WEBVTT - Thomas D. Gilovich Talks About Human Behavior 0:00:02.240 --> 0:00:06.800 This is Masters in Business with Barry Ridholts on Bloomberg Radio. 0:00:09.560 --> 0:00:12.400 This weekend. On the podcast, I have an extra special guest. 0:00:12.800 --> 0:00:15.360 His name is Tom Gilovich. He is a professor of 0:00:15.360 --> 0:00:20.200 psychology at Cornell University, and I have to say he 0:00:20.360 --> 0:00:24.000 is a person who has had over the years, tremendous 0:00:24.000 --> 0:00:29.920 influence on my career, although admittedly unknowingly. I began in 0:00:30.000 --> 0:00:34.240 this industry as a trader, and I was frequently perplexed 0:00:34.280 --> 0:00:37.600 and fascinated by why the people on the desk around 0:00:37.600 --> 0:00:42.600 me were doing either poorly or well any given day, week, month. 0:00:43.240 --> 0:00:47.120 And I eventually figured out it wasn't that one guy 0:00:47.200 --> 0:00:50.639 was smarter than another or someone had more knowledge. It 0:00:50.720 --> 0:00:54.440 was their own behavior that led to their successful failures. 0:00:54.880 --> 0:00:59.720 And so I started hunting for some information about why 0:00:59.800 --> 0:01:05.000 people made certain behavioral decisions that they did. I ended 0:01:05.160 --> 0:01:09.800 up tracking down a book of his from How We 0:01:09.920 --> 0:01:12.240 Know It Isn't So, and that pretty much sent me 0:01:12.319 --> 0:01:17.959 down the rabbit hole of behavioral economics, which has been 0:01:18.000 --> 0:01:21.399 a tremendous asset to me uh both in the world 0:01:21.520 --> 0:01:26.280 of finance and media. Understanding what motivates people to make 0:01:26.840 --> 0:01:30.480 either good or bad decisions with their money UH is 0:01:30.520 --> 0:01:33.840 a tremendous asset both what you should be doing with 0:01:33.920 --> 0:01:37.520 your money and what you should be advising other people 0:01:37.640 --> 0:01:41.119 to do with their money. This is to me one 0:01:41.160 --> 0:01:44.759 of the more fascinating conversations UH that you'll hear if 0:01:44.800 --> 0:01:50.960 you are all interested in filling the blank psychology, behavioral economics, heuristics, biases, 0:01:51.320 --> 0:01:53.960 et cetera. I could have gone on for another three 0:01:53.960 --> 0:01:56.720 hours with him. I barely got to scratch the surface 0:01:57.440 --> 0:02:01.280 of all my questions with no further ado my conversation 0:02:01.360 --> 0:02:08.120 with Tom Gilovich. I have an extra special guest this week, 0:02:08.280 --> 0:02:11.880 and his name is Professor Thomas Gilovich. He is a 0:02:11.919 --> 0:02:17.560 professor of psychology at Cornell University. He has published numerous 0:02:18.120 --> 0:02:22.480 pure reviewed works on cognition and heuristics and is among 0:02:22.560 --> 0:02:26.760 the most cited academics in the field. Working on behavioral 0:02:26.840 --> 0:02:31.160 psychology and economics. His work has debunked the idea of 0:02:31.200 --> 0:02:35.160 the hot hand in basketball, the spotlight effect, the bias, 0:02:35.240 --> 0:02:39.799 blind site, clustering, illusion, and numerous other cognitive issues are 0:02:39.919 --> 0:02:43.360 in his purview. He is the author of numerous books, 0:02:43.400 --> 0:02:47.600 including a textbook on heuristics and biases UH. He is 0:02:47.639 --> 0:02:50.720 the co author of Why Smart People make big bunny 0:02:50.760 --> 0:02:53.640 mistakes and what you can do to correct them. I 0:02:53.720 --> 0:02:56.520 became familiar with his work How We Know It Isn't So, 0:02:57.160 --> 0:03:01.280 The Fallibility of Human Reason in Everyday. It was one 0:03:01.320 --> 0:03:05.359 of the first popular books on behavioral economics and one 0:03:05.400 --> 0:03:11.000 that I found incredibly influential. Thomas Killovich, Welcome to Bloomberg. 0:03:11.200 --> 0:03:13.880 Happy to be here. Let's start out with how we 0:03:13.960 --> 0:03:16.760 Know what is? And so you begin the book with 0:03:16.800 --> 0:03:21.360 a quote from Artemus Ward. It ain't the things we 0:03:21.440 --> 0:03:24.400 don't know that get us into trouble. It's the things 0:03:24.440 --> 0:03:29.440 we know that just ain't so. Tell us about that. Well, 0:03:29.880 --> 0:03:33.000 if we're convinced of things that aren't true, we're gonna 0:03:33.160 --> 0:03:36.120 go down certain paths that aren't going to be productive. 