[Script Info] Title: [Events] Format: Layer, Start, End, Style, Name, MarginL, MarginR, MarginV, Effect, Text Dialogue: 0,0:00:00.95,0:00:02.34,Default,,0000,0000,0000,,Hi. Dialogue: 0,0:00:02.79,0:00:05.18,Default,,0000,0000,0000,,You might have noticed\Nthat I have half a beard. Dialogue: 0,0:00:05.60,0:00:07.75,Default,,0000,0000,0000,,It's not because I lost a bet. Dialogue: 0,0:00:07.77,0:00:10.72,Default,,0000,0000,0000,,Many years ago, I was badly burned. Dialogue: 0,0:00:10.75,0:00:12.81,Default,,0000,0000,0000,,Most of my body is covered with scars, Dialogue: 0,0:00:12.83,0:00:14.68,Default,,0000,0000,0000,,including the right side of my face. Dialogue: 0,0:00:14.71,0:00:17.47,Default,,0000,0000,0000,,I just don't have hair.\NThat's just how it happened. Dialogue: 0,0:00:17.50,0:00:19.86,Default,,0000,0000,0000,,It looks symmetrical, but almost. Dialogue: 0,0:00:19.89,0:00:22.98,Default,,0000,0000,0000,,Anyway, now that we discussed facial hair, Dialogue: 0,0:00:23.00,0:00:25.88,Default,,0000,0000,0000,,let's move to social science. Dialogue: 0,0:00:25.90,0:00:32.14,Default,,0000,0000,0000,,And in particular, I want us to think\Nabout where is the potential for humanity Dialogue: 0,0:00:32.17,0:00:33.46,Default,,0000,0000,0000,,and where we are now. Dialogue: 0,0:00:33.88,0:00:35.96,Default,,0000,0000,0000,,And if you think about it,\Nthere's a big gap Dialogue: 0,0:00:35.98,0:00:38.50,Default,,0000,0000,0000,,between where we think we could be\Nand where we are, Dialogue: 0,0:00:38.53,0:00:40.65,Default,,0000,0000,0000,,and it's in all kinds of areas. Dialogue: 0,0:00:40.67,0:00:42.74,Default,,0000,0000,0000,,So let me ask you: Dialogue: 0,0:00:42.77,0:00:46.82,Default,,0000,0000,0000,,How many of you in the last month\Nhave eaten more than you think you should? Dialogue: 0,0:00:46.84,0:00:48.85,Default,,0000,0000,0000,,Just kind of general. OK. Dialogue: 0,0:00:48.87,0:00:53.34,Default,,0000,0000,0000,,How many of you in the last month have\Nexercised less than you think you should? Dialogue: 0,0:00:53.36,0:00:56.30,Default,,0000,0000,0000,,OK, and for how many of you\Nhas raising your hands twice Dialogue: 0,0:00:56.32,0:00:58.26,Default,,0000,0000,0000,,been the most exercise you got today? Dialogue: 0,0:00:58.29,0:01:00.61,Default,,0000,0000,0000,,(Laughter) Dialogue: 0,0:01:01.54,0:01:05.31,Default,,0000,0000,0000,,How many of you have ever\Ntexted while driving? Dialogue: 0,0:01:06.20,0:01:09.56,Default,,0000,0000,0000,,OK, we're getting honest.\NLet's test your honesty. Dialogue: 0,0:01:09.58,0:01:11.58,Default,,0000,0000,0000,,How many people here in the last month Dialogue: 0,0:01:11.61,0:01:14.49,Default,,0000,0000,0000,,have not always washed your hands\Nwhen you left the bathroom? Dialogue: 0,0:01:14.52,0:01:16.15,Default,,0000,0000,0000,,(Laughter) Dialogue: 0,0:01:16.18,0:01:17.35,Default,,0000,0000,0000,,A little less honest. Dialogue: 0,0:01:17.38,0:01:21.00,Default,,0000,0000,0000,,By the way, it's interesting how we're\Nwilling to admit texting and driving Dialogue: 0,0:01:21.03,0:01:23.08,Default,,0000,0000,0000,,but not washing our hands,\Nthat's difficult. Dialogue: 0,0:01:23.10,0:01:24.80,Default,,0000,0000,0000,,(Laughter) Dialogue: 0,0:01:25.39,0:01:26.67,Default,,0000,0000,0000,,We can go on and on. Dialogue: 0,0:01:26.69,0:01:29.45,Default,,0000,0000,0000,,The problem, the topic is\Nthat there's lots of things Dialogue: 0,0:01:29.48,0:01:31.52,Default,,0000,0000,0000,,when we know what we could do -- Dialogue: 0,0:01:31.54,0:01:35.18,Default,,0000,0000,0000,,we could be very, very different,\Nbut we're acting in a very different way. Dialogue: 0,0:01:35.21,0:01:37.46,Default,,0000,0000,0000,,And when we think\Nhow do we bridge that gap, Dialogue: 0,0:01:37.49,0:01:40.57,Default,,0000,0000,0000,,the usual answer is, "Just tell people." Dialogue: 0,0:01:40.60,0:01:43.80,Default,,0000,0000,0000,,For example, just tell people\Nthat texting and driving is dangerous. Dialogue: 0,0:01:43.83,0:01:46.37,Default,,0000,0000,0000,,Did you know it's dangerous?