Easy money

Q: How do you get people to pay more?

A: Don’t make them pay.

People and rivers both follow the path of least resistance. What is easy? That’s what people do.

But not junk food, binge-watching, and immediate gratification easy. It’s easy subject to our last choice. Switching jobs isn’t easy, but it is easy to show up at one. Ease has two challenges: the initial change and each small choice.

Jobs To Be Done addresses the first challenge. People change when the discomfort of the present and appeal of the new is greater than the anxieties of switching and habits of the present. JTBD interviews is the focus on the moment things flip. Free hotel breakfasts and donation alchemy are examples.

But I think it’s very interesting when you just think about what can be expensed on a corporate card and how that differs in terms of the pricing power that a business might have. And to me, if you can find a customer that’s going to be able to use their corporate card and you can give them a reason to use their corporate card, they are going to be much less likely to churn, willing to pay for more expenses because it’s always easier to use other people’s money than it is to use your money.

I think much of Manhattan between restaurants and sports teams is propped up on the corporate card dynamic there and a little different demand curve in terms of how that looks from a pricing perspective. So that is certainly the case here and what you have going on, and they’ve used it to their advantage historically.

Matt Reustle, Business Breakdowns

An HBR article’s contents aren’t clear, Matt remarked, there are no stars or reviews. It’s just the title and date. That’s the fear of the new – is this going to be good? But it’s Harvard, and the person buying isn’t the person paying. That’s great! That’s easy!

The challenge of ongoing action, is solved by design, crafting the path of least resistance. Want more vaccines? Schedule their application at each checkup. Want to eat less? Make it hard, or easy!, to count calories Want people to buy your Peloton? Don’t make them pay – let their future selves.

Organizations have many levers to pull to create behavioral change. Which ones are best depends on the context. For Harvard Business Review it’s branding and differentiating between the consumer and the customer.

Winning’s Structure

Good advice is hard. Our This Time is Different series is built around asking: Are these the correct lessons?

Part of the uncertainty is the truth and fit between the big idea and the story. Start with No is an example. The big idea is our ego, the story is sales, and the fit is that good salespeople have the right ego. Do people have egos? Are people in sales? Does the right ego for sales still matter? Yes – so the book is good advice. 

Wanting by Luke Burgis is an example too. The big idea is network types. The story is about mimetics. The fit is that we are mimetic because of our network structure. That checks out too (though I had my doubts about the effect size). 

Winning by Tim Grover follows this pattern. The big idea is intentionality told through the story of competition. Winning like Jordan or Kobe requires intentional actions. That checks out too. An opposite story but the same big idea is Early Retirement Extreme. The big idea is still intentionality but the story is financial philosophy. 

Grover focuses on intentionality in two ways: wants and outsider status.

For Grover, wants like winning are preceded by actions. Kobe and Jordan wanted to win so they had to take actions that lead to that.  “If you don’t get on the same level,” Michael Jordan told one teammate, “It’s going to be hell for you.” Jordan was one of the first players to switch from carb heavy meals to eating steak before games. Before Jordan, few players trained during and before the season. For Kobe the actions were learning Slovenian to trash talk Luca Donic. In 2008, preparing for the Olympic Games, Kobe was going to the gym when the rest of the team came back from a party at five in the morning. 

Intentional living requires wants which require actions.

Grover’s second point is how it feels to be an outsider. Howard Marks popularized the idea that outperformance means being different and being right. Easy to say, hard to do. 

Investors, like Marks, can be different and right with good stakeholders. If limited partners don’t ‘get it’ the business plan can’t work. Investors then look for LPs who will ‘stick with’ a plan. It’s easier to be an outsider when surrounded by a (small) group of insiders. 

Grover’s clients are in the entertainment business so the ‘get it’ is social. Why succeed unconventionally when you can fail traditionally? 

There are ways to deal with outsider status. Have a plan and stick with it rather than stick your finger in the wind. “No,” Grover writes, “is a complete sentence.” Build up the don’t give a fuck muscle too. Some think it’s weird? Who cares! 

Successful outsiders design easier paths. We are wired to not stand out. Kobe Bryant had the most ingenious form and LARPed as the Black Mamba. Winning wasn’t a great book. I hoped for more insider stories. But the big idea was a good reminder.

