[Script Info]
Title: 
[Events]
Format: Layer, Start, End, Style, Name, MarginL, MarginR, MarginV, Effect, Text
Dialogue: 0,0:00:12.68,0:00:14.38,Default,,0000,0000,0000,,What you have here
Dialogue: 0,0:00:14.38,0:00:16.67,Default,,0000,0000,0000,,is an electronic cigarette.
Dialogue: 0,0:00:18.44,0:00:19.56,Default,,0000,0000,0000,,It's something that's,
Dialogue: 0,0:00:19.56,0:00:21.50,Default,,0000,0000,0000,,since it was invented a year or two ago,
Dialogue: 0,0:00:21.50,0:00:23.16,Default,,0000,0000,0000,,has given me untold happiness.
Dialogue: 0,0:00:23.16,0:00:24.59,Default,,0000,0000,0000,,(Laughter)
Dialogue: 0,0:00:24.59,0:00:26.75,Default,,0000,0000,0000,,A little bit of it, I think,\Nis the nicotine,
Dialogue: 0,0:00:26.75,0:00:28.81,Default,,0000,0000,0000,,but there's something\Nmuch bigger than that.
Dialogue: 0,0:00:28.81,0:00:34.06,Default,,0000,0000,0000,,Which is ever since, in the U.K.,\Nthey banned smoking in public places,
Dialogue: 0,0:00:34.06,0:00:37.27,Default,,0000,0000,0000,,I've never enjoyed\Na drinks party ever again.
Dialogue: 0,0:00:37.27,0:00:39.25,Default,,0000,0000,0000,,(Laughter)
Dialogue: 0,0:00:39.25,0:00:42.40,Default,,0000,0000,0000,,And the reason,\NI only worked out just the other day,
Dialogue: 0,0:00:42.40,0:00:44.25,Default,,0000,0000,0000,,which is when you go to a drinks party
Dialogue: 0,0:00:44.25,0:00:46.62,Default,,0000,0000,0000,,and you stand up\Nand you hold a glass of red wine
Dialogue: 0,0:00:46.62,0:00:48.27,Default,,0000,0000,0000,,and you talk endlessly to people,
Dialogue: 0,0:00:48.27,0:00:50.81,Default,,0000,0000,0000,,you don't actually want to spend\Nall the time talking.
Dialogue: 0,0:00:50.81,0:00:52.28,Default,,0000,0000,0000,,It's really, really tiring.
Dialogue: 0,0:00:52.28,0:00:54.59,Default,,0000,0000,0000,,Sometimes you just want\Nto stand there silently,
Dialogue: 0,0:00:54.59,0:00:56.54,Default,,0000,0000,0000,,alone with your thoughts.
Dialogue: 0,0:00:56.54,0:01:00.90,Default,,0000,0000,0000,,Sometimes you just want to stand\Nin the corner and stare out of the window.
Dialogue: 0,0:01:00.90,0:01:03.65,Default,,0000,0000,0000,,Now the problem is, when you can't smoke,
Dialogue: 0,0:01:04.25,0:01:07.40,Default,,0000,0000,0000,,if you stand and stare\Nout of the window on your own,
Dialogue: 0,0:01:07.88,0:01:10.35,Default,,0000,0000,0000,,you're an antisocial, friendless idiot.
Dialogue: 0,0:01:10.35,0:01:12.50,Default,,0000,0000,0000,,(Laughter)
Dialogue: 0,0:01:12.50,0:01:16.12,Default,,0000,0000,0000,,If you stand and stare out of the window\Non your own with a cigarette,
Dialogue: 0,0:01:16.12,0:01:17.56,Default,,0000,0000,0000,,you're a fucking philosopher.
Dialogue: 0,0:01:17.56,0:01:19.73,Default,,0000,0000,0000,,(Laughter)
Dialogue: 0,0:01:19.73,0:01:23.36,Default,,0000,0000,0000,,(Applause)
Dialogue: 0,0:01:26.56,0:01:29.49,Default,,0000,0000,0000,,So the power of reframing things
Dialogue: 0,0:01:31.36,0:01:33.87,Default,,0000,0000,0000,,cannot be overstated.
Dialogue: 0,0:01:34.51,0:01:37.46,Default,,0000,0000,0000,,What we have is exactly the same thing,\Nthe same activity,
Dialogue: 0,0:01:37.46,0:01:39.86,Default,,0000,0000,0000,,but one of them makes you feel great
Dialogue: 0,0:01:39.86,0:01:43.11,Default,,0000,0000,0000,,and the other one,\Nwith just a small change of posture,
Dialogue: 0,0:01:43.11,0:01:45.61,Default,,0000,0000,0000,,makes you feel terrible.
Dialogue: 0,0:01:45.90,0:01:48.58,Default,,0000,0000,0000,,And I think one of the problems\Nwith classical economics
Dialogue: 0,0:01:48.58,0:01:51.36,Default,,0000,0000,0000,,is it's absolutely preoccupied\Nwith reality.
Dialogue: 0,0:01:51.36,0:01:55.73,Default,,0000,0000,0000,,And reality isn't a particularly\Ngood guide to human happiness.
Dialogue: 0,0:01:55.73,0:01:57.67,Default,,0000,0000,0000,,Why, for example,
Dialogue: 0,0:01:57.67,0:02:00.63,Default,,0000,0000,0000,,are pensioners much happier
Dialogue: 0,0:02:00.63,0:02:03.02,Default,,0000,0000,0000,,than the young unemployed?
Dialogue: 0,0:02:03.02,0:02:06.58,Default,,0000,0000,0000,,Both of them, after all,\Nare in exactly the same stage of life.
Dialogue: 0,0:02:06.58,0:02:10.30,Default,,0000,0000,0000,,You both have too much time\Non your hands and not much money.
Dialogue: 0,0:02:10.30,0:02:13.18,Default,,0000,0000,0000,,But pensioners are reportedly\Nvery, very happy,
Dialogue: 0,0:02:13.18,0:02:17.23,Default,,0000,0000,0000,,whereas the unemployed are extraordinarily\Nunhappy and depressed.
Dialogue: 0,0:02:17.23,0:02:19.73,Default,,0000,0000,0000,,The reason, I think,\Nis that the pensioners believe
Dialogue: 0,0:02:19.73,0:02:21.76,Default,,0000,0000,0000,,they've chosen to be pensioners,
Dialogue: 0,0:02:21.76,0:02:26.17,Default,,0000,0000,0000,,whereas the young unemployed\Nfeel it's been thrust upon them.
Dialogue: 0,0:02:26.17,0:02:28.57,Default,,0000,0000,0000,,In England the upper middle classes
Dialogue: 0,0:02:28.57,0:02:30.65,Default,,0000,0000,0000,,have actually solved\Nthis problem perfectly,
Dialogue: 0,0:02:30.65,0:02:33.13,Default,,0000,0000,0000,,because they've re-branded unemployment.