\NYou should stop doing it. Dialogue: 0,0:01:46.39,0:01:49.18,Default,,0000,0000,0000,,You tell people something\Nis dangerous, and they will stop. Dialogue: 0,0:01:49.21,0:01:50.89,Default,,0000,0000,0000,,Texting and driving is one example. Dialogue: 0,0:01:50.92,0:01:53.14,Default,,0000,0000,0000,,Another very sad example\Nis that in the US, Dialogue: 0,0:01:53.17,0:01:56.65,Default,,0000,0000,0000,,we spend between seven\Nand eight hundred million dollars a year Dialogue: 0,0:01:56.68,0:01:58.70,Default,,0000,0000,0000,,on what's called "financial literacy." Dialogue: 0,0:01:59.24,0:02:01.70,Default,,0000,0000,0000,,And what do we get\Nas a consequence of that? Dialogue: 0,0:02:01.72,0:02:05.82,Default,,0000,0000,0000,,There was recently a study that looked\Nat all the research ever to be conducted Dialogue: 0,0:02:05.84,0:02:08.64,Default,,0000,0000,0000,,on financial literacy --\Nwhat's called a meta-analysis. Dialogue: 0,0:02:08.66,0:02:11.47,Default,,0000,0000,0000,,And what they found is that\Nwhen you tell people, Dialogue: 0,0:02:11.50,0:02:13.41,Default,,0000,0000,0000,,you teach them financial literacy, Dialogue: 0,0:02:13.44,0:02:15.82,Default,,0000,0000,0000,,they learn and they remember. Dialogue: 0,0:02:15.85,0:02:18.83,Default,,0000,0000,0000,,But do people execute? Not so much. Dialogue: 0,0:02:18.85,0:02:21.10,Default,,0000,0000,0000,,The improvement is about\Nthree or four percent Dialogue: 0,0:02:21.13,0:02:22.99,Default,,0000,0000,0000,,immediately after the course, Dialogue: 0,0:02:23.01,0:02:24.68,Default,,0000,0000,0000,,and then it goes down. Dialogue: 0,0:02:24.70,0:02:26.41,Default,,0000,0000,0000,,And at the end of the day, Dialogue: 0,0:02:26.43,0:02:30.09,Default,,0000,0000,0000,,the improvement is about 0.1 percent -- Dialogue: 0,0:02:30.12,0:02:33.59,Default,,0000,0000,0000,,not zero, but as humanly close\Nto zero as possible. Dialogue: 0,0:02:33.61,0:02:35.91,Default,,0000,0000,0000,,(Laughter) Dialogue: 0,0:02:36.49,0:02:37.66,Default,,0000,0000,0000,,So that's the sad news. Dialogue: 0,0:02:37.69,0:02:40.24,Default,,0000,0000,0000,,The sad news is, giving\Ninformation to people Dialogue: 0,0:02:40.27,0:02:42.62,Default,,0000,0000,0000,,is just not a good recipe\Nto change behavior. Dialogue: 0,0:02:43.02,0:02:44.18,Default,,0000,0000,0000,,What is? Dialogue: 0,0:02:44.21,0:02:47.06,Default,,0000,0000,0000,,Well, social science\Nhas made lots of strides, Dialogue: 0,0:02:47.08,0:02:50.79,Default,,0000,0000,0000,,and the basic insight is that\Nif we want to change behavior, Dialogue: 0,0:02:50.81,0:02:52.55,Default,,0000,0000,0000,,we have to change the environment. Dialogue: 0,0:02:53.23,0:02:56.62,Default,,0000,0000,0000,,The right way is not to change people,\Nit's to change the environment. Dialogue: 0,0:02:56.64,0:03:00.17,Default,,0000,0000,0000,,And I want to present a very simpleminded\Nmodel of how to think about it: Dialogue: 0,0:03:00.20,0:03:02.22,Default,,0000,0000,0000,,it's to think about behavioral change Dialogue: 0,0:03:02.24,0:03:05.30,Default,,0000,0000,0000,,in the same way that we think about\Nsending a rocket to space. Dialogue: 0,0:03:05.76,0:03:08.17,Default,,0000,0000,0000,,When we think about\Nsending a rocket to space, Dialogue: 0,0:03:08.19,0:03:09.64,Default,,0000,0000,0000,,we want to do two main things. Dialogue: 0,0:03:09.66,0:03:12.12,Default,,0000,0000,0000,,The first one is to reduce friction. Dialogue: 0,0:03:12.14,0:03:15.29,Default,,0000,0000,0000,,We want to take the rocket\Nand have as little friction as possible Dialogue: 0,0:03:15.32,0:03:17.37,Default,,0000,0000,0000,,so it's the most aerodynamic possible. Dialogue: 0,0:03:17.39,0:03:20.91,Default,,0000,0000,0000,,And the second thing is we want\Nto load as much fuel as possible, Dialogue: 0,0:03:20.94,0:03:24.92,Default,,0000,0000,0000,,to give it the most amount\Nof motivation, energy to do its task. Dialogue: 0,0:03:25.46,0:03:27.83,Default,,0000,0000,0000,,And behavior change is the same thing. Dialogue: 0,0:03:27.85,0:03:30.23,Default,,0000,0000,0000,,So let's first talk about friction. Dialogue: 0,0:03:31.34,0:03:34.28,Default,,0000,0000,0000,,In this particular case study\NI'll tell you about, Dialogue: 0,0:03:34.30,0:03:37.46,Default,,0000,0000,0000,,there's a pharmacy, an online pharmacy. Dialogue: 0,0:03:37.49,0:03:39.39,Default,,0000,0000,0000,,Imagine you go to your doctor. Dialogue: 0,0:03:39.41,0:03:41.05,Default,,0000,0000,0000,,You have a long-term illness, Dialogue: 0,0:03:41.08,0:03:43.91,Default,,0000,0000,0000,,your