Designer grocers

Like what is this place optimized for, places are designed to increase or reduce action frictions. Grocery stores for the end consumer are designed for comfort – stores for middlemen are designed for speed.

The end consumer grocery store has wide aisle to avoid the butt brush effect, produce in the front (colors have a relaxing effect), and pasta near the sauce because customers look for complimentary items. Fish and coffee are separate because of the smells. Stuff for kids is on lower stuff. The blueprint for a traditional grocery store is called a planogram.

For a dark grocery store the layout is different. The aisles are smaller. The seltzer is separated. Spaghetti and linguini are parted too. Salt and pepper also. In dark stores the design goal is speed which means reducing confusion. Also, shot glasses, bags, foil, garbage bags, batteries, and foil pans are next to each other because those items are ordered for parties.

Nothing new here, just a reminder that design guides behavior. It can be how we count calories or answer financial questions or avoid drinks or break fasts or track travel. We need reminders because we are all designers.

Design = Action

“We have scores about how much willpower some people have,” says Wendy Wood author of Good Habits Bad Habits, “and some people score really high on those scales. Those people are not denying themselves things, but instead they form habits that meet their goals. For example, my students study in the library or a place in their dorm and when they are there they put their phone away. There’s no distractions. They just work.”

There’s a lot in there!

Willpower might be a bad metric. Often we count, compute, and consider the things which are easy to count, compute and consider. But easy may not be the best way to judge a metric. Calories are easy to count, but how often does calorie counting lead to weight loss? So maybe ‘willpower’ – quantified or not – is the wrong thing to look at as well.

Instead Wood suggests habits which are helped by ease and ease is designed. Wood notes that her students go to a place that is designed for reduced distraction. They also take the advice of James Clear and put their phone just out of reach.

Design is part of writing Cal Newport told Tim Ferriss. We know this, Neil Gaiman’s writing cottage has been featured here, twice! What’s nice about it, Gaiman said, is that it’s just out of WiFi range. A separate place has been an ongoing study on Cal Newport’s blog.

Okay. We get it. But, here’s the twist. The design of “quiet space free from distraction” is only best for certain outcomes.

The starkest 2022 contrast is Twitter. Investing Twitter, for instance, is full of smart people trading ideas, giving commentary, and sharing thoughts. If the desired action is to be a better thinker in the markets the design must include Twitter. It just won’t work to sequester oneself just out of Wifi range. Even Charlie Munger joked about his kids thinking of him as a book with legs: but the book now is the timeline. Similar if the goal is public policy the design must include advocation. If the goal is sales the design must include talking to customers (and finding the JTBD).

The heart of design is intentionality. Here’s to all of us being a bit more intentional today.

‘WiFi’ BTW is just branding. Here is Wood’s full interview.

Flat earth beliefs

It is surprising there are not more anti-science beliefs.
1. Science isn’t static, there’s not much canon.
2. Science is mostly not a putting-a-man-on-the-moon problem.
3. Science communication persuasion is difficult, especially relative to cultures, norms, and habits.
4. Science belief doesn’t follow formal logic, it is contextual. There are plenty of people who don’t trust a medical engineering but trust engineered medicine, or vice versa.

One way to think about all the non-science beliefs is as three states of the world: -1, 0, and 1. Put another way: anti-science, ignorant, pro-science.

Sometimes science denial is an information problem. If people only knew…. But that’s not quite it. Yes, sometimes scientific knowledge is zero, ‘they just don’t know the facts’.

“The other thing I think is wrong about how the media portrays it (science denial) is as misinformation. Science denial is about disinformation. Someone has intentionally created the theory that rebreathing into a mask will give you CO2 poisoning. Someone has made that up and filtered it out through the internet where it hits someone’s cognitive bias and they start to believe it.” – Lee McIntyre, Behavioral Grooves, November 2021

Most of life is not a ‘they just know the facts’ situation. C’mon, how many things do you dear reader not hold an opinion on. More often, it’s not non-consumption, but belief in something else. Weight Watchers and financial education are also examples of this state. Plus, our views on science and medicine, finances, and diet-health-lifestyle all have a strong identity component. If someone said, “Look, I hear what you are saying but I don’t trust the experts and this online community are my people,” you would have no idea if they were a Boglehead, a CrossFit participant, or anit-vax father of two.