Dialogue: 0,0:02:33.13,0:02:35.40,Default,,0000,0000,0000,,If you're an upper-middle-class\NEnglish person,
Dialogue: 0,0:02:35.40,0:02:37.80,Default,,0000,0000,0000,,you call unemployment "a year off."
Dialogue: 0,0:02:37.80,0:02:40.26,Default,,0000,0000,0000,,(Laughter)
Dialogue: 0,0:02:40.26,0:02:43.65,Default,,0000,0000,0000,,And that's because having a son\Nwho's unemployed in Manchester
Dialogue: 0,0:02:43.65,0:02:45.49,Default,,0000,0000,0000,,is really quite embarrassing,
Dialogue: 0,0:02:45.49,0:02:48.79,Default,,0000,0000,0000,,but having a son\Nwho's unemployed in Thailand
Dialogue: 0,0:02:48.79,0:02:51.17,Default,,0000,0000,0000,,is really viewed\Nas quite an accomplishment.
Dialogue: 0,0:02:51.17,0:02:52.93,Default,,0000,0000,0000,,(Laughter)
Dialogue: 0,0:02:52.93,0:02:55.02,Default,,0000,0000,0000,,But actually the power\Nto re-brand things -
Dialogue: 0,0:02:55.02,0:02:59.86,Default,,0000,0000,0000,,to understand that actually\Nour experiences, costs, things
Dialogue: 0,0:02:59.86,0:03:03.03,Default,,0000,0000,0000,,don't actually much depend\Non what they really are,
Dialogue: 0,0:03:03.03,0:03:04.85,Default,,0000,0000,0000,,but on how we view them -
Dialogue: 0,0:03:04.85,0:03:07.36,Default,,0000,0000,0000,,I genuinely think can't be overstated.
Dialogue: 0,0:03:07.36,0:03:10.08,Default,,0000,0000,0000,,There's an experiment\NI think Daniel Pink refers to
Dialogue: 0,0:03:10.08,0:03:12.74,Default,,0000,0000,0000,,where you put two dogs in a box
Dialogue: 0,0:03:12.74,0:03:15.71,Default,,0000,0000,0000,,and the box has an electric floor.
Dialogue: 0,0:03:17.54,0:03:22.18,Default,,0000,0000,0000,,Every now and then an electric shock\Nis applied to the floor,
Dialogue: 0,0:03:22.94,0:03:24.76,Default,,0000,0000,0000,,which pains the dogs.
Dialogue: 0,0:03:25.55,0:03:29.61,Default,,0000,0000,0000,,The only difference is one of the dogs\Nhas a small button in its half of the box.
Dialogue: 0,0:03:29.61,0:03:33.22,Default,,0000,0000,0000,,And when it nuzzles the button,\Nthe electric shock stops.
Dialogue: 0,0:03:34.55,0:03:36.98,Default,,0000,0000,0000,,The other dog doesn't have the button.
Dialogue: 0,0:03:36.98,0:03:40.90,Default,,0000,0000,0000,,It's exposed to exactly the same level\Nof pain as the dog in the first box,
Dialogue: 0,0:03:40.90,0:03:43.49,Default,,0000,0000,0000,,but it has no control\Nover the circumstances.
Dialogue: 0,0:03:45.22,0:03:47.68,Default,,0000,0000,0000,,Generally the first dog\Ncan be relatively content.
Dialogue: 0,0:03:48.03,0:03:51.17,Default,,0000,0000,0000,,The second dog lapses\Ninto complete depression.
Dialogue: 0,0:03:52.24,0:03:56.32,Default,,0000,0000,0000,,The circumstances of our lives\Nmay actually matter less to our happiness
Dialogue: 0,0:03:56.32,0:04:00.46,Default,,0000,0000,0000,,than the sense of control\Nwe feel over our lives.
Dialogue: 0,0:04:01.56,0:04:03.47,Default,,0000,0000,0000,,It's an interesting question.
Dialogue: 0,0:04:03.47,0:04:06.97,Default,,0000,0000,0000,,We ask the question -\Nthe whole debate in the Western world
Dialogue: 0,0:04:06.97,0:04:08.74,Default,,0000,0000,0000,,is about the level of taxation.
Dialogue: 0,0:04:09.13,0:04:11.34,Default,,0000,0000,0000,,But I think there's another debate\Nto be asked,
Dialogue: 0,0:04:11.34,0:04:14.35,Default,,0000,0000,0000,,which is the level of control\Nwe have over our tax money.
Dialogue: 0,0:04:14.100,0:04:18.64,Default,,0000,0000,0000,,That what costs us 10 pounds\Nin one context can be a curse.
Dialogue: 0,0:04:19.68,0:04:22.69,Default,,0000,0000,0000,,What costs us 10 pounds\Nin a different context
Dialogue: 0,0:04:22.69,0:04:25.38,Default,,0000,0000,0000,,we may actually welcome.
Dialogue: 0,0:04:25.70,0:04:28.88,Default,,0000,0000,0000,,You know, pay 20,000 pounds\Nin tax toward health
Dialogue: 0,0:04:29.42,0:04:31.64,Default,,0000,0000,0000,,and you're merely feeling a mug.
Dialogue: 0,0:04:31.64,0:04:34.79,Default,,0000,0000,0000,,Pay 20,000 pounds to endow a hospital ward
Dialogue: 0,0:04:34.79,0:04:36.95,Default,,0000,0000,0000,,and you're called a philanthropist.
Dialogue: 0,0:04:38.08,0:04:41.46,Default,,0000,0000,0000,,I'm probably in the wrong country\Nto talk about willingness to pay tax.
Dialogue: 0,0:04:41.46,0:04:42.90,Default,,0000,0000,0000,,(Laughter)
Dialogue: 0,0:04:42.90,0:04:48.08,Default,,0000,0000,0000,,So I'll give you one in return.\NHow you frame things really matters.
Dialogue: 0,0:04:48.08,0:04:50.16,Default,,0000,0000,0000,,Do you call it the bailout of Greece
Dialogue: 0,0:04:50.16,0:04:53.95,Default,,0000,0000,0000,,or the bailout of a load of stupid banks\Nwhich lent to Greece?
Dialogue: 0,0:04:54.87,0:04:56.93,Default,,0000,0000,0000,,Because they are actually the same thing.
Dialogue: 0,0:04:56.93,0:04:59.06,Default,,0000,0000,0000,,What you call them actually affects
Dialogue: 0,0:04:59.06,0:05:02.59,Default,,0000,0000,0000,,how you react to them,\Nviscerally and morally.
Dialogue: 0,0:05:02.93,0:05:05.96,Default,,0000,0000,0000,,I think psychological value\Nis great to be absolutely honest.