0:03:36.280 --> 0:03:40.720 And uh, that quote captures that idea very well. And 0:03:40.760 --> 0:03:44.120 what I like about that quote is that most people 0:03:44.680 --> 0:03:50.760 attribute it to Mark Twins or Will Rogers, and the 0:03:51.040 --> 0:03:56.280 source I thought at the time was Artemus Ward. And 0:03:56.880 --> 0:04:00.400 maybe two years after the publication of the book, reader 0:04:00.480 --> 0:04:03.520 wrote to me and said, Uh, well, it's really interesting. 0:04:03.680 --> 0:04:05.960 You're sort of telling everyone they got it wrong with 0:04:06.440 --> 0:04:09.360 Will Rogers and Mark Twain, but in fact it goes 0:04:09.440 --> 0:04:13.960 back even earlier than Artemis forward to someone named Josh 0:04:14.000 --> 0:04:17.000 Billings that I hadn't heard of, so uh, it's kind 0:04:17.040 --> 0:04:20.880 of ironic. Started off a book on illusion and air 0:04:21.040 --> 0:04:24.320 to the very first sentence of the book contains a 0:04:24.960 --> 0:04:28.800 citation air at least, but the that citation errors did 0:04:28.800 --> 0:04:32.000 not lead you down a path filled with errors. Let's 0:04:32.040 --> 0:04:34.960 discuss a little bit about the things that you discovered 0:04:35.560 --> 0:04:38.039 uh and published in the book, and will begin with 0:04:38.080 --> 0:04:43.360 a very simple question, what are heuristics and biases? Well, 0:04:43.400 --> 0:04:45.760 the bias part is quite easy. It's a term that 0:04:45.920 --> 0:04:51.080 people are familiar with when there's a systematic departure between um, 0:04:51.440 --> 0:04:54.360 a belief that you have in reality, or a tendency 0:04:54.440 --> 0:04:57.760 to choose to veer in one direction when you should 0:04:57.800 --> 0:05:00.960 be varying in another direction. So it's assist thematic departure 0:05:01.080 --> 0:05:06.440 from uh reality or the best assessment of reality. Heuristics 0:05:06.520 --> 0:05:10.800 that's a little more complicated for most folks. UM. It's 0:05:10.880 --> 0:05:15.560 generally defined in the behavioral economics world as a rough 0:05:15.600 --> 0:05:21.119 approximation seed of the pants uh rule of thumbs another 0:05:21.160 --> 0:05:24.600 way of describing it. Yes, and why do these heuristics 0:05:24.680 --> 0:05:30.040 lead people down the wrong path? Because there they generally 0:05:30.080 --> 0:05:33.559 work pretty well. In One of the earliest examples used 0:05:33.960 --> 0:05:39.400 UH applied to psychology was Daniel Khneman and Amos Tversky's 0:05:39.440 --> 0:05:43.320 example to we use the clarity of the of an 0:05:43.320 --> 0:05:46.320 image as a cue for how far away it is. 0:05:46.480 --> 0:05:50.320 Farther things are, the harder it is to see them clearly, 0:05:50.400 --> 0:05:55.240 so they will see more indistinct and that generally works 0:05:55.279 --> 0:05:57.840 pretty well. We're able to see whether something's very far 0:05:57.839 --> 0:06:02.520 away or relatively close up. But on a hazy day, 0:06:02.560 --> 0:06:07.120 that's gonna make things seem farther away than they really are. Um. 0:06:07.240 --> 0:06:11.520 And conversely, on a spectacularly clear day, you often have 0:06:11.640 --> 0:06:15.480 the reaction of whoa those mountains are. I didn't realize 0:06:15.520 --> 0:06:19.720 they were that close. Let's use another example of of 0:06:19.760 --> 0:06:23.400 some biases. Your online in the supermarket and your line 0:06:23.400 --> 0:06:26.159 doesn't seem to be moving, the line next to you 0:06:26.240 --> 0:06:28.240 really looks like it's flying, or you're waiting for a 0:06:28.279 --> 0:06:30.640 toll booth. I know parts of the country still have 0:06:30.800 --> 0:06:34.960 toll booths. Um. And you switch lines and suddenly the 0:06:35.000 --> 0:06:38.880 line you're on comes to a dead halt and the 0:06:38.960 --> 0:06:42.080 line you just left seems to be moving. What is 