The case at hand is like an errant Sudoku puzzle, there’s something else in that spot and it’s attached to a person’s identity.

Around here we try to skip the ‘they just don’t know the facts’ stage and go right to designing change. Personal finance is about shifting what we buy, often time rather than stuff. Heath is about shifting what we eat and what we do, replacing one thing with a healthier option. Anti-science persuasion then must replace the anti-science beliefs with something else. The trick here, says McIntyre is to plant a seed. Rather than ‘the facts’, be empathetic and offer suggestions. Reframe your aim from conversion to combustion, be the spark but let them do the work.

It is wild how many things we do become part of our identity.

Update February 15, 2022. Even ‘hard’ sciences are hard. Only forty percent of cancer biology studies replicated and eighty percent of pharmaceutical studies in academic labs cannot be replicated in industrial ones. Also, plastic recycling has (always?) been a sham: NPR Planet Money.

Going bananas for WW

If this blog has a core, at the moment, it’s about decision making. One way to change decision making is to change the initial conditions. One way to do that is to dial ease up or down.

Losing weight is about introducing new habits and breaking old habits. WW, formerly Weight Watchers, uses ease a lot. Make the good things relatively easy and make the less good things relatively difficult. For example, part of what makes keeping a food journal a successful dietary change is that it introduces a friction, writing down the food forces our focus: do I really want to eat this? There’s no noting bananas though.

“To introduce new habits you want to pick foods you can eat on autopilot. If you’re with WW there are zero point foods that you don’t need to pay attention to. Bananas are pretty healthy and you’re probably not going to overeat bananas.” – Julie O’Brien, The Science of Change, November 2021

The episode is full of behavioral hacks, for instance having slack in the system for an occasional treat (or lapse). Another is the idea of rules of thumb. WW has points, intermittent fasting has times, Whole30 has no carbs. Each also restricts booze.

As a teen I worked retail with a woman who did the points system. She ate popcorn all the time. I didn’t get it. Popcorn has calories. But it worked for her.

As a teen I thought the world was more black and white. Now I get there’s more shades of grey. Now I appreciate the aspects of designing ease.

Here’s a few more posts about the different ways ease works.

“I’m your financial advisor”

In the early 2010s I listened to Dave Ramsey nearly every day. The Nashville based personal finance (personal accountability) radio host is still on the air, holding court. There’s a few things that make Ramsey popular.

First, he’s great on the radio. The content fits the medium, and Ramsey’s basic explanations, stories, and approaches combined with the delivery works.

Second, he gives good advice rather than perfect advice. There’s a difference between precision and accuracy, usually between the world of a model and the real world. It’s why Ramsey suggests beginning with the debt snowball:

“Start by listing all of your debts except for your mortgage. Put them in order by balance from smallest to largest—regardless of interest rate. Pay minimum payments on everything but the little one. Attack that one with a vengeance. Once it’s gone, take that payment and put it toward the second-smallest debt, making minimum payments on the rest.” – Dave Ramsey (link)

A great behavioral angle. We like feelings of progress and by focusing on the smallest balance we get that, especially given the financial conditions we may be in.

A third thing Ramsey does well is filling an answer gap. One time a woman called into his show and asked a question. He answered. She protested that her friends and family wouldn’t understand. He suggested telling them her financial advisor advised it. I don’t have a financial advisor she said. “I’m your financial advisor!!”, Ramsey retorted.

In another instance he told someone it didn’t matter how much their income was, the purchase wasn’t “in the budget”. Could they afford it? Yep. But framing it against the contrived ‘budget’ change the conversation. (I’ve used this one, it works.)

Both “I’m your financial advisor” and “it’s not in the budget” fill in an answer gap. Having ready answers can change our fast thinking. It works for drinking too much, a diet, or any kind of behavior we’re trying to stick with.

The ready answers can be pretty arbitrary too. If you offered “meatless Monday” would anyone actually comment? I’d wager not. So it’s not the validity of an explanation but merely the existence of one.

Some people don’t like Ramsey’s advice but I’m reminded of the Tyler Cowen expression: opposed to what? If not this then what?

Customer Acquisition Cost Communication (CACC)

One way to change the CAC is to change the communication. When an organization communicates well it clearly frames the exchange which helps people ‘get it’.