Dialogue: 0,0:05:05.96,0:05:09.09,Default,,0000,0000,0000,,One of my great friends,\Na professor called Nick Chater,
Dialogue: 0,0:05:09.09,0:05:11.71,Default,,0000,0000,0000,,who's the Professor of Decision Sciences\Nin London,
Dialogue: 0,0:05:11.71,0:05:14.24,Default,,0000,0000,0000,,believes that we should spend\Nfar less time
Dialogue: 0,0:05:14.24,0:05:16.20,Default,,0000,0000,0000,,looking into humanity's hidden depths
Dialogue: 0,0:05:16.20,0:05:19.33,Default,,0000,0000,0000,,and spend much more time\Nexploring the hidden shallows.
Dialogue: 0,0:05:19.100,0:05:21.39,Default,,0000,0000,0000,,I think that's true actually.
Dialogue: 0,0:05:21.39,0:05:23.90,Default,,0000,0000,0000,,I think impressions have an insane effect
Dialogue: 0,0:05:23.90,0:05:26.05,Default,,0000,0000,0000,,on what we think and what we do.
Dialogue: 0,0:05:26.64,0:05:30.40,Default,,0000,0000,0000,,But what we don't have is a really good\Nmodel of human psychology.
Dialogue: 0,0:05:30.40,0:05:32.23,Default,,0000,0000,0000,,At least pre-Kahneman perhaps,
Dialogue: 0,0:05:32.23,0:05:35.31,Default,,0000,0000,0000,,we didn't have a really good model\Nof human psychology
Dialogue: 0,0:05:35.31,0:05:40.05,Default,,0000,0000,0000,,to put alongside models of engineering,\Nof neoclassical economics.
Dialogue: 0,0:05:40.05,0:05:44.07,Default,,0000,0000,0000,,So people who believed in psychological\Nsolutions didn't have a model.
Dialogue: 0,0:05:44.07,0:05:45.84,Default,,0000,0000,0000,,We didn't have a framework.
Dialogue: 0,0:05:45.84,0:05:48.98,Default,,0000,0000,0000,,This is what Warren Buffett's\Nbusiness partner Charlie Munger calls
Dialogue: 0,0:05:48.98,0:05:51.49,Default,,0000,0000,0000,,"a latticework\Non which to hang your ideas."
Dialogue: 0,0:05:52.34,0:05:55.02,Default,,0000,0000,0000,,Engineers, economists,\Nclassical economists
Dialogue: 0,0:05:55.31,0:05:57.86,Default,,0000,0000,0000,,all had a very, very robust\Nexisting latticework
Dialogue: 0,0:05:57.86,0:06:00.83,Default,,0000,0000,0000,,on which practically every idea\Ncould be hung.
Dialogue: 0,0:06:00.83,0:06:04.09,Default,,0000,0000,0000,,We merely have a collection\Nof random individual insights
Dialogue: 0,0:06:04.09,0:06:06.58,Default,,0000,0000,0000,,without an overall model.
Dialogue: 0,0:06:06.58,0:06:10.58,Default,,0000,0000,0000,,And what that means\Nis that in looking at solutions,
Dialogue: 0,0:06:10.58,0:06:13.72,Default,,0000,0000,0000,,we've probably given too much priority
Dialogue: 0,0:06:13.86,0:06:17.64,Default,,0000,0000,0000,,to what I call technical engineering\Nsolutions, Newtonian solutions,
Dialogue: 0,0:06:17.64,0:06:20.29,Default,,0000,0000,0000,,and not nearly enough\Nto the psychological ones.
Dialogue: 0,0:06:20.29,0:06:22.34,Default,,0000,0000,0000,,You know my example of the Eurostar.
Dialogue: 0,0:06:22.34,0:06:24.92,Default,,0000,0000,0000,,Six million pounds spent\Nto reduce the journey time
Dialogue: 0,0:06:24.92,0:06:29.04,Default,,0000,0000,0000,,between Paris and London\Nby about 40 minutes.
Dialogue: 0,0:06:29.04,0:06:33.20,Default,,0000,0000,0000,,For 0.01 percent of this money\Nyou could have put WiFi on the trains,
Dialogue: 0,0:06:33.20,0:06:35.87,Default,,0000,0000,0000,,which wouldn't have reduced\Nthe duration of the journey,
Dialogue: 0,0:06:35.87,0:06:39.83,Default,,0000,0000,0000,,but would have improved its enjoyment\Nand its usefulness far more.
Dialogue: 0,0:06:40.58,0:06:42.55,Default,,0000,0000,0000,,For maybe 10 percent of the money,
Dialogue: 0,0:06:42.55,0:06:45.85,Default,,0000,0000,0000,,you could have paid all of the world's\Ntop male and female supermodels
Dialogue: 0,0:06:45.85,0:06:50.60,Default,,0000,0000,0000,,to walk up and down the train handing out\Nfree Chateau Petrus to all the passengers.
Dialogue: 0,0:06:51.30,0:06:53.79,Default,,0000,0000,0000,,You'd still have five [million] pounds\Nin change,
Dialogue: 0,0:06:53.79,0:06:56.57,Default,,0000,0000,0000,,and people would ask\Nfor the trains to be slowed down.
Dialogue: 0,0:06:56.57,0:06:59.32,Default,,0000,0000,0000,,(Laughter)
Dialogue: 0,0:07:00.65,0:07:02.32,Default,,0000,0000,0000,,Why were we not given the chance
Dialogue: 0,0:07:02.32,0:07:04.33,Default,,0000,0000,0000,,to solve that problem psychologically?
Dialogue: 0,0:07:04.33,0:07:07.12,Default,,0000,0000,0000,,I think it's because there's an imbalance,\Nan asymmetry,
Dialogue: 0,0:07:07.94,0:07:12.06,Default,,0000,0000,0000,,in the way we treat creative,\Nemotionally-driven psychological ideas
Dialogue: 0,0:07:13.17,0:07:17.22,Default,,0000,0000,0000,,versus the way we treat rational,\Nnumerical, spreadsheet-driven ideas.
Dialogue: 0,0:07:17.22,0:07:19.74,Default,,0000,0000,0000,,If you're a creative person,\NI think quite rightly,
Dialogue: 0,0:07:19.74,0:07:21.86,Default,,0000,0000,0000,,you have to share\Nall your ideas for approval
Dialogue: 0,0:07:21.86,0:07:23.96,Default,,0000,0000,0000,,with people much more rational than you.
Dialogue: 0,0:07:24.56,0:07:27.71,Default,,0000,0000,0000,,You have to go in and you have to have\Na cost-benefit analysis,
Dialogue: 0,0:07:27.71,0:07:30.59,Default,,0000,0000,0000,,a feasibility study,\Nan ROI study and so forth.
Dialogue: 0,0:07:30.59,0:07:32.84,Default,,0000,0000,0000,,And I think that's probably right.
Dialogue: 0,0:07:33.44,0:07:35.77,Default,,0000,0000,0000,,But this does not apply\Nthe other way around.
Dialogue: 0,0:07:36.21,0:07:38.21,Default,,0000,0000,0000,,People who have an existing framework,
Dialogue: 0,0:07:38.21,0:07:40.54,Default,,0000,0000,0000,,an economic framework,\Nan engineering framework,
Dialogue: 0,0:07:40.54,0:07:43.76,Default,,0000,0000,0000,,feel that actually logic\Nis its own answer.