doctor prescribes\Nto you a medication, Dialogue: 0,0:03:43.94,0:03:46.23,Default,,0000,0000,0000,,you sign up for this online pharmacy Dialogue: 0,0:03:46.26,0:03:49.14,Default,,0000,0000,0000,,and you get your medication\Nin the mail every 90 days. Dialogue: 0,0:03:49.17,0:03:51.67,Default,,0000,0000,0000,,Every 90 days, medication,\Nmedication, medication. Dialogue: 0,0:03:52.12,0:03:55.79,Default,,0000,0000,0000,,And this online pharmacy\Nwants to switch people Dialogue: 0,0:03:55.82,0:03:58.45,Default,,0000,0000,0000,,from branded medication\Nto generic medication. Dialogue: 0,0:03:59.18,0:04:01.23,Default,,0000,0000,0000,,So they send people letters, and they say, Dialogue: 0,0:04:01.25,0:04:03.56,Default,,0000,0000,0000,,"Please, please, please,\Nswitch to generics. Dialogue: 0,0:04:03.58,0:04:07.01,Default,,0000,0000,0000,,You will save money, we will save money,\Nyour employer will save money." Dialogue: 0,0:04:07.03,0:04:08.26,Default,,0000,0000,0000,,And what do people do? Dialogue: 0,0:04:08.66,0:04:09.81,Default,,0000,0000,0000,,Nothing. Dialogue: 0,0:04:09.83,0:04:12.31,Default,,0000,0000,0000,,So they try all kinds of things\Nand nothing happens. Dialogue: 0,0:04:12.33,0:04:15.43,Default,,0000,0000,0000,,So for one year, they give people\Nan amazing offer. Dialogue: 0,0:04:15.45,0:04:17.40,Default,,0000,0000,0000,,They send people a letter, and they say, Dialogue: 0,0:04:17.42,0:04:21.12,Default,,0000,0000,0000,,"If you switch to generics now,\Nit will be free for a whole year." Dialogue: 0,0:04:21.14,0:04:22.65,Default,,0000,0000,0000,,Free for a whole year. Amazing! Dialogue: 0,0:04:23.18,0:04:26.03,Default,,0000,0000,0000,,What percentage of people\Ndo you think switched? Dialogue: 0,0:04:27.07,0:04:28.47,Default,,0000,0000,0000,,Less than 10 percent. Dialogue: 0,0:04:29.10,0:04:31.34,Default,,0000,0000,0000,,At this point, they show up to my office. Dialogue: 0,0:04:31.37,0:04:32.82,Default,,0000,0000,0000,,And they come to complain. Dialogue: 0,0:04:33.71,0:04:34.86,Default,,0000,0000,0000,,Why did they pick me? Dialogue: 0,0:04:34.89,0:04:37.66,Default,,0000,0000,0000,,I wrote a couple of papers\Non the "allure of free." Dialogue: 0,0:04:37.68,0:04:40.90,Default,,0000,0000,0000,,In those papers, we showed\Nthat if you reduce the price of something Dialogue: 0,0:04:40.92,0:04:43.95,Default,,0000,0000,0000,,for, let's say, 10 cents to one cent,\Nnothing much happens. Dialogue: 0,0:04:43.98,0:04:46.89,Default,,0000,0000,0000,,You reduce it from one cent to zero,\Nnow people get excited. Dialogue: 0,0:04:46.92,0:04:47.99,Default,,0000,0000,0000,,(Laughter) Dialogue: 0,0:04:48.01,0:04:51.29,Default,,0000,0000,0000,,And they said, "Look, we read these\Npapers on 'free,' we gave 'free.' Dialogue: 0,0:04:51.32,0:04:52.62,Default,,0000,0000,0000,,Not working as we expected. Dialogue: 0,0:04:52.65,0:04:53.88,Default,,0000,0000,0000,,What's going on?" Dialogue: 0,0:04:54.31,0:04:57.06,Default,,0000,0000,0000,,I said, "You know, maybe\Nit's a question of friction." Dialogue: 0,0:04:57.56,0:04:59.04,Default,,0000,0000,0000,,They said, "What do you mean?" Dialogue: 0,0:04:59.07,0:05:01.10,Default,,0000,0000,0000,,I said, "People are starting with branded. Dialogue: 0,0:05:01.12,0:05:03.48,Default,,0000,0000,0000,,They can do nothing and end with branded. Dialogue: 0,0:05:03.50,0:05:07.17,Default,,0000,0000,0000,,To move to generic, they have to choose\Ngeneric over branded, Dialogue: 0,0:05:07.19,0:05:09.06,Default,,0000,0000,0000,,but they also have to do something. Dialogue: 0,0:05:09.08,0:05:10.70,Default,,0000,0000,0000,,They have to return the letter." Dialogue: 0,0:05:10.72,0:05:13.33,Default,,0000,0000,0000,,So this is what we call\Na "confounded design." Dialogue: 0,0:05:13.35,0:05:15.38,Default,,0000,0000,0000,,Two things are happening at the same time. Dialogue: 0,0:05:15.40,0:05:17.09,Default,,0000,0000,0000,,It's branded versus generic, Dialogue: 0,0:05:17.11,0:05:19.74,Default,,0000,0000,0000,,but it's doing nothing\Nversus doing something. Dialogue: 0,0:05:20.21,0:05:21.93,Default,,0000,0000,0000,,So I said, "Why don't we switch it? Dialogue: 0,0:05:22.42,0:05:26.02,Default,,0000,0000,0000,,Why don't we send people a letter\Nand say, 'We're switching you to generics. Dialogue: 