cars. Fewer than 50 percent honked at the high-status car; 84 percent hooted at the lower-status car. Not only was a Californian driver’s likelihood to honk influence by the status of the car that was delaying them, but their latency to honk was influenced, too. When behind a low-status car, people would sound the horn much sooner than when behind a high-status one. Very often, more than once.
Michael Michalko, a former US army officer who has become a leader in creativity, advocates ‘assumption reversal’. You take the core notions in any subject or proposal, and simply turn them on their head. So, suppose you are thinking of starting a restaurant. The first assumption might be: ‘restaurants have menus’. The reversal would be: ‘restaurants have no menus’. This provokes the idea of a chef informing each customer what he bought that day at market, allowing them to select a customised dish. The point is not that this will necessarily turn out to be a workable scheme, but that by disrupting conventional thought patterns, it might lead to new associations and ideas.
Or, to take a different example, suppose you are considering starting a new taxi company. The first assumption might be: ‘taxi companies own cars’. The reversal would be: ‘taxi companies own no cars’. Twenty years ago, that might have sounded cray. Today, the largest taxi company that has ever existed doesn’t own cars: Uber.
John Cleese, the British comedian, put it this way: ‘Everybody has theories. The dangerous people who are not aware of their own theories. That is, the theories on which they operate are largely unconscious.’
Sometimes (often actually) in business, you do know where you’re going, and when you do, you can be efficient. Put in place a plan and execute. In contrast, wandering in business is not efficient… but it’s also not random. It’s guided – by hunch, gut, intuition, curiosity … it’s worth being a little messy and tangential to find out way there. Wandering is an essential counterbalance to efficiency .. The outsized discoveries – the ‘non-linear’ ones – are highly likely to require wandering.
A clever study by the Rotterdam School of Management analysed more than three hundred real-world projects dating back to 1972 and found that projects led by junior managers were more likely to succeed than those with a senior person in charge. On the face of it, this seems astonishing. How could a team perform better when deprived of the presence of one of its most knowledgeable members?
The reason is that this leadership comes at a sociological price when linked to a dominance dynamic. The knowledge squandered by the group when a senior manager is taken out of the project is more than compensated for by the additional knowledge expressed by the team in his absence.
I’ve been to several scientific conferences at which Professor Kahneman has spoken; and, when Daniel Kahneman talks, people listen. I am invariably among them. So I took special notice of his answer to a fascinating challenge to put to him not long ago by an online discussion site. He was asked to specify the one scientific concept that, if appreciated properly, would most improve everyone’s understanding of the world. Although in response he provided a full five-hundred-word essay describing what he called “the focusing illusion,” his answer is neatly summarized in the essay’s title: “Nothing in life is as important as you think it is while you are thinking about it.”
Today, information technology is changing the world making it more idea intensive, better connected, and ultimately more urban. Improvements in information technology seem to have increased, rather than reduced, the value of face-to-face connections, which might be called Jevons’s Complementarity Corollary. The nineteenth-century English economist William Stanley Jevons noted that more fuel-efficient steam engines didn’t lead to less coal consumption. Better engines made energy use effectively less expansive, and helped move the world to an industrial era powered by coal. The term Jevons’s paradox had come to refer to any situation in which efficiency improvements lead to more, not less consumption — one reason why low-calorie cookies can lead to larger waistlines and fuel-efficient cars can end up consuming more gas. Jevons’s paradox applied to information technology means that as we acquire more efficient means of transmitting information, like e-mail or Skype, we spend more, not less, time transmitting information.
Excerpt from: Triumph of the City by Edward Glaeser
At a school in the USA, the girls in their early teens had just discovered lipstick.
They would go into the female toilets to apply it.
Then, giggling, they’d leave imprints of their lips on the large mirror.
This made a lot of extra work for the cleaning staff.
The head teacher asked the girls to stop.
Of course, they ignored her.
So she took the girls to the toilets for a demonstration.
She said, ‘It takes a lot of work to clean the lipstick off the mirror.’
She said to the janitor, ‘Please show the girls how much work it takes.’
The janitor put the mop in the toilet, squeezed off the excess water and washed the mirror.
Then put the mop in the toilet again, and repeated the process. From that day on there was no more lipstick on the mirror.
That’s choice architecture.
My favorite example of the power of specificity was Apple’s introduction of the iPod. They didn’t give it the vanilla, global “World Class MP3 Player” treatment. They said “1,000 Songs In Your Pocket.” They were specific. They talked about the virtues of the product, not wooly melodramatic horseshit.