Dialogue: 0,0:07:44.38,0:07:47.25,Default,,0000,0000,0000,,What they don't say is,\N"Well the numbers all seem to add up,
Dialogue: 0,0:07:47.25,0:07:48.84,Default,,0000,0000,0000,,but before I present this idea,
Dialogue: 0,0:07:48.84,0:07:51.03,Default,,0000,0000,0000,,I'll go and show it\Nto some really crazy people
Dialogue: 0,0:07:51.03,0:07:53.40,Default,,0000,0000,0000,,to see if they can come up\Nwith something better."
Dialogue: 0,0:07:53.40,0:07:56.12,Default,,0000,0000,0000,,And so we, artificially I think,\Nprioritize
Dialogue: 0,0:07:56.12,0:07:59.87,Default,,0000,0000,0000,,what I'd call mechanistic ideas\Nover psychological ideas.
Dialogue: 0,0:08:00.33,0:08:02.40,Default,,0000,0000,0000,,An example of a great psychological idea:
Dialogue: 0,0:08:02.40,0:08:04.95,Default,,0000,0000,0000,,The single best improvement\Nin passenger satisfaction
Dialogue: 0,0:08:04.95,0:08:07.51,Default,,0000,0000,0000,,on the London Underground per pound spent
Dialogue: 0,0:08:07.51,0:08:12.40,Default,,0000,0000,0000,,came when they didn't add any extra trains\Nnor change the frequency of the trains,
Dialogue: 0,0:08:12.40,0:08:16.01,Default,,0000,0000,0000,,they put dot matrix display boards\Non the platforms.
Dialogue: 0,0:08:16.74,0:08:18.28,Default,,0000,0000,0000,,Because the nature of a wait
Dialogue: 0,0:08:18.28,0:08:21.53,Default,,0000,0000,0000,,is not just dependent on its\Nnumerical quality, its duration,
Dialogue: 0,0:08:21.53,0:08:24.99,Default,,0000,0000,0000,,but on the level of uncertainty\Nyou experience during that wait.
Dialogue: 0,0:08:24.99,0:08:28.12,Default,,0000,0000,0000,,Waiting seven minutes for a train\Nwith a countdown clock
Dialogue: 0,0:08:28.12,0:08:29.95,Default,,0000,0000,0000,,is less frustrating and irritating
Dialogue: 0,0:08:29.95,0:08:31.98,Default,,0000,0000,0000,,than waiting four minutes, knuckle-biting
Dialogue: 0,0:08:31.98,0:08:35.17,Default,,0000,0000,0000,,going, "When's this train\Ngoing to damn well arrive?"
Dialogue: 0,0:08:35.76,0:08:38.30,Default,,0000,0000,0000,,Here's a beautiful example\Nof a psychological solution
Dialogue: 0,0:08:38.30,0:08:40.32,Default,,0000,0000,0000,,deployed in Korea.
Dialogue: 0,0:08:40.34,0:08:42.97,Default,,0000,0000,0000,,Red traffic lights have a countdown delay.
Dialogue: 0,0:08:42.98,0:08:46.25,Default,,0000,0000,0000,,It's proven to reduce the accident rate\Nin experiments.
Dialogue: 0,0:08:46.25,0:08:49.77,Default,,0000,0000,0000,,Why? Because road rage,\Nimpatience and general irritation
Dialogue: 0,0:08:49.77,0:08:52.54,Default,,0000,0000,0000,,are massively reduced\Nwhen you can actually see
Dialogue: 0,0:08:52.54,0:08:54.71,Default,,0000,0000,0000,,the time you have to wait.
Dialogue: 0,0:08:54.71,0:08:57.84,Default,,0000,0000,0000,,In China, not really understanding\Nthe principle behind this,
Dialogue: 0,0:08:57.84,0:09:00.60,Default,,0000,0000,0000,,they applied the same principle\Nto green traffic lights.
Dialogue: 0,0:09:00.60,0:09:03.81,Default,,0000,0000,0000,,(Laughter)
Dialogue: 0,0:09:04.82,0:09:06.22,Default,,0000,0000,0000,,Which isn't a great idea.
Dialogue: 0,0:09:06.22,0:09:07.45,Default,,0000,0000,0000,,You're 200 yards away,
Dialogue: 0,0:09:07.45,0:09:10.12,Default,,0000,0000,0000,,you realize you've got five seconds to go,\Nyou floor it.
Dialogue: 0,0:09:10.12,0:09:12.50,Default,,0000,0000,0000,,(Laughter)
Dialogue: 0,0:09:13.51,0:09:15.94,Default,,0000,0000,0000,,The Koreans, very assiduously,\Ndid test both.
Dialogue: 0,0:09:15.94,0:09:18.78,Default,,0000,0000,0000,,The accident rate goes down\Nwhen you apply this to red traffic lights;
Dialogue: 0,0:09:18.78,0:09:21.57,Default,,0000,0000,0000,,it goes up when you apply it\Nto green traffic lights.
Dialogue: 0,0:09:22.22,0:09:25.01,Default,,0000,0000,0000,,This is all I'm asking for really\Nin human decision making,
Dialogue: 0,0:09:25.01,0:09:27.03,Default,,0000,0000,0000,,is the consideration\Nof these three things.
Dialogue: 0,0:09:27.03,0:09:29.93,Default,,0000,0000,0000,,I'm not asking for the complete\Nprimacy of one over the other.
Dialogue: 0,0:09:29.93,0:09:32.17,Default,,0000,0000,0000,,I'm merely saying\Nthat when you solve problems,
Dialogue: 0,0:09:32.17,0:09:35.03,Default,,0000,0000,0000,,you should look\Nat all three of these equally
Dialogue: 0,0:09:35.28,0:09:37.73,Default,,0000,0000,0000,,and you should seek as far as possible
Dialogue: 0,0:09:37.73,0:09:40.60,Default,,0000,0000,0000,,to find solutions which sit\Nin the sweet spot in the middle.
Dialogue: 0,0:09:40.60,0:09:43.14,Default,,0000,0000,0000,,If you actually look at a great business,
Dialogue: 0,0:09:43.14,0:09:46.52,Default,,0000,0000,0000,,you'll nearly always see all of these\Nthree things coming into play.
Dialogue: 0,0:09:47.01,0:09:48.87,Default,,0000,0000,0000,,Really, really successful businesses -
Dialogue: 0,0:09:48.87,0:09:51.76,Default,,0000,0000,0000,,Google is a great,\Ngreat technological success,
Dialogue: 0,0:09:51.76,0:09:54.98,Default,,0000,0000,0000,,but it's also based\Non a very good psychological insight:
Dialogue: 0,0:09:55.63,0:09:58.61,Default,,0000,0000,0000,,People believe something\Nthat only does one thing
Dialogue: 0,0:09:58.61,0:10:02.75,Default,,0000,0000,0000,,is better at that thing than something\Nthat does that thing and something else.