0:06:42.120 --> 0:06:47.279 it about our life experience that causes that illusion or 0:06:47.440 --> 0:06:51.960 is it an illusion? Um that one. As far as 0:06:52.040 --> 0:06:55.040 the grocery lines, I don't know if anyone has formally 0:06:55.160 --> 0:06:58.000 studied it, but you have to ask what principle of 0:06:58.040 --> 0:07:03.159 the universe would there be that it systematically uh distort 0:07:03.279 --> 0:07:05.839 things such that whenever you move to a line, it 0:07:05.839 --> 0:07:07.839 would slow down and the line that you were in 0:07:08.120 --> 0:07:11.400 suddenly sped up. Uh. But it's easy to explain why 0:07:11.400 --> 0:07:14.240 people would believe that, even if it's not true. That 0:07:14.400 --> 0:07:17.640 is to say, uh, those times when you stay in 0:07:17.800 --> 0:07:22.560 your overly busy line, you're tempted to move to another one, UM, 0:07:22.800 --> 0:07:25.960 and it turns out that that you can see that 0:07:25.960 --> 0:07:29.040 that would have been a better thing. Your line stays slow, 0:07:29.440 --> 0:07:31.880 you could see people speeding through the other line. That 0:07:32.000 --> 0:07:35.720 bothers you, but you get over it. If, on the 0:07:35.720 --> 0:07:38.160 other hand, you make the opposite mistake, you switch to 0:07:38.400 --> 0:07:42.040 the seemingly speedy line and it slows down, the line 0:07:42.080 --> 0:07:45.560 you were in suddenly speeds up, you're gonna kick yourself 0:07:45.600 --> 0:07:47.440 and say, Wow, why did I do that? I was 0:07:47.480 --> 0:07:51.239 in the right line. I brought this on myself, And 0:07:51.440 --> 0:07:55.240 it's more annoying. And because it's more annoying, it's more memorable, 0:07:55.680 --> 0:07:59.080 and therefore, UH, you're gonna have a distorted sense in 0:07:59.120 --> 0:08:02.160 your head of how common it is. UM. Very much 0:08:02.200 --> 0:08:06.760 like UH, there's a belief in the sports world, baseball 0:08:06.800 --> 0:08:09.280 world that if your team, your picture has a no 0:08:09.400 --> 0:08:13.960 hitter in progress, don't comment on it. And that's partly 0:08:14.000 --> 0:08:17.520 fed by the idea that if you're picture does have 0:08:17.560 --> 0:08:19.680 a no hitter and you say, oh, we've got a 0:08:19.720 --> 0:08:21.760 no hitter going, this is great, and then they lose it, 0:08:22.440 --> 0:08:25.480 you draw an association between those two and those are 0:08:25.480 --> 0:08:28.600 gonna stand out, and you're gonna think that it's uh, 0:08:28.640 --> 0:08:32.160 what you've done has played some determinative role, which of 0:08:32.160 --> 0:08:34.679 course hasn't. So so let's talk a little bit about 0:08:34.800 --> 0:08:38.319 mean reversion. Very often, when we see things that are 0:08:38.400 --> 0:08:41.920 outliers to the upside of the downside, we're sort of 0:08:41.960 --> 0:08:47.400 surprised when the next item in that series is not 0:08:47.559 --> 0:08:50.480 as extreme, be it how fast the line is moving, 0:08:50.600 --> 0:08:54.120 or how easily a no hitter UH is lost and 0:08:54.160 --> 0:08:57.760 goes back to normal issues. Why do people have such 0:08:57.760 --> 0:09:00.959 a hard time with mean reversion that It's a great question, 0:09:01.120 --> 0:09:04.560 and there are a number of things that contribute to UH. 0:09:04.800 --> 0:09:08.880 This belief. The failure to recognize the fact that UM 0:09:09.160 --> 0:09:13.160 regression to the mean is happening UM. And one of 0:09:13.200 --> 0:09:17.120 them is that UH is the same story that I've 0:09:17.160 --> 0:09:22.040 described before, which is when it reverts UM, and particularly 0:09:22.080 --> 0:09:26.080 when it reverts after you've done something that that stands 0:09:26.120 --> 0:09:29.200 out in your memory more and distorts your the intuitive 0:09:29.280 --> 0:09:33.720 database that you have in your head. And so UH. 0:09:33.760 --> 0:09:37.200 There are a lot of superstitions that are essentially a 0:09:37.240 --> 0:09:41.359 failure to recognize the operation of regression, the Sports Illustrated 0:09:41.440 --> 0:09:44.920 jinks being one of them. That it's believed that if 0:09:44.920 --> 0:09:47.440 you get your picture on the cover of Sports Illustrated, 0:09:47.840 --> 0:09:51.400 that that's bad luck UM. And it doesn't take that 0:09:51.520 --> 0:09:55.120 much insight to recognize that really is a mean aversion account. 