0,0:05:26.05,0:05:27.53,Default,,0000,0000,0000,,You don't need to do anything. Dialogue: 0,0:05:27.55,0:05:30.63,Default,,0000,0000,0000,,If you want to stay with branded,\Nplease return the letter.'" Dialogue: 0,0:05:30.66,0:05:31.81,Default,,0000,0000,0000,,(Laughter) Dialogue: 0,0:05:31.83,0:05:33.04,Default,,0000,0000,0000,,Right? Dialogue: 0,0:05:33.49,0:05:34.84,Default,,0000,0000,0000,,What do you think happened? Dialogue: 0,0:05:36.84,0:05:38.39,Default,,0000,0000,0000,,Lawyers, lawyers happened. Dialogue: 0,0:05:38.41,0:05:41.74,Default,,0000,0000,0000,,(Laughter) Dialogue: 0,0:05:44.02,0:05:45.86,Default,,0000,0000,0000,,It turns out, this is illegal. Dialogue: 0,0:05:45.89,0:05:49.28,Default,,0000,0000,0000,,(Laughter) Dialogue: 0,0:05:51.40,0:05:54.35,Default,,0000,0000,0000,,By the way, for brainstorming\Nand creativity, Dialogue: 0,0:05:54.37,0:05:56.92,Default,,0000,0000,0000,,doing things that are illegal\Nand immoral, it's fine, Dialogue: 0,0:05:56.95,0:06:00.40,Default,,0000,0000,0000,,as long as it's just\Nin the brainstorming phase. Dialogue: 0,0:06:00.42,0:06:01.77,Default,,0000,0000,0000,,(Laughter) Dialogue: 0,0:06:01.80,0:06:03.60,Default,,0000,0000,0000,,But this was the purity of the idea, Dialogue: 0,0:06:03.62,0:06:07.62,Default,,0000,0000,0000,,because the initial design was\Nthe branded had the no-action benefit. Dialogue: 0,0:06:07.64,0:06:11.96,Default,,0000,0000,0000,,In my illegal, immoral design,\Ngeneric had the no-action benefit. Dialogue: 0,0:06:11.98,0:06:14.85,Default,,0000,0000,0000,,But they agreed to give people\Na T-intersection: Dialogue: 0,0:06:14.88,0:06:16.27,Default,,0000,0000,0000,,send people a letter and say, Dialogue: 0,0:06:16.29,0:06:18.32,Default,,0000,0000,0000,,"If you don't return this letter, Dialogue: 0,0:06:18.34,0:06:20.50,Default,,0000,0000,0000,,we will be forced\Nto stop your medications. Dialogue: 0,0:06:21.08,0:06:24.85,Default,,0000,0000,0000,,But when you return the letter,\Nyou could choose branded at this price, Dialogue: 0,0:06:24.87,0:06:26.20,Default,,0000,0000,0000,,generic at this price." Dialogue: 0,0:06:26.91,0:06:28.82,Default,,0000,0000,0000,,Now people had to take an action. Dialogue: 0,0:06:28.85,0:06:30.52,Default,,0000,0000,0000,,They were on even footing. Right? Dialogue: 0,0:06:30.54,0:06:32.92,Default,,0000,0000,0000,,It wasn't that one had\Nthe no-action benefit. Dialogue: 0,0:06:32.94,0:06:35.45,Default,,0000,0000,0000,,What percentage do you think switched? Dialogue: 0,0:06:36.28,0:06:37.80,Default,,0000,0000,0000,,The vast majority switched. Dialogue: 0,0:06:38.21,0:06:39.40,Default,,0000,0000,0000,,So what does it tell us? Dialogue: 0,0:06:39.42,0:06:41.76,Default,,0000,0000,0000,,Do people like generics,\Nor do we like branded? Dialogue: 0,0:06:42.43,0:06:44.03,Default,,0000,0000,0000,,We hate returning letters. Dialogue: 0,0:06:44.05,0:06:46.01,Default,,0000,0000,0000,,(Laughter) Dialogue: 0,0:06:46.04,0:06:50.94,Default,,0000,0000,0000,,This is the story of friction:\Nsmall things really matter. Dialogue: 0,0:06:50.96,0:06:54.33,Default,,0000,0000,0000,,And friction is about taking\Nthe desired behavior Dialogue: 0,0:06:54.35,0:06:56.70,Default,,0000,0000,0000,,and saying: Where do we have\Ntoo much friction Dialogue: 0,0:06:56.72,0:06:59.29,Default,,0000,0000,0000,,so it's slowing people down\Nfrom acting on it? Dialogue: 0,0:06:59.32,0:07:01.61,Default,,0000,0000,0000,,And every time you see\Nthat the desired behavior Dialogue: 0,0:07:01.63,0:07:03.50,Default,,0000,0000,0000,,and the easy behavior are not aligned, Dialogue: 0,0:07:03.52,0:07:06.05,Default,,0000,0000,0000,,it means we want to try and realign them. Dialogue: 0,0:07:06.51,0:07:08.82,Default,,0000,0000,0000,,That's the first part.