Dialogue: 0,0:10:02.75,0:10:05.49,Default,,0000,0000,0000,,It's an innate thing called goal dilution.
Dialogue: 0,0:10:05.49,0:10:07.82,Default,,0000,0000,0000,,Ayelet Fishbach has written\Na paper about this.
Dialogue: 0,0:10:07.82,0:10:10.22,Default,,0000,0000,0000,,Everybody else at the time of Google,\Nmore or less,
Dialogue: 0,0:10:10.22,0:10:11.89,Default,,0000,0000,0000,,was trying to be a portal.
Dialogue: 0,0:10:11.89,0:10:13.49,Default,,0000,0000,0000,,Yes, there's a search function,
Dialogue: 0,0:10:13.49,0:10:16.89,Default,,0000,0000,0000,,but you also have weather,\Nsports scores, bits of news.
Dialogue: 0,0:10:17.50,0:10:20.14,Default,,0000,0000,0000,,Google understood\Nthat if you're just a search engine,
Dialogue: 0,0:10:20.14,0:10:22.93,Default,,0000,0000,0000,,people assume you're a very,\Nvery good search engine.
Dialogue: 0,0:10:22.93,0:10:24.54,Default,,0000,0000,0000,,All of you know this actually
Dialogue: 0,0:10:24.54,0:10:26.51,Default,,0000,0000,0000,,from when you go in to buy a television.
Dialogue: 0,0:10:26.51,0:10:29.48,Default,,0000,0000,0000,,And in the shabbier end\Nof the row of flat screen TVs
Dialogue: 0,0:10:29.48,0:10:32.42,Default,,0000,0000,0000,,you can see are these\Nrather despised things
Dialogue: 0,0:10:32.42,0:10:34.85,Default,,0000,0000,0000,,called combined TV and DVD players.
Dialogue: 0,0:10:35.38,0:10:38.55,Default,,0000,0000,0000,,And we have no knowledge whatsoever\Nof the quality of those things,
Dialogue: 0,0:10:38.55,0:10:41.82,Default,,0000,0000,0000,,but we look at a combined TV\Nand DVD player and we go, "Uck.
Dialogue: 0,0:10:41.82,0:10:46.14,Default,,0000,0000,0000,,It's probably a bit of a crap telly\Nand a bit rubbish as a DVD player."
Dialogue: 0,0:10:46.14,0:10:49.04,Default,,0000,0000,0000,,So we walk out of the shops\Nwith one of each.
Dialogue: 0,0:10:49.04,0:10:53.77,Default,,0000,0000,0000,,Google is as much a psychological success\Nas it is a technological one.
Dialogue: 0,0:10:54.42,0:10:57.20,Default,,0000,0000,0000,,I propose that we can use psychology\Nto solve problems
Dialogue: 0,0:10:57.20,0:10:59.70,Default,,0000,0000,0000,,that we didn't even realize\Nwere problems at all.
Dialogue: 0,0:10:59.70,0:11:03.44,Default,,0000,0000,0000,,This is my suggestion for getting people\Nto finish their course of antibiotics.
Dialogue: 0,0:11:03.44,0:11:05.08,Default,,0000,0000,0000,,Don't give them 24 white pills.
Dialogue: 0,0:11:05.08,0:11:07.85,Default,,0000,0000,0000,,Give them 18 white pills and six blue ones
Dialogue: 0,0:11:07.85,0:11:09.95,Default,,0000,0000,0000,,and tell them to take\Nthe white pills first
Dialogue: 0,0:11:09.95,0:11:12.35,Default,,0000,0000,0000,,and then take the blue ones.
Dialogue: 0,0:11:12.35,0:11:13.86,Default,,0000,0000,0000,,It's called chunking.
Dialogue: 0,0:11:13.86,0:11:16.62,Default,,0000,0000,0000,,The likelihood that people\Nwill get to the end is much greater
Dialogue: 0,0:11:16.62,0:11:19.17,Default,,0000,0000,0000,,when there is a milestone\Nsomewhere in the middle.
Dialogue: 0,0:11:20.00,0:11:22.45,Default,,0000,0000,0000,,One of the great mistakes,\NI think, of economics
Dialogue: 0,0:11:22.45,0:11:24.90,Default,,0000,0000,0000,,is it fails to understand\Nthat what something is,
Dialogue: 0,0:11:24.90,0:11:28.07,Default,,0000,0000,0000,,whether it's retirement,\Nunemployment, cost,
Dialogue: 0,0:11:28.99,0:11:32.97,Default,,0000,0000,0000,,is a function, not only of its amount,\Nbut also its meaning.
Dialogue: 0,0:11:33.25,0:11:36.36,Default,,0000,0000,0000,,This is a toll crossing in Britain.
Dialogue: 0,0:11:37.16,0:11:40.15,Default,,0000,0000,0000,,Quite often queues happen at the tolls.
Dialogue: 0,0:11:40.50,0:11:42.80,Default,,0000,0000,0000,,Sometimes you get very,\Nvery severe queues.
Dialogue: 0,0:11:42.80,0:11:45.49,Default,,0000,0000,0000,,You could apply the same principle\Nactually, if you like,
Dialogue: 0,0:11:45.49,0:11:47.55,Default,,0000,0000,0000,,to the security lanes in airports.
Dialogue: 0,0:11:47.55,0:11:49.42,Default,,0000,0000,0000,,What would happen if you could actually
Dialogue: 0,0:11:49.42,0:11:51.67,Default,,0000,0000,0000,,pay twice as much money\Nto cross the bridge,
Dialogue: 0,0:11:51.67,0:11:54.40,Default,,0000,0000,0000,,but go through a lane\Nthat's an express lane?
Dialogue: 0,0:11:54.40,0:11:56.20,Default,,0000,0000,0000,,It's not an unreasonable thing to do.
Dialogue: 0,0:11:56.20,0:11:58.20,Default,,0000,0000,0000,,It's an economically\Nefficient thing to do.
Dialogue: 0,0:11:58.20,0:12:00.20,Default,,0000,0000,0000,,Time means more to some people\Nthan others.
Dialogue: 0,0:12:00.20,0:12:02.59,Default,,0000,0000,0000,,If you're trying to get\Nto a job interview,
Dialogue: 0,0:12:02.59,0:12:06.60,Default,,0000,0000,0000,,you'd patently pay a couple of pounds more\Nto go through the fast lane.
Dialogue: 0,0:12:06.60,0:12:09.20,Default,,0000,0000,0000,,If you're on the way\Nto visit your mother in-law,
Dialogue: 0,0:12:09.20,0:12:12.42,Default,,0000,0000,0000,,you'd probably prefer to stay on the left.
Dialogue: 0,0:12:14.17,0:12:17.73,Default,,0000,0000,0000,,The only problem is if you introduce\Nthis economically efficient solution,
Dialogue: 0,0:12:17.73,0:12:19.45,Default,,0000,0000,0000,,people hate it.