0:09:55.160 --> 0:09:57.160 That is, you only get your picture on the cover 0:09:57.240 --> 0:10:01.040 of Sports Illustrated if you've had a run of success 0:10:01.120 --> 0:10:05.360 and extraordinary success at time one is going to be 0:10:05.440 --> 0:10:09.840 followed not by abject failure but by somewhat less extreme 0:10:11.160 --> 0:10:14.320 a run of success afterwards. So you're right there on 0:10:14.360 --> 0:10:17.880 the peak. On average, people are going to do less 0:10:17.880 --> 0:10:20.199 well the next time, and that gives rise to this 0:10:20.280 --> 0:10:24.040 belief that um, it's bad luck to be pictured on 0:10:24.080 --> 0:10:28.040 the cover of Sports Illustrated magazine, and people athletes truly 0:10:28.120 --> 0:10:31.080 believe it. Some of them have turned down the opportunity 0:10:31.120 --> 0:10:34.120 to be on the cover of Sports Illustrated simply because 0:10:34.160 --> 0:10:37.000 they thought it was bad luck. Let's talk a little 0:10:37.000 --> 0:10:41.120 bit about the hot hands in basketball. You first wrote 0:10:41.160 --> 0:10:45.120 about this effect with Amos Tversky. Is it about thirty 0:10:45.200 --> 0:10:48.840 years ago? Is that right? Yes, paper came out, so 0:10:48.840 --> 0:10:52.400 so tell us what your studies found and how you 0:10:52.440 --> 0:10:55.920 went about proving that the hot hands wasn't everything it 0:10:56.000 --> 0:11:01.480 appeared to be. Uh. The the belief in the hot 0:11:01.559 --> 0:11:05.600 hand is just one of the most powerful and firmly 0:11:05.640 --> 0:11:09.440 held beliefs that we have. If you've ever played or 0:11:09.440 --> 0:11:13.160 watched the game of basketball, it just seems like people 0:11:13.320 --> 0:11:15.920 get on these streaks where they can do no wrong. 0:11:16.080 --> 0:11:20.280 I am in the zone, absolutely, and it's incredibly compelling 0:11:20.360 --> 0:11:24.280 that you've made a few shots, the game just seems easier. 0:11:24.320 --> 0:11:27.240 It seems like you don't even have to attend to 0:11:27.320 --> 0:11:30.080 the basket as much as normal, and it just goes in. 0:11:30.240 --> 0:11:33.400 It's absolutely compelling. Michael Jordan used to say, there are 0:11:33.480 --> 0:11:39.920 times when the rim looks bigger, absolutely um, and we 0:11:40.000 --> 0:11:46.160 wondered whether there was less to that belief than basketball 0:11:46.200 --> 0:11:51.360 players think. UM, we're not. It was we don't want 0:11:51.360 --> 0:11:56.240 to challenge the feeling. There's no question that when you've 0:11:56.280 --> 0:12:00.000 done well, you feel different differently, and when you've done poor, 0:12:00.000 --> 0:12:04.040 really you feel differently. The basket seems to have shrunk. 0:12:04.080 --> 0:12:06.599 It seems like the best aim shot is going to 0:12:06.679 --> 0:12:10.479 go partly in the cylinder and pop right out. UM, 0:12:10.480 --> 0:12:13.200 no questioning that. But the belief in the hot hand 0:12:13.280 --> 0:12:17.240 is really a three link chain. Previous performance affects how 0:12:17.320 --> 0:12:20.600 you feel. How you feel affects subsequent performance, and we 0:12:20.600 --> 0:12:24.200 were interested in the link between the second and third, 0:12:24.320 --> 0:12:27.679 and the thought was that we exaggerate that for many 0:12:27.760 --> 0:12:32.440 of the same UH psychological principles we've already talked about UM. 0:12:32.559 --> 0:12:36.960 And when we tested it, UH, the our hypothesis was 0:12:37.000 --> 0:12:40.400 that people are going to exaggerate how much heat there is, 0:12:40.440 --> 0:12:44.240 how much streakiness there is in performance. And when we 0:12:44.320 --> 0:12:48.760 did the analyzes, turned out there was no connection between 0:12:48.840 --> 0:12:51.880 link two and three. That is, how you feel doesn't 0:12:51.880 --> 0:12:56.360 seem to influence how UH you