\NWe talked about friction. Dialogue: 0,0:07:08.84,0:07:10.51,Default,,0000,0000,0000,,Now let's talk about motivation. Dialogue: 0,0:07:10.88,0:07:12.08,Default,,0000,0000,0000,,In this particular study, Dialogue: 0,0:07:12.10,0:07:16.44,Default,,0000,0000,0000,,we were trying to get very poor people\Nin a slum called Kibera in Kenya Dialogue: 0,0:07:16.46,0:07:19.13,Default,,0000,0000,0000,,to save a little bit of money\Nfor a rainy day. Dialogue: 0,0:07:19.16,0:07:22.07,Default,,0000,0000,0000,,You know, if you're very, very poor,\Nyou have no extra money, Dialogue: 0,0:07:22.10,0:07:23.32,Default,,0000,0000,0000,,you live hand to mouth, Dialogue: 0,0:07:23.34,0:07:25.66,Default,,0000,0000,0000,,and from time to time, bad things happen. Dialogue: 0,0:07:25.69,0:07:30.04,Default,,0000,0000,0000,,And when something bad happens,\Nyou have nothing to draw on, you borrow. Dialogue: 0,0:07:30.06,0:07:36.43,Default,,0000,0000,0000,,The Kibera people can borrow at sometimes\Nup to 10 percent interest a week. Dialogue: 0,0:07:36.46,0:07:39.07,Default,,0000,0000,0000,,And then, of course,\Nit's really hard to get out of it. Dialogue: 0,0:07:39.09,0:07:41.26,Default,,0000,0000,0000,,You live hand to mouth,\Nsomething bad happens, Dialogue: 0,0:07:41.29,0:07:44.05,Default,,0000,0000,0000,,you borrow, things get worse\Nand worse and worse. Dialogue: 0,0:07:44.08,0:07:47.44,Default,,0000,0000,0000,,So we wanted people to keep\Na little bit of money for a rainy day. Dialogue: 0,0:07:48.14,0:07:50.71,Default,,0000,0000,0000,,And we thought about\Nwhat is the motivation, Dialogue: 0,0:07:50.73,0:07:53.05,Default,,0000,0000,0000,,what is the fuel that we need to add? Dialogue: 0,0:07:53.07,0:07:54.86,Default,,0000,0000,0000,,And we tried all kinds of things. Dialogue: 0,0:07:55.37,0:07:57.97,Default,,0000,0000,0000,,Some people, we texted them\Nonce a week and said, Dialogue: 0,0:07:57.100,0:08:02.09,Default,,0000,0000,0000,,"Please try to save 100 shillings" --\Nabout a dollar -- "this week." Dialogue: 0,0:08:02.57,0:08:06.76,Default,,0000,0000,0000,,Some people, we sent a text message\Nas if it came from their kids. Dialogue: 0,0:08:07.32,0:08:10.72,Default,,0000,0000,0000,,So it said, "Hi Mom, hi Dad,\Nthis is little Joey" -- Dialogue: 0,0:08:10.75,0:08:12.52,Default,,0000,0000,0000,,whatever the name of the kid was -- Dialogue: 0,0:08:12.54,0:08:16.48,Default,,0000,0000,0000,,"Try and save 100 shillings this week\Nfor the future of our family." Dialogue: 0,0:08:16.51,0:08:20.09,Default,,0000,0000,0000,,Right? I'm Jewish, a little bit\Nof guilt always works. Dialogue: 0,0:08:20.11,0:08:21.56,Default,,0000,0000,0000,,(Laughter) Dialogue: 0,0:08:21.59,0:08:23.43,Default,,0000,0000,0000,,Some people got 10 percent. Dialogue: 0,0:08:23.45,0:08:26.30,Default,,0000,0000,0000,,"Save up to a hundred shillings,\Nwe'll give you 10 percent." Dialogue: 0,0:08:26.33,0:08:28.01,Default,,0000,0000,0000,,Some people got 20 percent. Dialogue: 0,0:08:28.04,0:08:30.69,Default,,0000,0000,0000,,Some people got also\N10 percent and 20 percent, Dialogue: 0,0:08:30.71,0:08:32.99,Default,,0000,0000,0000,,but they got it with loss aversion. Dialogue: 0,0:08:33.01,0:08:34.34,Default,,0000,0000,0000,,What is loss aversion? Dialogue: 0,0:08:34.36,0:08:36.96,Default,,0000,0000,0000,,Loss aversion is the idea\Nthat we hate losing Dialogue: 0,0:08:36.98,0:08:38.72,Default,,0000,0000,0000,,more than we enjoy gaining. Dialogue: 0,0:08:38.74,0:08:41.47,Default,,0000,0000,0000,,Now, think about somebody\Nwho is in a 10-percent condition Dialogue: 0,0:08:41.50,0:08:43.42,Default,,0000,0000,0000,,and they put 40 shillings in. Dialogue: 0,0:08:43.44,0:08:45.63,Default,,0000,0000,0000,,They put 40 shillings,\Nwe give them four more, Dialogue: 0,0:08:45.65,0:08:47.10,Default,,0000,0000,0000,,they say thank you very much. Dialogue: 0,0:08:47.13,0:08:48.86,Default,,0000,0000,0000,,That person gave up six. Dialogue: 0,0:08:48.88,0:08:51.48,Default,,0000,0000,0000,,They could have gotten six more\Nif they gave a hundred, Dialogue: 0,0:08:51.50,0:08:53.09,Default,,0000,0000,0000,,but they don't see it. Dialogue: 0,0:08:53.11,0:08:55.54,Default,,0000,0000,0000,,So we created what we call pre-match. Dialogue: 0,0:08:55.56,0:08:58.23,Default,,0000,0000,0000,,We put the 10 shillings in\Nat the beginning of the week. Dialogue: 0,0:08:58.25,0:08:59.80,Default,,0000,0000,0000,,We said, "It's waiting for you!" Dialogue: 0,0:08:59.83,0:09:02.79,Default,,0000,0000,0000,,And then if somebody puts 40 in,\Nwe say, "Oh, you put 40 in, Dialogue: 0,0:09:02.82,0:09:05.41,Default,,0000,0000,0000,,we're leaving four,\Nand we're taking six back." Dialogue: 0,0:09:05.43,0:09:08.43,Default,,0000,0000,0000,,So in both cases, pre-match or post-match, Dialogue: 0,0:09:08.46,0:09:10.16,Default,,0000,0000,0000,,people get 10 percent. Dialogue: 