Dialogue: 0,0:12:19.45,0:12:22.69,Default,,0000,0000,0000,,Because they think you're deliberately\Ncreating delays at the bridge
Dialogue: 0,0:12:22.69,0:12:24.31,Default,,0000,0000,0000,,in order to maximize your revenue,
Dialogue: 0,0:12:24.31,0:12:27.76,Default,,0000,0000,0000,,and "Why on earth should I pay\Nto subsidize your incompetence?"
Dialogue: 0,0:12:27.97,0:12:30.56,Default,,0000,0000,0000,,On the other hand,\Nchange the frame slightly
Dialogue: 0,0:12:30.56,0:12:32.86,Default,,0000,0000,0000,,and create charitable yield management,
Dialogue: 0,0:12:32.86,0:12:36.16,Default,,0000,0000,0000,,so the extra money you get goes\Nnot to the bridge company,
Dialogue: 0,0:12:36.16,0:12:38.13,Default,,0000,0000,0000,,it goes to charity,
Dialogue: 0,0:12:38.13,0:12:41.30,Default,,0000,0000,0000,,and the mental willingness\Nto pay completely changes.
Dialogue: 0,0:12:41.81,0:12:44.61,Default,,0000,0000,0000,,You have a relatively\Neconomically efficient solution,
Dialogue: 0,0:12:44.61,0:12:47.12,Default,,0000,0000,0000,,but one that actually meets\Nwith public approval
Dialogue: 0,0:12:47.12,0:12:49.14,Default,,0000,0000,0000,,and even a small degree of affection,
Dialogue: 0,0:12:49.14,0:12:51.50,Default,,0000,0000,0000,,rather than being seen as bastardy.
Dialogue: 0,0:12:52.16,0:12:55.27,Default,,0000,0000,0000,,So where economists\Nmake the fundamental mistake
Dialogue: 0,0:12:55.27,0:12:57.54,Default,,0000,0000,0000,,is they think that money is money.
Dialogue: 0,0:12:58.27,0:13:02.62,Default,,0000,0000,0000,,Actually my pain experienced\Nin paying five pounds
Dialogue: 0,0:13:02.62,0:13:04.60,Default,,0000,0000,0000,,is not just proportionate to the amount,
Dialogue: 0,0:13:04.60,0:13:07.10,Default,,0000,0000,0000,,but where I think that money is going.
Dialogue: 0,0:13:07.10,0:13:10.14,Default,,0000,0000,0000,,And I think understanding\Nthat could revolutionize tax policy.
Dialogue: 0,0:13:10.14,0:13:12.34,Default,,0000,0000,0000,,It could revolutionize\Nthe public services.
Dialogue: 0,0:13:12.34,0:13:15.15,Default,,0000,0000,0000,,It could really change\Nthings quite significantly.
Dialogue: 0,0:13:15.50,0:13:17.91,Default,,0000,0000,0000,,Here's a guy you all need to study.
Dialogue: 0,0:13:17.91,0:13:20.33,Default,,0000,0000,0000,,Anybody heard of him?
Dialogue: 0,0:13:20.33,0:13:22.53,Default,,0000,0000,0000,,Good. One or two.
Dialogue: 0,0:13:22.53,0:13:24.49,Default,,0000,0000,0000,,He's an Austrian school economist
Dialogue: 0,0:13:24.49,0:13:29.39,Default,,0000,0000,0000,,who was first active in the first half\Nof the 20th century in Vienna.
Dialogue: 0,0:13:29.39,0:13:31.58,Default,,0000,0000,0000,,What was interesting\Nabout the Austrian school
Dialogue: 0,0:13:31.58,0:13:34.79,Default,,0000,0000,0000,,is they actually grew up alongside Freud.
Dialogue: 0,0:13:35.14,0:13:37.77,Default,,0000,0000,0000,,And so they're predominantly\Ninterested in psychology.
Dialogue: 0,0:13:37.77,0:13:42.25,Default,,0000,0000,0000,,They believed that there was a discipline\Ncalled praxeology,
Dialogue: 0,0:13:42.25,0:13:45.14,Default,,0000,0000,0000,,which is a prior discipline\Nto the study of economics.
Dialogue: 0,0:13:45.14,0:13:49.52,Default,,0000,0000,0000,,Praxeology is the study of human choice,\Naction and decision making.
Dialogue: 0,0:13:50.24,0:13:51.54,Default,,0000,0000,0000,,I think they're right.
Dialogue: 0,0:13:51.54,0:13:53.59,Default,,0000,0000,0000,,I think the danger\Nwe have in today's world
Dialogue: 0,0:13:53.59,0:13:55.44,Default,,0000,0000,0000,,is we have the study of economics
Dialogue: 0,0:13:55.44,0:13:59.82,Default,,0000,0000,0000,,considers itself to be a prior discipline\Nto the study of human psychology.
Dialogue: 0,0:13:59.82,0:14:02.65,Default,,0000,0000,0000,,But as Charlie Munger says,\N"If economics isn't behavioral,
Dialogue: 0,0:14:02.65,0:14:04.95,Default,,0000,0000,0000,,I don't know what the hell is."
Dialogue: 0,0:14:05.36,0:14:11.06,Default,,0000,0000,0000,,Von Mises, interestingly, believes\Neconomics is just a subset of psychology.
Dialogue: 0,0:14:11.06,0:14:13.24,Default,,0000,0000,0000,,I think he just refers to economics as
Dialogue: 0,0:14:13.24,0:14:16.73,Default,,0000,0000,0000,,"the study of human praxeology\Nunder conditions of scarcity."
Dialogue: 0,0:14:17.10,0:14:19.66,Default,,0000,0000,0000,,But von Mises, among many other things,
Dialogue: 0,0:14:20.46,0:14:25.37,Default,,0000,0000,0000,,I think uses an analogy which is probably\Nthe best justification and explanation
Dialogue: 0,0:14:25.37,0:14:28.92,Default,,0000,0000,0000,,for the value of marketing,\Nthe value of perceived value
Dialogue: 0,0:14:29.18,0:14:32.76,Default,,0000,0000,0000,,and the fact that we should actually\Ntreat it as being absolutely equivalent
Dialogue: 0,0:14:32.76,0:14:34.57,Default,,0000,0000,0000,,to any other kind of value.
Dialogue: 0,0:14:34.57,0:14:36.99,Default,,0000,0000,0000,,All of us - even those of us\Nwho work in marketing -
Dialogue: 0,0:14:36.99,0:14:38.67,Default,,0000,0000,0000,,tend to think of value in two ways.
Dialogue: 0,0:14:38.67,0:14:39.82,Default,,0000,0000,0000,,There's the real value,
Dialogue: 0,0:14:39.82,0:14:43.02,Default,,0000,0000,0000,,which is when you make something\Nin a factory and provide a service,
Dialogue: 0,0:14:43.02,0:14:44.97,Default,,0000,0000,0000,,and then there's a kind of dubious value,
Dialogue: 0,0:14:44.97,0:14:47.75,Default,,0000,0000,0000,,which you create by changing\Nthe way people look at things.