perform in the future, 0:12:56.400 --> 0:12:59.520 at least at the professional level. So let's let's be 0:12:59.679 --> 0:13:02.520 really precise with that. When you say there is no link. 0:13:03.000 --> 0:13:07.080 There's not even the slight improvement. Hey, I'm lose some 0:13:07.320 --> 0:13:12.080 hitting shots. I'm feeling good each subsequent basket. What is 0:13:12.160 --> 0:13:15.200 the correlation with the future success whether I made a 0:13:15.200 --> 0:13:17.600 few in a row where I missed a few row. UM. 0:13:17.920 --> 0:13:21.240 Two things are important there. One is um, there may 0:13:21.280 --> 0:13:25.360 be some ways in which you've experienced some success, you 0:13:25.480 --> 0:13:29.120 feel different, and it might influence your future behavior that 0:13:29.200 --> 0:13:32.760 we haven't studied. We put aside from the hot hand idea, 0:13:32.840 --> 0:13:36.440 which is I've done well. Maybe I'm a more energetic player, 0:13:36.480 --> 0:13:39.520 I played better defense, I get more rebounds. We don't 0:13:39.520 --> 0:13:41.760 know about that, and that may be true. What we 0:13:41.800 --> 0:13:44.600 did look at do you become a better shooter? Not 0:13:44.720 --> 0:13:46.640 do you take more shots? You may you probably do 0:13:46.720 --> 0:13:49.400 take more shots because you're feeling hot. The question is 0:13:49.400 --> 0:13:52.880 are you more likely to make a shot um after 0:13:53.000 --> 0:13:56.600 having succeeded in the past versus after having failed. And 0:13:56.679 --> 0:14:00.120 the data show and this remains, you know, controversial or 0:14:00.200 --> 0:14:04.120 thirty years, there's been back and forth. All the challenges 0:14:04.160 --> 0:14:06.720 to it for decades have not stood up. There's a 0:14:06.720 --> 0:14:10.120 recent challenge that's among the more interesting ones. So I 0:14:10.120 --> 0:14:14.840 have to say it remains controversial. Our original hypothesis UM 0:14:15.040 --> 0:14:20.600 isn't controversial. That is to say, UM people wildly overestimate 0:14:21.080 --> 0:14:24.680 the extent to which people are hot or how streaky 0:14:24.760 --> 0:14:29.560 people are. Whether there's any sort of carryover that remains 0:14:30.000 --> 0:14:33.320 a bit controversial. So some of the pushback has been, 0:14:33.400 --> 0:14:36.920 you know, a player gets hot and the defense collapses 0:14:37.000 --> 0:14:39.880 on on them and they have less good looks at 0:14:39.880 --> 0:14:43.600 the basket, and so naturally after a certain streak they're 0:14:43.640 --> 0:14:47.160 gonna start missing. But you don't have that same defensive 0:14:47.160 --> 0:14:50.000 pressure with foul shooting, do you. That's right? And what 0:14:50.120 --> 0:14:52.400 is the data show with that? The data show that 0:14:52.480 --> 0:14:55.400 the outcome of the second free throw is completely independent 0:14:55.480 --> 0:14:58.760 of the out outcome of the first totally. So if 0:14:58.800 --> 0:15:01.720 you hit or miss the US one, the outcome of 0:15:01.760 --> 0:15:05.840 the second one is statistically no different. Right, And a 0:15:05.880 --> 0:15:09.000 lot of basketball UM players and fans will say, well, 0:15:09.040 --> 0:15:11.440 I'm not so impressed by that, because you can't really 0:15:11.480 --> 0:15:14.000 be streaky when it comes to free throws. Now they 0:15:14.000 --> 0:15:17.000 say that after the fact, but I mean, you're standing there, 0:15:17.080 --> 0:15:21.040 nobody's guarding you. There are certain think of Reggie Miller 0:15:21.080 --> 0:15:24.920 of the Yetta Paces used to shoot like free throws. 