My direction to the creative teams who worked for me was always the same – be specific. Today the objective is to ignore the specific and “ladder up” the benefit.
Guinness and AMV publicised the slowness of the pour with “Good things come to those who wait”. The National Dairy Council alluded to the high calorific content of cream cakes with “Naughty, but Nice”. (Incidentally, that strapline was coined by Salman Rushdie while working at Ogilvy & Mather.)
Admitting weakness is a tangible demonstration of honesty and, therefore, makes other claims more believable. Further to that, the best straplines harness the trade-off effect. We know from bitter experience that we don’t get anything for free in life. By admitting a weakness, a brand credibly establishes a related positive attribute.
Guinness may take longer to pour but boy, it’s worth it. Avis might not have the most sales but it’s desperate to keep you happy.
What Palchinsky realised was that most real-world problems are more complex than we think. They have a human dimension, a local dimension, and are likely to change as circumstances change. His method for dealing with this could be summarised as three ‘Palchinsky principles’: first, seek out new ideas an try new things; second, when trying something new, do it on a scale where failure is survivable; third, seek out feedback and learn from your mistakes as you go along. The first principle could simply be expressed as ‘variation’; the third as ‘selection’.
Yet there are, when you think about it, two different approaches to business. The is the ‘tourist restaurant’ approach, where you try to make as much money from people on their single visit. And then there is the ‘local pub’ approach, where you may make less money from people on each visit, but where you profit more over time by encouraging people to come back. The second type of business is much more likely to generate trust and yield positive-sum outcomes than the firsy.
How might people distinguish the second type of business from the first? Well, the scoop of extra fried you get at Five Guys is one such gesture – an immediate expense with a deferred pay-off. It is a reliable signifier that you are investing in a repeat relationship, not milking a single transaction. Likewise, when your company pays your salary this month, it says you are worth this money for now; when it sends you to Kitzbuhel, it signals that it is committed to you for a few years at least.
Lung cancer proved to be a handy example. Lung cancer doctors and patients in early 1980s faced two unequally unpleasant options: surgery or radiation. Surgery was more likely to extend your life, but, unlike radiation, it came with the small risk of instant death. When you told people that they had a 90 percent chance of surviving surgery, 82 percent of patients opted for surgery. But when you told them that they had a 10 percent chance of dying from the surgery — which was of course just a different way of putting the same odds — only 54 percent chose the surgery. People facing a life-and-death decision responded not to the odds but to the way the odds were described to them.
All too often, we find ourselves unable to predict what will happen; yet after the fact we explain what did happen with a great deal of confidence. This “ability” to explain that which we cannot predict, even in the absence of any additional information, represents an important, though subtle, flaw in our reasoning. It leads us to believe that there is a less uncertain world than there actually is, and that we are less bright than we actually might be. For if we can explain tomorrow what we cannot predict today, without any added information except the knowledge of the actual outcome, then this outcome must have been determined in advance and we should have been able to predict it. The fact we couldn’t is taken as an indication of out limited intelligence rather than of the uncertainty that is in the the world.
The biggest thing to remember is that numbers that end in 0 inevitably feel like temporary placeholders, guesstimates that you can easily be negotiated off of. But anything you throw out that sounds less rounded — say, $37,263 — feels like a figure that you came to as a result of thoughtful calculation. Such numbers feel serious and permanent to your counterpart, so use them to fortify your offers.
1. Set your target price (your goal).
2. Set your first offer at 65 percent of your target price.
3. Calculate three raises of decreasing increments (to 85, 95, and 100 percent).
4. Use lots of empathy and different ways of saying “No” to get the other side to counter before you increase your offer.
5. When calculating the final amount, use precise, non-round number like, say, $37,893 rather than $38,000. It gives the number credibility and weight.
6. On you final number, throw in a non-monetary item (that they probably don’t want) to show you’re at your limit.
Behavioural economics is an odd term. As Warren Buffett’s business partner Charlie Munger once said, ‘If economics isn’t behavioural, I don’t know what the hell is.’ It’s true: in a more sensible world, economics would be a sub-discipline of psychology. Adam Smith was as much a behavioural economist as an economist – The Wealth of Nations (1776) doesn’t contain a single equation. But, strange though it may seem, the study of economics has long been detached from how people behave in the real world, preferring to concern itself with a parallel universe in which people behave as economists think they should.