0,0:09:10.18,0:09:11.62,Default,,0000,0000,0000,,But in the pre-match, Dialogue: 0,0:09:11.65,0:09:14.74,Default,,0000,0000,0000,,they see the money they did not match\Nleaving their account. Dialogue: 0,0:09:15.85,0:09:18.77,Default,,0000,0000,0000,,So we have text, text from kids,\N10 percent, 20 percent, Dialogue: 0,0:09:18.80,0:09:20.38,Default,,0000,0000,0000,,pre-match, post-match. Dialogue: 0,0:09:20.41,0:09:22.37,Default,,0000,0000,0000,,And we had one more condition. Dialogue: 0,0:09:22.40,0:09:24.77,Default,,0000,0000,0000,,It was a coin about this size, Dialogue: 0,0:09:24.79,0:09:26.84,Default,,0000,0000,0000,,with 24 numbers written on it. Dialogue: 0,0:09:27.47,0:09:30.94,Default,,0000,0000,0000,,And we asked them to put the coin\Nsomewhere in their hut, Dialogue: 0,0:09:30.96,0:09:34.26,Default,,0000,0000,0000,,and every week, take a knife\Nand scratch the number for that week -- Dialogue: 0,0:09:34.28,0:09:36.39,Default,,0000,0000,0000,,week one, two, three, four -- Dialogue: 0,0:09:36.41,0:09:38.91,Default,,0000,0000,0000,,scratch it like a minus\Nif they didn't save Dialogue: 0,0:09:38.94,0:09:41.19,Default,,0000,0000,0000,,and scratch it up and down if they saved. Dialogue: 0,0:09:41.79,0:09:43.05,Default,,0000,0000,0000,,Now, think to yourself: Dialogue: 0,0:09:43.08,0:09:46.40,Default,,0000,0000,0000,,Which one of those methods\Ndo you think worked the best? Dialogue: 0,0:09:46.42,0:09:48.79,Default,,0000,0000,0000,,Text, text from the kids,\N10 percent, 20 percent, Dialogue: 0,0:09:48.82,0:09:51.38,Default,,0000,0000,0000,,beginning of the week,\Nend of the week, and the coin? Dialogue: 0,0:09:51.40,0:09:53.50,Default,,0000,0000,0000,,I'll tell you what\Nthe average people think. Dialogue: 0,0:09:53.53,0:09:55.52,Default,,0000,0000,0000,,We've done these studies of prediction, Dialogue: 0,0:09:55.54,0:09:57.63,Default,,0000,0000,0000,,both in the US and in Kenya. Dialogue: 0,0:09:57.66,0:10:00.60,Default,,0000,0000,0000,,People think that 20 percent\Nwill get a lot of action, Dialogue: 0,0:10:00.62,0:10:01.87,Default,,0000,0000,0000,,10 percent less, Dialogue: 0,0:10:01.89,0:10:03.73,Default,,0000,0000,0000,,the rest of it will do nothing -- Dialogue: 0,0:10:03.75,0:10:06.48,Default,,0000,0000,0000,,kids, coin, doesn't matter. Dialogue: 0,0:10:07.05,0:10:09.69,Default,,0000,0000,0000,,People think loss aversion\Nwill have a small effect. Dialogue: 0,0:10:10.68,0:10:11.94,Default,,0000,0000,0000,,What actually happened? Dialogue: 0,0:10:12.86,0:10:15.03,Default,,0000,0000,0000,,Sending a text reminder once a week Dialogue: 0,0:10:15.06,0:10:16.27,Default,,0000,0000,0000,,helps a lot. Dialogue: 0,0:10:16.85,0:10:18.01,Default,,0000,0000,0000,,Good news! Dialogue: 0,0:10:18.03,0:10:21.63,Default,,0000,0000,0000,,This program lasted six months.\NPeople forget. Reminding people is great. Dialogue: 0,0:10:22.09,0:10:25.03,Default,,0000,0000,0000,,Ten percent at the end\Nof the week helped some more. Dialogue: 0,0:10:25.06,0:10:26.46,Default,,0000,0000,0000,,Financial incentives work. Dialogue: 0,0:10:27.03,0:10:31.03,Default,,0000,0000,0000,,Twenty percent at the end of the week --\Njust like 10 percent, no difference. Dialogue: 0,0:10:31.62,0:10:33.58,Default,,0000,0000,0000,,Ten percent in the beginning of the week Dialogue: 0,0:10:33.61,0:10:34.76,Default,,0000,0000,0000,,helps some more. Dialogue: 0,0:10:34.79,0:10:35.98,Default,,0000,0000,0000,,Loss aversion works. Dialogue: 0,0:10:36.01,0:10:38.08,Default,,0000,0000,0000,,Twenty percent in\Nthe beginning of the week, Dialogue: 0,0:10:38.10,0:10:41.18,Default,,0000,0000,0000,,just like 10 percent in the beginning\Nof the week, no difference. Dialogue: 0,0:10:41.20,0:10:44.18,Default,,0000,0000,0000,,And the text message from the kids\Nwas just as effective Dialogue: 0,0:10:44.20,0:10:47.42,Default,,0000,0000,0000,,as 20 percent plus loss aversion -- Dialogue: 0,0:10:47.44,0:10:49.10,Default,,0000,0000,0000,,which is amazing, right? Dialogue: 0,0:10:49.12,0:10:52.45,Default,,0000,0000,0000,,It's amazing how motivating\Nmessages from kids were. Dialogue: 0,0:10:52.48,0:10:55.83,Default,,0000,0000,0000,,And one conclusion is\Nwe don't use kids enough. Dialogue: 0,0:10:55.85,0:10:57.90,Default,,0000,0000,0000,,(Laughter) Dialogue: 0,0:10:57.92,0:11:03.39,Default,,0000,0000,0000,,And, of