0:15:25.080 --> 0:15:30.120 He was an outstanding free throw shooter. Why would people 0:15:30.320 --> 0:15:33.240 not assume if there's a streak when you're on the 0:15:33.360 --> 0:15:35.560 on the court, why would you not assume there's a 0:15:35.560 --> 0:15:39.960 streak at the foul line. I think they say that 0:15:40.040 --> 0:15:42.800 after having seen the data UM, and they want to 0:15:42.920 --> 0:15:46.120 maintain that belief. But we went a step further and 0:15:46.120 --> 0:15:48.560 we conducted UM and other people have done this too, 0:15:48.680 --> 0:15:51.560 where UM, you have people shoot in the gym for you, 0:15:51.840 --> 0:15:54.960 and the feeling for all of us who've played basketball 0:15:55.080 --> 0:15:57.040 is you can feel it in warm up Sometime it 0:15:57.040 --> 0:15:58.880 doesn't have to be in the heat of the game 0:15:58.920 --> 0:16:02.440 that you can feel hot. And uh. We have people 0:16:02.520 --> 0:16:06.040 take a series of shots along an arc equidistance from 0:16:06.040 --> 0:16:10.280 the basket, and before each shot they place a bet 0:16:10.320 --> 0:16:12.960 on themselves, take a risky bet if they're feeling hot, 0:16:13.040 --> 0:16:15.240 or a more conservative bet if they are not feeling 0:16:15.280 --> 0:16:17.840 so hot. It turns out we can predict the bets 0:16:17.840 --> 0:16:19.680 they're going to make. That is, if they've made several 0:16:19.680 --> 0:16:22.560 shots in a row, that is a very strong predictor 0:16:22.760 --> 0:16:26.400 of whether they're going to choose the risky bet or not. However, 0:16:26.880 --> 0:16:29.840 the bets that they choose are not very good predictors 0:16:29.880 --> 0:16:32.800 of what's going to happen next? Again, this three linked chain, 0:16:33.440 --> 0:16:36.320 no problem between the first and the second. How you've 0:16:36.360 --> 0:16:40.440 done influences how you feel, But surprisingly how you feel 0:16:40.520 --> 0:16:44.640 has um either no or very little impact on your 0:16:44.720 --> 0:16:46.920 likelihood of making the next shot. And again I want 0:16:46.920 --> 0:16:49.480 to stress it has to do with your ability to, 0:16:50.120 --> 0:16:53.520 as they now say, score the basketball, get the ball 0:16:53.640 --> 0:16:55.520 in the cylinder. It may affect you in other ways, 0:16:55.560 --> 0:16:58.120 may make you a better defender, better pass or whatever. 0:16:58.760 --> 0:17:01.040 So about a year a half ago I read the 0:17:01.080 --> 0:17:04.679 book by Michael Lewis, The Undoing Project about Danny Khneman, 0:17:04.720 --> 0:17:07.760 any of us Amos Tversky. You wrote the Hot Hand 0:17:07.760 --> 0:17:13.120 paper with Amos Tversky? What was it like working with him? 0:17:13.160 --> 0:17:17.439 I mean, it was certainly a highlight of my career, 0:17:17.480 --> 0:17:21.040 and subsequently had the great opportunity to have worked with 0:17:21.119 --> 0:17:26.800 Danny Khneman as well. Um and Amos, who's brilliant, as 0:17:26.880 --> 0:17:29.760 you know, as as comes across in The Undoing Project, 0:17:30.160 --> 0:17:33.040 and one of the things that I most liked about 0:17:33.880 --> 0:17:36.840 uh working with him one of the great lessons. And 0:17:36.880 --> 0:17:41.240 this applies equally as well to Koneman. Um. They're both 0:17:41.240 --> 0:17:45.320 brilliant and it's fun to be in close proximity to brilliance. 0:17:46.000 --> 0:17:49.440 But that's not enough. Both of these guys were incredibly 0:17:49.600 --> 0:17:53.119 hard working and detailed oriented. And one of the things 0:17:53.200 --> 0:17:56.880 I learned from Amos it's kind of similar to this, 0:17:57.240 --> 0:18:00.919 uh saying people have about gall that you know, you 0:18:01.040 --> 0:18:05.720 drive for show and you put for dough. Um that uh, 0:18:05.760 --> 0:18:09.480 you know, when we were basically done with our hot 0:18:09.560 --> 0:18:12.000 hand paper. In fact, as a young person, I thought 0:18:12.040 --> 0:18:15.320 we were done. He would several times, Tom, come in here. 0:18:15.320 --> 0:18:17.840 I've moved this sentence around here, and I've changed this word. 0:18:18.000 --> 0:18:20.879 And the thought was the lesson was if someone of 0:18:21.000 --> 0:18:24.760 his stature is really sweating the details right here at 0:18:24.840 --> 0:18:28.119 the very end, just making the paper a little better 0:18:28.320 --> 0:18:31.720 in these marginal ways, I can do that too. And 0:18:31.760 --> 0:18:34.399 it's just been a very helpful lesson. You're never really 0:18:34.440 --> 0:18:38.120 done and things can always be made better. And uh, 0:18:38.320 --> 0:18:43.240 both Condimn and Diversky are you