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The Things We Do

The things we do: The economic, social, and personal costs of optimism

Roxanne Bauer's picture

Construction worker for the Panama Canal expansion projectIt is now the second week of 2016 and many people are working (or struggling) to follow through on their New Year’s resolutions. Whether they have decided to run a marathon, travel more, or save money, many people endeavor to create positive, new habits while shedding existing habits they think are less positive.  These resolutions, though, tend to last one or two months, fading into the backgrounds of their consciousness as spring arrives. 
 
It’s a typical combination of the planning fallacy, unrealistic optimism, and a bit of self-regulatory failure.
 
And this sort of challenge is not specific to New Year’s resolutions or even to issues pertaining to individuals.  City councils frequently draw up budgets that are too lean, road construction frequently lasts much longer than expected, and advances in technology often require much more investment than planners expect. So what’s at work here?  Why is it that people have a hard time judging the amount of time, energy, and resources that a project will take?

#2 from 2015: The things we do: Nudging people to give

Roxanne Bauer's picture
Our Top Ten blog posts by readership in 2015. This post was originally posted on April 7, 2015.
 

Man delivers gas cylinders in IndiaIn an appeal to civic duty, the Government of India is asking citizens to forgo a gas subsidy they receive so that gas cylinders can be transferred to the less fortunate. To encourage Indians to "Give It Up," the government called on business leaders to set an example and made the procedure extremely easy.

India recently launched an ambitious cash transfer program to help small businesses and households buy fuel.  Under the plan, consumers of liquefied petroleum gas (LPG), commonly referred to as propane or butane, receive a cash subsidy in their bank accounts to buy gas cylinders at market price.

Once joining the scheme, the subsidy, which is equal to the difference between the current subsidized rate and the market price, is transferred to the consumer’s bank account when he/she orders a cylinder.  Another transfer is then provided at the time of delivery of the cylinder. 

Last November, the Direct Benefit Transfer Scheme for LPG was rolled out across 54 districts, with the rest of the country participating by January 1 of this year. 

The scheme was launched by India’s previous UPA government in June 2013, but it was abruptly stopped earlier this year following court orders.  It has since been modified to exclude the requirement of providing a unique identification number (Aadhaar) to avail the cash subsidy.

The idea behind the direct benefit transfer is that it can ensure that the subsidy meant for the genuine domestic customer reaches them directly and is not diverted. The Government of India hoped to save millions each year by curbing diversions and leakages in the system but also to ensure efficient delivery of subsidies to the target beneficiaries— the consumers.

#5 from 2015: The things we do: How a simple text message is the difference between success and failure

Roxanne Bauer's picture
Our Top Ten blog posts by readership in 2015. This post was  originally posted on April 21, 2015.
 

A woman and her child get the anti-malaria drugs distributed in Freetown.Mobile phones are increasingly prevalent throughout the world, and researchers have found that sending text message reminders can help people follow-through with their intentions, significantly increasing the success of development interventions.

“People need to be reminded more often than they need to be instructed.”

These are the wise words of Samuel Johnson, an English author, critic, and lexicographer. Even though he lived more than 200 years ago, international development interventions are proving him correct today. 
 
Reminders for Malaria
 
It’s widely known that failure to adhere to a full course of antibiotic treatment leads to treatment failure and encourages bacterial resistance to antibiotics, threatening the sustainability of current medications. This is extremely important for malaria, which, according to the World Health Organization, results in 198 million cases each year and around 584,000 deaths.  The burden is particularly heavy in Africa, where around 90% of malaria deaths occur, and in children under 5 years of age, who account for 78% of all deaths. Moreover, low rates of adherence to artemisinin-based combination therapy (ACT) treatments has led to a prevalence of antibiotic-resistant Malaria in many parts of the world, particularly Africa. One of the biggest and simplest  reasons why people fail to complete the full treatment for Malaria is that they forget.

#8 from 2015: The things we do: How money can buy you happiness

Roxanne Bauer's picture

Our Top Ten blog posts by readership in 2015. This post was originally posted on September 22, 2015.

People have been arguing for centuries about whether or not money can buy happiness. New research provides a fuller understanding of the relationship between what we earn and how we feel.

