“Hello 2019! New Year, New Me! I’m finally going to kick all the bad habits and be the best me possible!” Look familiar? I’m sure we’ve all seen and had these thoughts, chats and social media posts as we tick over another year.
Every year the start of January gives us pause to reflect on what we might like to achieve. They’re normally pretty similar resolutions - things like to drink less alcohol, exercise more, eat healthier etc. New Year’s resolutions are common, but are they rational?
Behavioural economics tells us people think about units of time differently. The start of a calendar year provides a symbolic demarcation of time that may not be rationally different from any other, but it can be useful to effectively set goals.
This reflection can help us to be more deliberate and intentional in our actions. But why do we often fail to meet these goals? Behavioural economics suggest it could be a result of what we call the ‘planning fallacy.’ ‘Planning fallacy was coined by behavioural scientists Daniel Kahneman and Amos Tversky to describe plans and forecasts that:
- Are unrealistically close to best-case scenarios.
- Could be improved by consulting the statistics of similar cases.
(Amusingly, Hofstader’s law takes this a step further and states an action takes longer than we expect, even when we take into account Hofstader’s law!).
A well-known Australian example of the planning fallacy is the cost estimates for the Sydney Opera House in the 1960s. It was originally estimated at $7 million to build. But when finished, the final cost ballooned out to $102 million. It has the dubious honour of being 1,400 per cent over budget, enormous even amongst the scale of public infrastructure projects.
Closer to home, the planning fallacy might apply when committing to run a marathon when you haven’t completed a 5km fun run before. Goal setting is best applied when used for realistic goals. But setting the goal is not enough. A major analysis of goal setting found spelling out exactly when, where and how to achieve the goal in advance had a positive effect on achievement.
This means remembering to act – so if your goal is to start running, map out a route from your house as soon as you think of it, don’t put it off. Or if you see a local fun run advertised, sign up straight away. It also means acting on opportunities, so if the weather is good, or you find yourself with a relatively free Saturday, just start. It also means overcoming initial reluctance, which comes from our uncertainty in doing things we haven’t done before.
Commitment devices are well-known in behavioural economics to improve follow-through. This is because they put in place strategies which reduce our ability to deviate from our intentions. So if your intention is to eat healthier, committing to bring your lunch every day is a good step to reduce the chance you will buy lunch. Or conversely, committing to buy healthy snacks as part of the weekly grocery shop means you aren’t at risk of eating chocolate when the temptation strikes.
Telling other people about your goal might help. Not only does it reduce the risk you will be inadvertently swayed away from your goal by others, behavioural economics tells us that people are motivated to maintain a consistent and positive self-image. We like to keep commitments to avoid reputational damage and keep our own positive self-image.
Technology helps too, with a recent proliferation of goal setting devices, from stikk.com to apps including Habitica, Swipes, Goals on Track and Life Goals all helping to set commitments and follow through.
So setting a new year’s resolution can be a good idea, but it becomes a better idea by being realistic about the goal, breaking it down your goal into stages, not putting off starting, and telling a friend. Happy New Year!
Thinking Fast and Slow. Daniel Kahneman
Hofstadter, Douglas., 2000. Godel, Escher, Bach: An Eternal Golden Braid, 20th anniversary ed., Penguin.