know, they they're they're 0:18:43.280 --> 0:18:46.600 into what they're doing, passionately care about it, and it 0:18:46.640 --> 0:18:49.840 shows in their ability to throw themselves into it. And 0:18:49.880 --> 0:18:54.520 there's there's no being brilliants great, and both of them are, 0:18:54.560 --> 0:18:57.320 but to get to their level, you also have to 0:18:57.359 --> 0:19:01.400 have a great capacity for hard work and great enthusiasm 0:19:01.440 --> 0:19:03.960 for what you're doing, which both of them did do. 0:19:04.480 --> 0:19:08.800 Brilliance is necessary, but not sufficient, well said. Let's talk 0:19:08.840 --> 0:19:13.879 a little bit about some of your research on happiness 0:19:14.040 --> 0:19:19.760 and how do either get happy or avoid unhappiness. Let's 0:19:19.800 --> 0:19:23.840 begin with the discussion of regret. What is it that 0:19:23.920 --> 0:19:27.720 people regret more the things they do or the things 0:19:27.760 --> 0:19:31.320 that they decide not to do. I think one thing 0:19:31.359 --> 0:19:35.720 that's interesting about that question is that it depends upon 0:19:36.200 --> 0:19:40.960 um when you're talking about it, that in the immediate 0:19:41.000 --> 0:19:44.679 aftermath of a mistake of action, that just hurts a 0:19:44.720 --> 0:19:49.120 lot more than omission. And uh, you see that everywhere. 0:19:49.280 --> 0:19:51.520 It plays out in the example that you started with 0:19:51.560 --> 0:19:54.400 about the grocery store line, that if you switch from 0:19:54.400 --> 0:19:58.439 a slow line to one that's seemingly faster and it 0:19:58.520 --> 0:20:00.760 slows down, and you just kick yourself. I was in 0:20:00.800 --> 0:20:03.720 a better line, Why did I switch? Uh? The example 0:20:03.800 --> 0:20:06.120 at a university, of course that I think everyone can 0:20:06.200 --> 0:20:09.919 relate to is people taking multiple choice tests and you 0:20:10.000 --> 0:20:12.879 have the common experience of zipping along, Oh this one's 0:20:12.920 --> 0:20:16.440 B and oh wait a minute, maybe maybe it's D, 0:20:16.600 --> 0:20:18.520 and you go back and forth. Should I stick with 0:20:18.600 --> 0:20:21.760 my initial hunt or should I switch to now what 0:20:21.880 --> 0:20:24.919 I think that it is? Turns out people have studied that, 0:20:25.160 --> 0:20:28.600 and if you face that dilemma, Uh, you're much more 0:20:28.640 --> 0:20:32.400 likely to get the right answer by switching than staying. 0:20:32.960 --> 0:20:35.920 Students believe the complete opposite is better to go with 0:20:36.000 --> 0:20:41.280 your initial gut instinct. And UM, So their belief is incorrect, 0:20:41.320 --> 0:20:45.240 doesn't fit the data that's been observed. Um. But it's 0:20:45.240 --> 0:20:47.399 easy to see why they would believe that. That is, 0:20:47.480 --> 0:20:50.280 if you thought it was be and then you convince 0:20:50.320 --> 0:20:53.280 yourself let me switch to D. You erase it. Now 0:20:53.359 --> 0:20:55.720 you're endorsing B. And it turns out you were right. 0:20:56.160 --> 0:21:00.760 You're gonna kick yourself. I had I had the right answer. 0:21:00.800 --> 0:21:03.560 I knew it you did. Um. So, short term, the 0:21:03.600 --> 0:21:08.080 bias against action is a manifestation of regret aversion. We 0:21:08.160 --> 0:21:11.679 don't want to do something that we ultimately regret. But 0:21:11.880 --> 0:21:15.080 then how does that play out with the sort of 0:21:15.240 --> 0:21:20.120 deathbed statements we've seen from people I should have done X. Yeah, 0:21:20.240 --> 0:21:23.320 that's the that's the interesting part. This change from the 0:21:23.720 --> 0:21:28.399 close temporal proximity to a distant perspective, and over time 0:21:28.880 --> 0:21:31.399 we do things with our because our mistakes of action 0:21:31.440 --> 0:21:34.840 are so painful, we do things about them, We make 0:21:34.880 --> 0:21:38.600 amends to other people, We engage in what psychologists called 0:21:38.680 --> 0:21:42.240 cognitive dissonance reduction to make ourselves feel better about it. 0:21:42.440 --> 0:21:46.000 We identify and part of that is identifying a silver lining. 