It happens in politics. It happens in emergencies. It happens in sports and in investing too. When asked why he didn’t bring part of his business to a new venture, Bill Miller replied, “We are only interested in having clients that understand you’re going to get volatility. We try to monetize the volatility.“

The simplest form of this is the dating advice: be yourself.

Who is the message for and how would they like to hear it? At Duolingo the how is short.

“Any page on Duolingo has the minimum amount of text, the minimum amount of instructions and an intuitive simple interface. That’s in contrast to how language is traditionally learned, which is in a textbook, which usually begins with a conjugation table. What works better is to let the user jump into the exercise, get some hints, answer questions, and then we unlock new concepts.” – Cem Kansu, The Science of Change, October 2021

In sports the idea was unlocked with images (like heat maps). In investing the idea was unlocked with shareholder letters. It’s the same thing over and over – it’s just finding a fit. Kansu said they’ve run hundreds of experiments, on probably every part of their service. Part of those are how to find a good way to communicate well.

My own version of this is the sixty-two ideas drip. Like this post, it’s a short daily email about an idea. Communicating well is one. It’s five bucks.

Where are the notifications?

One difference between the human brain and the laptop computer is that location matters. A human thinks differently, a computer compiles the same. This makes alchemy possible.

This also makes academia tough.

In behavioral science information presentation is everything. Order your tickets in the next 14:59. Put another way, what we see is all there is. Researchers will find that calorie labels work (!!), conditionally.

To humans, conditions matter. This, is a creativity canvas.

For instance, payment medium matters. People tend to spend differently because the feedback, the salience of paying with a twenty dollar bill is much higher than with a credit card.

“Certain payment systems leave a weaker trace in your memory. When I’m facing a purchase I ask, ‘How much have I spent in the recent past on things like this?’ If the answer is a lot then I’m less likely to make a new purchase, and if I’m paying by credit card I don’t remember those past purchases.” – Dilip Soman, The Decision Corner, October 2021

So, Soman created an app where people could spend and see feedback on their recent purchases. They spent less! Success!! But in 2010 South Korea created a text-message-for-purchases-alert-system and they found the opposite. “On an average,” Soman said, “people who opted in to receive the notifications spent more instead of less.”

The mechanism seems to be that text message information registers in a different way. “When we interviewed people they would say things like, ‘Oh if I ever needed a record I know my phone has it.’ Instead of being more vigilant they outsources that to the phone.”

The replication crisis in behavioral sciences makes me more hopeful about the tool’s potential. Human beings are goofy. Being one place and not another doesn’t matter how hungry I am, but you wouldn’t know by our actions.

Bottom line: the easiest behavioral tool is dialing friction up or down. Thanks for reading and supporting.

Two health designs

We highlight design because humans are conditional creatures. Certain circumstances make certain actions more or less likely. Living near a huge retirement community in Florida shows this contrast clearly. The involvement in new sports like pickleball, water volleyball, and sand tennis exemplify the design principle: If you build it, they will come.

In talking about his book,Drink?, David Nutt notes how much alcohol is a cultural act. Per Nutt, alcohol’s health impacts are terrible, the societal costs are large, and meaningful outcome changes wouldn’t require that much tweaking to the current system. But we don’t change.

Culture is design too. So to not drink a person needs to counter culture.

“In my book I suggest if people say to you, ‘Why aren’t you drinking?’ quite a good repost is to say, ‘Because I’ve got quite a busy day tomorrow.'” – David Nutt, London Real, February 2020

That’s good communication, it’s in the listener’s language.

The second design is around fasting, an area design helps.

“Right around the five hour mark of a fast you’ll probably get hungry (this being our ‘normal’ time between meals), and that’s the most difficult time. Sleeping through that is the best idea then. If you can start a fast at three p.m., then in the evening you have to stay away from the snacks, but when you wake up you’re in that cruise state of twelve plus hours.” – Matt Tullman, No Meat Athlete Radio, October 2021

In my experience this is true. Fasting pangs are non-linear. Depending on the time, circumstances, and maybe even hydration, a fast can be more or less difficult. Sleeping through those time-based hunger troughs can help.

You are a designer. I’m a designer. We are all designers.

Nutt sounded quite certain in the podcast about the health effects, but a query for “cancer alcohol meta analysis” showed less convincing results. In an attempt to be more Bayesian I’ll update from ‘quite bad for you’ to ‘pretty bad for you’.