course, I don't mean\Nin a child labor sense. Dialogue: 0,0:11:04.06,0:11:06.44,Default,,0000,0000,0000,,But if you think about\Nparents and their kids, Dialogue: 0,0:11:06.46,0:11:09.08,Default,,0000,0000,0000,,we are the best that we can for our kids, Dialogue: 0,0:11:09.11,0:11:10.60,Default,,0000,0000,0000,,and we think about the future, Dialogue: 0,0:11:10.62,0:11:12.10,Default,,0000,0000,0000,,and I think we should think Dialogue: 0,0:11:12.12,0:11:15.24,Default,,0000,0000,0000,,about how to use that amazing\Nsource of motivation Dialogue: 0,0:11:15.26,0:11:17.81,Default,,0000,0000,0000,,to get parents to behave in a better way. Dialogue: 0,0:11:18.85,0:11:21.67,Default,,0000,0000,0000,,But the big surprise\Nof this study was the coin. Dialogue: 0,0:11:21.70,0:11:24.95,Default,,0000,0000,0000,,The coin basically doubled savings\Ncompared to everything else. Dialogue: 0,0:11:25.73,0:11:28.41,Default,,0000,0000,0000,,And now the question is: Why?\NWhat was it about the coin? Dialogue: 0,0:11:29.05,0:11:31.70,Default,,0000,0000,0000,,So I'll tell you how I started\Nthinking about the coin, Dialogue: 0,0:11:31.73,0:11:33.23,Default,,0000,0000,0000,,and then we'll come back to it. Dialogue: 0,0:11:33.25,0:11:36.23,Default,,0000,0000,0000,,So you know, when I do research\Non, let's say, buying coffee, Dialogue: 0,0:11:36.25,0:11:38.71,Default,,0000,0000,0000,,I don't need to go anywhere.\NI can sit in my office. Dialogue: 0,0:11:38.73,0:11:40.94,Default,,0000,0000,0000,,I've bought enough coffee.\NI know how it works. Dialogue: 0,0:11:40.97,0:11:42.90,Default,,0000,0000,0000,,The details, I'm familiar with. Dialogue: 0,0:11:42.93,0:11:46.03,Default,,0000,0000,0000,,When you do research in some\Nof the poorest places in the world, Dialogue: 0,0:11:46.06,0:11:48.34,Default,,0000,0000,0000,,you have to go and visit\Nand see what's going on Dialogue: 0,0:11:48.36,0:11:50.95,Default,,0000,0000,0000,,and get some insight\Nabout how the system works. Dialogue: 0,0:11:51.59,0:11:52.96,Default,,0000,0000,0000,,And on that particular day, Dialogue: 0,0:11:52.98,0:11:55.50,Default,,0000,0000,0000,,I'm in a place called Soweto\Nin South Africa, Dialogue: 0,0:11:55.53,0:11:59.15,Default,,0000,0000,0000,,and I'm sitting in a place\Nthat sells funeral insurance. Dialogue: 0,0:11:59.99,0:12:03.88,Default,,0000,0000,0000,,You know, in the US people spend\Ncrazy amounts of money on weddings? Dialogue: 0,0:12:03.90,0:12:05.91,Default,,0000,0000,0000,,In South Africa, it's funerals. Dialogue: 0,0:12:06.36,0:12:11.35,Default,,0000,0000,0000,,People spend up to a year\Nor two years of income on funerals. Dialogue: 0,0:12:11.91,0:12:14.71,Default,,0000,0000,0000,,And I sit in this place -- Dialogue: 0,0:12:14.73,0:12:19.71,Default,,0000,0000,0000,,by the way, before you judge the South\NAfricans as being irrational with this, Dialogue: 0,0:12:19.73,0:12:20.93,Default,,0000,0000,0000,,I just want to remind you Dialogue: 0,0:12:20.95,0:12:24.26,Default,,0000,0000,0000,,that spending a lot of money\Non funerals compared to weddings, Dialogue: 0,0:12:24.28,0:12:26.79,Default,,0000,0000,0000,,at least you know for sure\Nyou only have one. Dialogue: 0,0:12:26.81,0:12:29.86,Default,,0000,0000,0000,,(Laughter) Dialogue: 0,0:12:36.00,0:12:41.04,Default,,0000,0000,0000,,OK, so I sit in this place\Nthat sells funeral insurance. Dialogue: 0,0:12:41.07,0:12:45.04,Default,,0000,0000,0000,,And this guy comes in with his son --\Nhis son is about 12 -- Dialogue: 0,0:12:45.06,0:12:48.32,Default,,0000,0000,0000,,and he buys funeral insurance for a week. Dialogue: 0,0:12:48.82,0:12:51.45,Default,,0000,0000,0000,,It will cover 90 percent\Nof his funeral expense Dialogue: 0,0:12:51.48,0:12:53.63,Default,,0000,0000,0000,,only if he dies in the next seven days. Dialogue: 0,0:12:54.35,0:12:57.66,Default,,0000,0000,0000,,Right? These are very poor people,\Nthey buy small amounts of insurance Dialogue: 0,0:12:57.68,0:12:59.34,Default,,0000,0000,0000,,and small amount of soap and such. Dialogue: 0,0:12:59.37,0:13:01.17,Default,,0000,0000,0000,,And he gets that certificate, Dialogue: 0,0:13:01.19,0:13:03.86,Default,,0000,0000,0000,,and in a very ceremonious way,\Nhe gives it to his son. Dialogue: 0,0:13:04.46,0:13:07.70,Default,,0000,0000,0000,,And