In general people prefer something freely chosen to the same thing forced upon them. The effect is dramatically revealed in a study that did not directly involve reward or punishment. Lottery tickets costing $1 each were sold to the employees of two companies. Some of the employees were allowed to choose the number of their tickets, others had no choice but were merely handed a ticket. Just before the draw, the experimenter approached each subject offering to buy the ticket back. The subjects who had no choice were prepared to sell back for $1.96 on average, but those who had selected their own tickets held out for an average of $8.67. There could be no better demonstration that we irrationally overvalue what we freely choose.
Excerpt from: Irrationality: The enemy within by Stuart Sutherland
One of those desirable difficulties is known as the “generational effect.” Struggling to generate an answer on your own, even a wrong one, enhances subsequent learning. Socrates was apparently on to something when he forces pupils to generate answers rather than bestowing them. It requires the learner to intentionally sacrifice current performance for future benefit.
Kornell and psychologist Janet Metcalfe tested sixth graders in the South Bronx on vocabulary learning, and varied how they studied in order to explore the generation effect. Students were given some of the words and definitions together. For example, To discuss something in order to come to an agreement: Negotiate. For others, they were shown the only definition and given a little time to think of the right word, even if they had no clue, before it was revealed. When they were tested later, students did way better on the definition-first words. The experiment was repeated on students at Columbia University, with more obscure words (Characterized by haughty scorn: Supercilious). The results were the same. Being forced to generate answers improves subsequent learning even if the generated answer is wrong. It can even help to be wildly wrong. Metcalfe and colleagues have repeatedly demonstrated a “hypercorrection effect.” The more confident a learner is of their wrong answer, the better the information sticks when they subsequently learn the right answer. Tolerating big mistake can create the biggest learning opportunities.
The average expert was a horrific forecaster. Their areas of specialty, years of experience, academic degrees, and even (for some) access to classified information made no difference. They were bad at short-term forecasting, bad at long-term forecasting, and bad at forecasting in every domain. When experts declared that some future event was impossible or nearly impossible, it nonetheless occurred 15 percent of the time. When they declared a sure thing, it failed to transpire more than one-quarter of the time. The Danish proverb that warns “It is difficult to make predictions, especially about the future,” was right. Dilettantes who were pitted against the experts were no more clairvoyant, but at least they were less likely to call future events either impossible or sure things, leaving them with fewer laugh-out-loud errors to atone for — if, that was, the experts had believed in atonement.
In separate work, from 2000 to 2010 German psychologist Gerd Gigerenzer compiled annual dollar-euro exchange rate predictions made by twenty-two of the most prestigious international banks — Barclays, Citigroup, JPMorgan Chase, Bank of America Merrill Lynch, and others. Each year, every bank predicted the end-of-year exchange rate. Gigerenzer’s simple conclusion about those projections, from some of the worlds most prominent specialists: “Forecasts of dollar-euro exchange rates are worthless.” In six of the ten years, the true exchange rate fell outside the entire range of all twenty-two bank forecasts.
A second, ironic, problem is that companies fear that if they produce a truly vital technology, governments will lean on them to relinquish their patent rights or slash prices. This was the fate of Bayer, the manufacturer of the anthrax treatment Cipro, when an unknown terrorist began mailing anthrax spores in late 2001, killing five people. Four years later, as anxiety grew about an epidemic of bird flu in humans, the owner of the patent on Tamiflu, Roche, agreed to license production of the drug after very similar pressure from governments across the world. It is quite obvious why governments have scant respect for patients in true emergencies. Still, if everybody knows that governments will ignore patents when innovations are most vital, it is not clear why anyone expects the patent system to encourage vital innovations.
An experiment on Stanford international relations students during the Cold War provided a cautionary tale about relying on kind-world reasoning — that is, drawing only from the first analogy that feels familiar. The students were told that a small, fictional democratic country was under threat from a totalitarian neighbor, and they had to decide how the United States should respond. Some students were given descriptions that likened the situation to World War II (refugees in boxcars; a president “from New York:, the same state as FDR”; a meeting in “Winston Churchill Hall”). For others, it was likened to Vietnam, (a president “from Texas. the same as LBJ,” and refugees in boats). The international relations students who were reminded of World War II were far more likely to choose to go to war; the students reminded of Vietnam opted for nonmilitary diplomacy. That phenomenon has been documented all over the place. College football coaches rated the same player’s potential very differently depending on what former player was likened to an introductory description, even with all other information kept exactly the same.