Cambodian farmer, Khout Sorn, stands in front of his banana trees in Aphiwat Village, CambodiaIt may seem a bit obvious: people with higher incomes are, generally speaking, happier than those who struggle. They worry less about paying their bills, they have greater choice in where they live or how they work, and they can provide creature comforts for themselves and their loved ones.  However, wealth alone is not a golden ticket. Indeed, what kind of money one has and how they spend it matters a lot more than a large income. 

The basics on happiness
When looking at all of these research results, it’s important to understand what is meant by the term ‘happiness’. Those in the field of happiness research divide it into two components, and individuals need both to be truly happy. But only one of those components keeps improving the more you earn. The other tops out after a certain point.

The things we do: How your mobile phone records can predict your creditworthiness

Roxanne Bauer's picture

Jinotega, NicaraguaRisk is a financial term that can mean life or death for a budding entrepreneur.  Many entrepreneurs need to take out loans from banks in order to have enough money to start their businesses.  Banks, though, need to be able to reliably determine which of these potential entrepreneurs will repay the loans and which will default. In developed countries this is usually accomplished through credit reports, which contain an individual’s credit history as reported to a credit bureau by lenders. This system, however, can be problematic in developing countries where many people do not have bank accounts, don’t interact frequently with formal institutions, or are paid informally in cash.  As a result, banks often lack verifiable information on the probability that a loan applicant will be successful. 

Interestingly, one set of data that is available in most countries is mobile phone records.  By the end of 2015, there will be more than 7 billion mobile cellular subscriptions, with a penetration rate of 97%, up from 738 million in 2000.  Due to the incredible market saturation of mobile phones and the ability of mobile phone operators to keep records of call activity (even with prepaid plans), operator records can provide rich information about individual behavior and social networks.  For example, phone records indicate whether or not an individual keeps their balance top-upped so that they can make calls in case of an emergency, how many people they call during the day, how long their calls last, and so on.

Daniel Björkegren, an economist at Brown University and Darrell Grissen of the Entrepreneurial Finance Lab (EFL) wondered whether these phone records could reveal insights into an individual’s behaviors that could be applied elsewhere- specifically whether this information could determine an individual’s creditworthiness.

The things we do: Why work does not depend on demand

Roxanne Bauer's picture
Bureaucracy - MagritteWhen was the last time you finished a job in less time than was allocated to it?  Have you ever moved from a smaller to a larger home and discovered that your big, new home is somehow filled with stuff after a while? How about car parks or real estate developments that start out small, enlarge, and end up just as packed as before?

It’s human nature to fill the time and space available to us. This phenomenon, known as Parkinson’s Law, states that, “Work expands so as to fill the time available for its completion.” 

Other variations of the principle includeThe more money you earn the more money you spend,” or “The bigger the available space, the more junk it can hold.”

This principle comes from the opening line of a humorous essay by Professor Cyril Northcote Parkinson published in The Economist in 1955.  

The essay explains the results of a study he conducted of the British Civil Service. The British Civil Service grew between 1914-1928, with a noticeable rise in administrative positions and a concurrent decline in ‘fighting’ positions. In 1914 there were 2,000 Admiralty officials with this number growing to 3,569 in 1928, creating “a magnificent Navy on land.” The interesting part of this shift, however, is that this growth was unrelated to any possible increase in their work.  The British Navy during that period had diminished by a third in men and two-thirds in ships. From 1922 onwards it was limited by the Washington Naval Agreement, signed among the major nations that had won World War I, which limited naval construction to prevent an arms race. Thus, the number of people employed in the bureaucracy increased even as the British Empire collapsed — an event that decreased the amount of work available.

The things we do: Self-command takes practice

Roxanne Bauer's picture

Also available in: العربية

Following prolonged conflict, it is often difficult to reestablish security and reduce crime and violence, especially among poor young men. In Liberia, development experts have been researching the most effective ways to support high-risk individuals, and they may have found an effective approach combining therapy with cash.

Cognitive Behavior Therapy and Cash Transfers on High-Risk Young Men in LiberiaOne of the most pressing concerns in post-conflict settings is how to help individuals transition back into a peaceful life. After a conflict has subsided, small arms are usually very common, local and national economies have been destroyed, and the emotional stress of the violence begins to take on new forms. Former soldiers, in particular, have trouble with the transition as they struggle with the pain and horror of what they experienced, and many do not remember how to participate in community life anymore.  In response, the international development community often tries to “enable” these men by creating jobs for them. The theory is that if people are busy working they will not have the time or the inclination to commit crime.
 