0:21:46.040 --> 0:21:49.000 If you ask people about some of their biggest regrets, 0:21:49.080 --> 0:21:53.199 people will say, oh, I married the wrong person. But 0:21:53.480 --> 0:21:55.680 they will say, yeah, that was a mistake, but I 0:21:55.680 --> 0:21:57.879 wouldn't have these great kids if I hadn't done that. 0:21:58.000 --> 0:22:00.760 So the marriage ended but turned out to have been 0:22:00.760 --> 0:22:02.680 a good thing because I have these kids that I love. 0:22:03.160 --> 0:22:06.600 Um And so there's all this mental stuff you do 0:22:06.760 --> 0:22:11.440 to make yourself more comfortable with many, at least mistakes 0:22:11.480 --> 0:22:14.960 of action. Whereas things that you didn't do, rather than 0:22:15.000 --> 0:22:19.200 shrinking over time, they often grow. You often think, oh, 0:22:19.359 --> 0:22:21.119 you know, if I had only taken that class, I 0:22:21.119 --> 0:22:23.440 would have gone into this profession rather than this one, 0:22:23.480 --> 0:22:27.159 and you imagine all the great things that could have happened. 0:22:27.160 --> 0:22:31.919 So over time, regrets of inaction either don't shrink like 0:22:32.000 --> 0:22:34.760 the action ones do, or they even grow over time. 0:22:34.800 --> 0:22:38.040 And so you, as you said, on people's deathbeds, they 0:22:39.640 --> 0:22:42.240 regret more of the things that they didn't do. I 0:22:42.240 --> 0:22:44.159 could have been a contender. You know, I could have 0:22:44.200 --> 0:22:46.600 been this, I could have been that. So so actions 0:22:47.119 --> 0:22:50.720 become rationalized and we learned to deal with our mistakes, 0:22:51.160 --> 0:22:54.199 but in actions blow up in our minds to become 0:22:54.280 --> 0:22:58.840 these mythic if only so, let's talk about something sort 0:22:58.840 --> 0:23:01.520 of related to that. You've you've created a little bit 0:23:01.520 --> 0:23:06.840 of a stir not too long ago, expressing the belief 0:23:06.960 --> 0:23:11.119 that you know, we're a consumer society and everybody wants 0:23:11.200 --> 0:23:13.720 the two point three kids in the four bedroom house 0:23:13.760 --> 0:23:16.600 and the convertible car and the boat or what have you. 0:23:16.720 --> 0:23:24.119 But your conclusion is experiences are more valuable to individuals 0:23:24.359 --> 0:23:28.639 than these babbles and goods. Explain how you came to 0:23:28.680 --> 0:23:31.720 that conclusion and what it means. That line of research 0:23:32.359 --> 0:23:36.240 stemmed from a finding, probably the biggest finding in the 0:23:36.440 --> 0:23:41.520 now quite extensive research on happiness or well being, which 0:23:41.600 --> 0:23:45.879 is that we have a remarkable capacity to adapt to things, 0:23:46.160 --> 0:23:50.199 and that's a good capacity when bad things happened to us. 0:23:50.560 --> 0:23:54.560 Oh no, I've lost my job, life's going to fall apart. Well, 0:23:54.600 --> 0:23:56.560 that is a bad thing, and you are miserable for 0:23:56.600 --> 0:23:59.680 a while, but we tend to adapt to it. Or 0:24:00.359 --> 0:24:02.440 many people think Oh, I don't think i'd even want 0:24:02.440 --> 0:24:05.720 to live if I lost the use of my legs. 0:24:05.840 --> 0:24:08.359 Let's say, well, it turns out that people who have 0:24:08.440 --> 0:24:12.639 experienced that, yes, they are miserable right away, but they 0:24:12.680 --> 0:24:16.800 adapt and live lives that are as fulfilling as people 0:24:16.840 --> 0:24:20.159 who haven't had that misfortune. Um. And this is just 0:24:20.680 --> 0:24:26.639 the probably biggest fact about the study of happiness, and 0:24:26.760 --> 0:24:31.520 so it applying it to consumption, the things that we buy. 0:24:31.600 --> 0:24:34.720 You know, if I trade in my camera and get Alexis, 0:24:34.760 --> 0:24:37.240 I'll be happier. Yeah, that's true, you will be for 0:24:37.280 --> 0:24:39.800 a little while. Pretty soon it's just a car like 0:24:39.880 --> 0:24:41.880 the other car, and you don't notice it as much. 0:24:42.200 --> 0:24:46.720 And so one challenge for happiness for searchers is, um, 0:24:46.760 --> 0:24:49.800