The Price of Your Vice: With Guests Dan Ariely & Dean Karlan

December 2, 2019
Giving in to temptation is all too easy in the moment. But raising the stakes just might bolster your resistance.

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The tendency to sell winning stocks and hold onto losers is one of the most widely documented mistakes that investors make.

The tendency to sell winning stocks and hold onto losers is one of the most widely documented mistakes that investors make.

In an episode of the television series Seinfeld, Jerry does a stand-up bit where he talks about staying up too late at night. He says, "I'm Night Guy. Night Guy wants to stay up late," to which he then replies, "What about getting up after five hours of sleep?" The answer? "That's Morning Guy's problem." This illustrates a challenge that we all face: How do you stick to positive long-term goals in the face of negative short-term temptations?

In this episode of Choiceology with Katy Milkman, we look at strategies to help keep Night Guy in check, so that Morning Guy can wake up well-rested.

The episode begins with two short tales of temptation. The first is the mythical story of Ulysses (Odysseus) avoiding the tantalizing but dangerous songs of the sirens. The second is an account of Victor Hugo's struggles to complete his novel The Hunchback of Notre Dame in the face of his own procrastination. In both stories, the protagonist employs a clever strategy to reach his goals.

For another illustration, we turn to Dean Karlan. Dean is a founder of StickK, a website and app that helps people commit to achieving goals using contracts with real stakes. The idea for StickK came about through Dean's personal struggle to lose weight. He decided to leverage what he'd learned about human behavior as an economist. He drew up a contract with a friend—someone who was also struggling with his weight—that would oblige each of them to pay the other thousands of dollars if they failed in their quest to shed pounds.

Dean Karlan is a professor of economics and finance at the Kellogg School of Management at Northwestern University. He is also the co-author of More Than Good Intentions: Improving the Ways the World's Poor Borrow, Save, Farm, Learn, and Stay Healthy.

To look at the science behind commitment strategies, Katy is joined by behavioral economist and best-selling author Dan Ariely. You'll hear how commitment devices can be used to help people overcome procrastination, save money for the future, and eat more vegetables. You'll also hear about some of Dan's favorite studies, in which these commitment devices improved post-operative outcomes for heart surgery patients and helped students better manage their workloads.

Dan Ariely is the James B. Duke Professor of Psychology and Behavioral Economics at Duke University. He is also the author of Predictably Irrational and The (Honest) Truth About Dishonesty.

Choiceology is an original podcast from Charles Schwab.

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