Dialogue: 0,0:14:47.75,0:14:49.95,Default,,0000,0000,0000,,Von Mises completely rejected\Nthis distinction.
Dialogue: 0,0:14:49.95,0:14:51.69,Default,,0000,0000,0000,,And he used this following analogy.
Dialogue: 0,0:14:51.69,0:14:56.79,Default,,0000,0000,0000,,He referred actually to strange economists\Ncalled the French Physiocrats,
Dialogue: 0,0:14:56.79,0:15:00.47,Default,,0000,0000,0000,,who believed that the only true value\Nwas what you extracted from the land.
Dialogue: 0,0:15:00.47,0:15:03.14,Default,,0000,0000,0000,,So if you're a shepherd\Nor a quarryman or a farmer,
Dialogue: 0,0:15:03.14,0:15:04.67,Default,,0000,0000,0000,,you created true value.
Dialogue: 0,0:15:04.67,0:15:07.53,Default,,0000,0000,0000,,If however, you bought\Nsome wool from the shepherd
Dialogue: 0,0:15:07.53,0:15:10.43,Default,,0000,0000,0000,,and charged a premium\Nfor converting it into a hat,
Dialogue: 0,0:15:10.43,0:15:12.59,Default,,0000,0000,0000,,you weren't actually creating value,
Dialogue: 0,0:15:12.59,0:15:14.55,Default,,0000,0000,0000,,you were exploiting the shepherd.
Dialogue: 0,0:15:15.10,0:15:18.99,Default,,0000,0000,0000,,Now von Mises said that modern economists\Nmake exactly the same mistake
Dialogue: 0,0:15:18.99,0:15:21.05,Default,,0000,0000,0000,,with regard to advertising and marketing.
Dialogue: 0,0:15:21.05,0:15:23.17,Default,,0000,0000,0000,,He says, if you run a restaurant,
Dialogue: 0,0:15:23.17,0:15:25.43,Default,,0000,0000,0000,,there is no healthy distinction to be made
Dialogue: 0,0:15:25.43,0:15:28.01,Default,,0000,0000,0000,,between the value you create\Nby cooking the food
Dialogue: 0,0:15:28.01,0:15:30.67,Default,,0000,0000,0000,,and the value you create\Nby sweeping the floor.
Dialogue: 0,0:15:30.67,0:15:33.22,Default,,0000,0000,0000,,One of them creates, perhaps,\Nthe primary product -
Dialogue: 0,0:15:33.22,0:15:35.00,Default,,0000,0000,0000,,the thing we think we're paying for -
Dialogue: 0,0:15:35.00,0:15:36.56,Default,,0000,0000,0000,,the other one creates a context
Dialogue: 0,0:15:36.56,0:15:39.72,Default,,0000,0000,0000,,within which we can enjoy\Nand appreciate that product.
Dialogue: 0,0:15:39.72,0:15:43.22,Default,,0000,0000,0000,,And the idea that one of them should\Nactually have priority over the other
Dialogue: 0,0:15:43.22,0:15:44.47,Default,,0000,0000,0000,,is fundamentally wrong.
Dialogue: 0,0:15:44.47,0:15:46.14,Default,,0000,0000,0000,,Try this quick thought experiment.
Dialogue: 0,0:15:46.14,0:15:48.72,Default,,0000,0000,0000,,Imagine a restaurant\Nthat serves Michelin-starred food,
Dialogue: 0,0:15:48.72,0:15:51.53,Default,,0000,0000,0000,,but actually where\Nthe restaurant smells of sewage
Dialogue: 0,0:15:51.53,0:15:54.17,Default,,0000,0000,0000,,and there's human feces on the floor.
Dialogue: 0,0:15:55.03,0:15:57.61,Default,,0000,0000,0000,,The best thing you can do there\Nto create value
Dialogue: 0,0:15:57.61,0:16:00.85,Default,,0000,0000,0000,,is not actually to improve\Nthe food still further,
Dialogue: 0,0:16:00.85,0:16:03.95,Default,,0000,0000,0000,,it's to get rid of the smell\Nand clean up the floor.
Dialogue: 0,0:16:05.31,0:16:08.11,Default,,0000,0000,0000,,And it's vital we understand this.
Dialogue: 0,0:16:08.11,0:16:10.49,Default,,0000,0000,0000,,If that seems like some strange,\Nabstruse thing,
Dialogue: 0,0:16:10.49,0:16:15.03,Default,,0000,0000,0000,,in the U.K., the post office\Nhad a 98 percent success rate
Dialogue: 0,0:16:15.03,0:16:17.57,Default,,0000,0000,0000,,at delivering first-class mail\Nthe next day.
Dialogue: 0,0:16:17.57,0:16:19.46,Default,,0000,0000,0000,,They decided this wasn't good enough
Dialogue: 0,0:16:19.46,0:16:21.59,Default,,0000,0000,0000,,and they wanted to get it up to 99.
Dialogue: 0,0:16:22.84,0:16:26.09,Default,,0000,0000,0000,,The effort to do that\Nalmost broke the organization.
Dialogue: 0,0:16:27.11,0:16:29.34,Default,,0000,0000,0000,,If at the same time you'd gone\Nand asked people,
Dialogue: 0,0:16:29.34,0:16:32.19,Default,,0000,0000,0000,,"What percentage of first-class mail\Narrives the next day?"
Dialogue: 0,0:16:32.19,0:16:36.32,Default,,0000,0000,0000,,the average, or the modal answer\Nwould have been 50 to 60 percent.
Dialogue: 0,0:16:36.98,0:16:39.74,Default,,0000,0000,0000,,Now if your perception\Nis much worse than your reality,
Dialogue: 0,0:16:39.74,0:16:42.76,Default,,0000,0000,0000,,what on earth are you doing\Ntrying to change the reality?
Dialogue: 0,0:16:42.76,0:16:46.44,Default,,0000,0000,0000,,That's like trying to improve\Nthe food in a restaurant that stinks.
Dialogue: 0,0:16:47.97,0:16:49.22,Default,,0000,0000,0000,,What you need to do
Dialogue: 0,0:16:49.22,0:16:50.66,Default,,0000,0000,0000,,is first of all tell people
Dialogue: 0,0:16:50.66,0:16:54.58,Default,,0000,0000,0000,,that 98 percent of mail gets there\Nthe next day, first-class mail.
Dialogue: 0,0:16:55.42,0:16:56.74,Default,,0000,0000,0000,,That's pretty good.
Dialogue: 0,0:16:56.74,0:16:59.96,Default,,0000,0000,0000,,I would argue, in Britain there's\Na much better frame of reference,
Dialogue: 0,0:16:59.96,0:17:01.11,Default,,0000,0000,0000,,which is to tell people
Dialogue: 0,0:17:01.11,0:17:03.32,Default,,0000,0000,0000,,that more first-class mail\Narrives the next day
Dialogue: 0,0:17:03.32,0:17:05.05,Default,,0000,0000,0000,,in the U.K. than in Germany.