However, simply providing jobs is rarely enough. The Network for Empowerment & Progressive Initiative (NEPI), an organization operating in Monrovia, Liberia, challenges this paradigm and seeks to support men formerly engaged in the country’s two civil wars by rehabilitating them through therapy.  
 
Klubosumo Johnson Borh, the founder of NEPI, was as a Liberian teenager when he was recruited for Charles Taylor‘s infamously brutal rebel army. Borh was made a commander and oversaw soldiers who were even younger than he was. By the end of the conflict, which lasted from 1989 through 2003, nearly 10% of the population had been killed, and thousands of child soldiers were now grown men.  Many of these men had trouble shaking the violent behaviors they had learned in war so Borh helped start NEPI in an effort to reform these and other troubled men.

The things we do: Stop multitasking and start focusing

Roxanne Bauer's picture

Many believe that multitasking is the art of the productive. However, social science reveals that humans don't really multitask, but rather they rapidly switch among tasks. It's a cognitive illusion that actually results in less productivity and may harm the brain's natural abilities.

caffeinating, calculating, computeratingIn June of this year, a Chinese motorist was caught driving while undergoing intravenous therapy and talking on the phone.  A needle providing the intravenous therapy was stuck in the back of his right hand, which had been holding his phone, while he used his left hand to hold the iron pole with the intravenous fluid bag and also the car’s steering wheel.  Police in the city of Wenzhou in southeastern Zhejiang province, China were on patrol on June 20 when they saw the motorist driving at 80km/h.

The driver told police he was rushing to carry out some urgent matters so had left a health clinic before his infusion was complete. He claimed that it was not dangerous for him to be driving at the time because he was good at multitasking. The police didn’t buy his multitasking defense and fined the driver 150 yuan and deducted four points from his driving license for dangerous driving and using a mobile phone while driving.

In a famous study of drivers chatting on mobile phones, David Strayer and Frank Drews found that diving while using a mobile phone is as dangerous as driving while drunk.

The problems of multitasking don’t end with driving.  Harvard Medical School knows first-hand that multitasking increases the number of mistakes people make— a resident doctor nearly killed a patient after a text message distracted her from updating a prescription. 

These and other examples point to an undeniable truth: multitasking can be dangerous at its worst and inefficient at its best. Even simple can produce a kind of ‘attention interference’ when performed simultaneously.

The things we do: How money can buy you happiness

Roxanne Bauer's picture

People have been arguing for centuries about whether or not money can buy happiness. New research provides a fuller understanding of the relationship between what we earn and how we feel.

ambodian farmer, Khout Sorn, stands in front of his banana trees in Aphiwat Village, CambodiaIt may seem a bit obvious: people with higher incomes are, generally speaking, happier than those who struggle. They worry less about paying their bills, they have greater choice in where they live or how they work, and they can provide creature comforts for themselves and their loved ones.  However, wealth alone is not a golden ticket. Indeed, what kind of money one has and how they spend it matters a lot more than a large income. 

The basics on happiness
When looking at all of these research results, it’s important to understand what is meant by the term ‘happiness’. Those in the field of happiness research divide it into two components, and individuals need both to be truly happy. But only one of those components keeps improving the more you earn. The other tops out after a certain point.

The things we do: The logic behind instant gratification

Roxanne Bauer's picture

Learning to give preference to long-term goals over more immediate ones is known as deferred gratification or patience and considered a virtue in many cultures.  However, there is logic behind asking for rewards immediately, and those who live in poverty know this all too well.

A woman tries to decideThe comedian Jerry Seinfeld, once joked “I never get enough sleep. I stay up late at night because I’m ‘night guy’. ‘Night guy’ wants to stay up late. ‘What about getting up after five hours of sleep?’ ‘Oh, that’s morning guy’s problem. That’s not my problem—I’m night guy! I stay up as late as I want.’

Such decisions are described by the theory of intertemporal choice, the idea that decisions have consequences that come at different points in time. People weigh the relative trade-offs of getting what they want in the immediate future with the trouble associated with waiting but potentially getting something better.

We all face these kinds of decisions in our day-to-day lives, from deciding to work now or later or save or spend money, to whether or not we should stay up late to enjoy the night or go to bed early to feel better the next day. In each of these cases, a decision maker needs to assess the utility (or value) of one outcome that is will occur sooner with another one that is more distant in the future. 
 

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