as he gives it to his son,\NI think to myself, why the ceremony? Dialogue: 0,0:13:07.73,0:13:09.26,Default,,0000,0000,0000,,What is this father doing? Dialogue: 0,0:13:09.28,0:13:13.32,Default,,0000,0000,0000,,Now, think about the breadwinner\Nthat decides on that particular day Dialogue: 0,0:13:13.34,0:13:15.76,Default,,0000,0000,0000,,to direct some money\Ninto insurance or savings. Dialogue: 0,0:13:16.59,0:13:18.93,Default,,0000,0000,0000,,What is the family going to see tonight? Dialogue: 0,0:13:19.94,0:13:21.51,Default,,0000,0000,0000,,They're going to see less. Dialogue: 0,0:13:21.53,0:13:25.59,Default,,0000,0000,0000,,Right? At that level of poverty, there'll\Nbe less food, less kerosene, less water -- Dialogue: 0,0:13:25.62,0:13:27.47,Default,,0000,0000,0000,,something less tonight. Dialogue: 0,0:13:27.49,0:13:30.76,Default,,0000,0000,0000,,And what his father was doing\Nand what our coin was trying to do Dialogue: 0,0:13:30.78,0:13:33.35,Default,,0000,0000,0000,,is to say, yes, there's less\Nfood on the table, Dialogue: 0,0:13:33.37,0:13:35.02,Default,,0000,0000,0000,,but there's another activity. Dialogue: 0,0:13:35.73,0:13:39.52,Default,,0000,0000,0000,,You see, what happened is, there are\Nmany good, important economic activities, Dialogue: 0,0:13:39.54,0:13:42.07,Default,,0000,0000,0000,,like savings and insurance,\Nthat are invisible. Dialogue: 0,0:13:42.62,0:13:45.50,Default,,0000,0000,0000,,And now the question is:\NHow do we make them visible? Dialogue: 0,0:13:46.10,0:13:49.84,Default,,0000,0000,0000,,So let's go back to our rocket model. Dialogue: 0,0:13:50.37,0:13:52.65,Default,,0000,0000,0000,,We have to, first of all,\Nlook at the system Dialogue: 0,0:13:52.67,0:13:56.37,Default,,0000,0000,0000,,and see where there's little things\Nwe can fix, with friction, Dialogue: 0,0:13:56.39,0:13:58.75,Default,,0000,0000,0000,,where is there\Nthat we can remove friction? Dialogue: 0,0:13:58.77,0:14:02.63,Default,,0000,0000,0000,,And then the next thing we want to do\Nis to think broadly about the system, Dialogue: 0,0:14:02.65,0:14:06.03,Default,,0000,0000,0000,,and say: What other motivations\Ncan we bring in? Dialogue: 0,0:14:06.06,0:14:08.08,Default,,0000,0000,0000,,And that's a much more difficult exercise, Dialogue: 0,0:14:08.10,0:14:10.62,Default,,0000,0000,0000,,and we don't always know\Nwhat would work best. Dialogue: 0,0:14:10.65,0:14:13.34,Default,,0000,0000,0000,,Is it going to be money?\NIs it going to be loss aversion? Dialogue: 0,0:14:13.36,0:14:15.44,Default,,0000,0000,0000,,Is it going to be\Nsomething that is visible? Dialogue: 0,0:14:15.47,0:14:18.09,Default,,0000,0000,0000,,We don't know, and we have\Nto try different things. Dialogue: 0,0:14:18.12,0:14:21.18,Default,,0000,0000,0000,,We also have to realize that\Nour intuition sometimes misleads us. Dialogue: 0,0:14:21.21,0:14:24.58,Default,,0000,0000,0000,,We don't always necessarily know\Nwhat would work the best. Dialogue: 0,0:14:25.10,0:14:26.98,Default,,0000,0000,0000,,So if we think about this gap Dialogue: 0,0:14:27.00,0:14:29.18,Default,,0000,0000,0000,,between where we could be\Nand where we are, Dialogue: 0,0:14:29.21,0:14:32.94,Default,,0000,0000,0000,,it's a really sad thing to see this gap\Nand to think about it. Dialogue: 0,0:14:32.96,0:14:35.36,Default,,0000,0000,0000,,But the good news is,\Nthere's lots we can do. Dialogue: 0,0:14:35.90,0:14:39.14,Default,,0000,0000,0000,,Some of the changes are easy,\Nsome of the changes are more complex. Dialogue: 0,0:14:39.16,0:14:41.82,Default,,0000,0000,0000,,But if we'll attack each problem directly, Dialogue: 0,0:14:41.84,0:14:45.31,Default,,0000,0000,0000,,not by just providing\Nmore information to people Dialogue: 0,0:14:45.34,0:14:47.08,Default,,0000,0000,0000,,but trying to change the friction, Dialogue: 0,0:14:47.10,0:14:48.37,Default,,0000,0000,0000,,add motivation, Dialogue: 0,0:14:48.39,0:14:49.69,Default,,0000,0000,0000,,I think we can ... Dialogue: 0,0:14:49.71,0:14:51.57,Default,,0000,0000,0000,,Can we close the gap? No. Dialogue: 0,0:14:51.59,0:14:54.60,Default,,0000,0000,0000,,But can we get much better?\NAbsolutely, yes. Dialogue: 0,0:14:54.63,0:14:55.84,Default,,0000,0000,0000,,Thank you very much. Dialogue: 0,0:14:55.87,0:14:59.63,Default,,0000,0000,0000,,(Applause)