Dialogue: 0,0:17:05.05,0:17:08.53,Default,,0000,0000,0000,,Because generally in Britain if you want\Nto make us happy about something,
Dialogue: 0,0:17:08.53,0:17:10.73,Default,,0000,0000,0000,,just tell us we do it better\Nthan the Germans.
Dialogue: 0,0:17:10.73,0:17:12.12,Default,,0000,0000,0000,,(Laughter)
Dialogue: 0,0:17:12.12,0:17:13.66,Default,,0000,0000,0000,,(Applause)
Dialogue: 0,0:17:15.08,0:17:18.02,Default,,0000,0000,0000,,Choose your frame of reference\Nand the perceived value
Dialogue: 0,0:17:18.02,0:17:21.30,Default,,0000,0000,0000,,and therefore the actual value\Nis completely transformed.
Dialogue: 0,0:17:21.30,0:17:23.33,Default,,0000,0000,0000,,It has to be said of the Germans
Dialogue: 0,0:17:23.33,0:17:26.07,Default,,0000,0000,0000,,that the Germans and the French\Nare doing a brilliant job
Dialogue: 0,0:17:26.07,0:17:27.57,Default,,0000,0000,0000,,of creating a united Europe.
Dialogue: 0,0:17:27.57,0:17:30.35,Default,,0000,0000,0000,,The only thing they didn't expect\Nis they're uniting Europe
Dialogue: 0,0:17:30.35,0:17:33.21,Default,,0000,0000,0000,,through a shared mild hatred\Nof the French and Germans.
Dialogue: 0,0:17:33.21,0:17:35.72,Default,,0000,0000,0000,,But I'm British,\Nthat's the way we like it.
Dialogue: 0,0:17:37.86,0:17:40.90,Default,,0000,0000,0000,,What you also notice is that\Nin any case our perception is leaky.
Dialogue: 0,0:17:40.90,0:17:43.74,Default,,0000,0000,0000,,We can't tell the difference\Nbetween the quality of the food
Dialogue: 0,0:17:43.74,0:17:45.86,Default,,0000,0000,0000,,and the environment\Nin which we consume it.
Dialogue: 0,0:17:45.86,0:17:47.88,Default,,0000,0000,0000,,All of you will have seen this phenomenon
Dialogue: 0,0:17:47.88,0:17:50.30,Default,,0000,0000,0000,,if you have your car washed or valeted.
Dialogue: 0,0:17:50.60,0:17:54.33,Default,,0000,0000,0000,,When you drive away,\Nyour car feels as if it drives better.
Dialogue: 0,0:17:55.82,0:17:57.21,Default,,0000,0000,0000,,And the reason for this,
Dialogue: 0,0:17:57.21,0:17:59.68,Default,,0000,0000,0000,,unless my car valet\Nmysteriously is changing the oil
Dialogue: 0,0:17:59.68,0:18:02.92,Default,,0000,0000,0000,,and performing work which\NI'm not paying him for and I'm unaware of,
Dialogue: 0,0:18:02.92,0:18:05.44,Default,,0000,0000,0000,,is because perception\Nis in any case leaky.
Dialogue: 0,0:18:05.44,0:18:09.39,Default,,0000,0000,0000,,Analgesics that are branded\Nare more effective at reducing pain
Dialogue: 0,0:18:09.39,0:18:11.26,Default,,0000,0000,0000,,than analgesics that are not branded.
Dialogue: 0,0:18:11.26,0:18:13.66,Default,,0000,0000,0000,,I don't just mean through\Nreported pain reduction,
Dialogue: 0,0:18:13.66,0:18:15.47,Default,,0000,0000,0000,,actual measured pain reduction.
Dialogue: 0,0:18:15.47,0:18:19.96,Default,,0000,0000,0000,,And so perception actually\Nis leaky in any case.
Dialogue: 0,0:18:20.75,0:18:23.68,Default,,0000,0000,0000,,So if you do something\Nthat's perceptually bad in one respect,
Dialogue: 0,0:18:23.68,0:18:25.29,Default,,0000,0000,0000,,you can damage the other.
Dialogue: 0,0:18:25.29,0:18:26.88,Default,,0000,0000,0000,,I'll end very quicky
Dialogue: 0,0:18:26.88,0:18:30.08,Default,,0000,0000,0000,,with something without which\Nyou'd never be happy for me to miss
Dialogue: 0,0:18:30.08,0:18:32.15,Default,,0000,0000,0000,,which is the perfect demonstration
Dialogue: 0,0:18:32.15,0:18:35.16,Default,,0000,0000,0000,,of creating economically\Nfairly sustainable value,
Dialogue: 0,0:18:35.16,0:18:37.09,Default,,0000,0000,0000,,through doing nothing to the product,
Dialogue: 0,0:18:37.09,0:18:40.19,Default,,0000,0000,0000,,and everything to the way\Nin which it's consumed and perceived.
Dialogue: 0,0:18:40.19,0:18:43.60,Default,,0000,0000,0000,,(Video) Man:\NShreddies are supposed to be square.
Dialogue: 0,0:18:44.20,0:18:47.55,Default,,0000,0000,0000,,Woman: Have any of these\Ndiamond shapes gone out?
Dialogue: 0,0:18:48.67,0:18:51.47,Default,,0000,0000,0000,,[Diamond Shreddies]\NWoman: New Diamond Shreddies cereal
Dialogue: 0,0:18:51.47,0:18:54.60,Default,,0000,0000,0000,,Same 100% Whole Grain Wheat\Nin a delicious diamond shape.
Dialogue: 0,0:18:55.98,0:18:59.20,Default,,0000,0000,0000,,Rory Sutherland: Very finally,\Nhere's the poster campaign.
Dialogue: 0,0:18:59.20,0:19:01.36,Default,,0000,0000,0000,,(Laughter)
Dialogue: 0,0:19:01.36,0:19:04.32,Default,,0000,0000,0000,,(Applause)
Dialogue: 0,0:19:09.47,0:19:11.75,Default,,0000,0000,0000,,Some Canadians are inherently\Nvery conservative,
Dialogue: 0,0:19:11.75,0:19:15.04,Default,,0000,0000,0000,,and were very annoyed that their\Nsquare Shreddies had been taken away.
Dialogue: 0,0:19:15.04,0:19:17.70,Default,,0000,0000,0000,,It was kind of a new-coat\Nmarketing moment.
Dialogue: 0,0:19:17.70,0:19:20.53,Default,,0000,0000,0000,,So after long thought and deliberation,
Dialogue: 0,0:19:20.53,0:19:22.49,Default,,0000,0000,0000,,they arrived at a compromise.
Dialogue: 0,0:19:22.49,0:19:23.86,Default,,0000,0000,0000,,Thank you very much.
Dialogue: 0,0:19:23.86,0:19:26.44,Default,,0000,0000,0000,,(Applause)