Behavioural Economics for your New Year’s Resolutions
I personally haven’t shed the 5 kilograms of weight or read the 45 books that I had vowed to do so back in December 2021. And I’m not the only one. Studies show that most New Year resolutions are broken merely weeks into January. But does that stop us from setting new goals each year-end as the clock strikes 12? Absolutely not.
As Economists, we are determined- to keep striving to meet our resolutions and to make good use of those long lecture notes we took on our Behavioural Economics module last term! So here’s a snippet on how the logics in Behavioural Economics can help you actually achieve your resolutions this year.
Don’t let the jargons intimidate you, because you’ve probably been subconsciously using these techniques without even noticing. In the heart of Behavioural Economics, lies 'Nudge theory'. This simply says that you can achieve certain outcomes by ‘nudging’ yourself using positive reinforcements toward behaviours that favour it. Here’s how you do it:
Be specific, be realistic: Instead of pledging to read more this year, pledge to read 12 books for the 12 months of the year. Psychologists Daniel Kahneman and Amos Tversky concluded that we can determine the likelihood of an event by how easily we can visualize the outcome. Moreover, dreaming of playing for England in the next World Cup is not quite practical if you've never kicked a ball. Behavioural Economist George Loewenstein says that people systematically misrepresent future abilities when in “hot” states such during the elated, year-end festivities on the 31st of December. Thus a better alternative is to set your goals in the beginning of December or even January when you are in a much more stable emotional mindset.
Incentivise your gains: Economic theory suggests that incentives motivate economic agents because they encourage them to act in their own self-interest. Take the carrot and stick approach for instance. Reward yourself with a treat when you take a step to fulfil your resolution and punish yourself when you back away from it.
Third-party accountability: Don't run a ‘laissez faire’ system. By adding someone else into your goal, you incorporate both the obligation to maintain it and a support system to get you through it. Surely its easier to skip a leg day on your own rather than having your best friend drag you out of bed!
Publicise your goals: Post about your goals, bring them up in conversation, boast about them. The public embarrassment of giving up is often the best incentive to keep going.
So here's to making more new year resolutions for 2023, and hopefully using a bit of Economics in seeing them through. Happy New Year!