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← Perspective is everything

The circumstances of our lives may matter less than how we see them, says Rory Sutherland. At TEDxAthens, he makes a compelling case for how reframing is the key to happiness.

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Showing Revision 12 created 04/20/2017 by Krystian Aparta.

  1. What you have here
  2. is an electronic cigarette.
  3. It's something that, since it was
    invented a year or two ago,
  4. has given me untold happiness.
  5. (Laughter)

  6. A little bit of it,
    I think, is the nicotine,

  7. but there's something
    much bigger than that;
  8. which is, ever since, in the UK,
    they banned smoking in public places,
  9. I've never enjoyed
    a drinks party ever again.
  10. (Laughter)

  11. And the reason, I only worked out
    just the other day,

  12. which is: when you go
    to a drinks party and you stand up
  13. and hold a glass of red wine
    and you talk endlessly to people,
  14. you don't actually want to spend
    all the time talking.
  15. It's really, really tiring.
  16. Sometimes you just want to stand there
    silently, alone with your thoughts.
  17. Sometimes you just want to stand
    in the corner and stare out of the window.
  18. Now the problem is, when you can't smoke,
  19. if you stand and stare
    out of the window on your own,
  20. you're an antisocial, friendless idiot.
  21. (Laughter)

  22. If you stand and stare out of the window
    on your own with a cigarette,

  23. you're a fucking philosopher.
  24. (Laughter)

  25. (Applause)

  26. So the power of reframing things

  27. cannot be overstated.
  28. What we have is exactly
    the same thing, the same activity,
  29. but one of them makes you feel great
  30. and the other one,
    with just a small change of posture,
  31. makes you feel terrible.
  32. And I think one of the problems
    with classical economics is,
  33. it's absolutely preoccupied with reality.
  34. And reality isn't a particularly good
    guide to human happiness.
  35. Why, for example,
    are pensioners much happier
  36. than the young unemployed?
  37. Both of them, after all,
    are in exactly the same stage of life.
  38. You both have too much time
    on your hands and not much money.
  39. But pensioners are reportedly
    very, very happy,
  40. whereas the unemployed
    are extraordinarily unhappy and depressed.
  41. The reason, I think,
    is that the pensioners believe
  42. they've chosen to be pensioners,
  43. whereas the young unemployed
    feel it's been thrust upon them.
  44. In England, the upper-middle classes have
    actually solved this problem perfectly,

  45. because they've re-branded unemployment.
  46. If you're an upper-middle-class
    English person,
  47. you call unemployment "a year off."
  48. (Laughter)

  49. And that's because having a son
    who's unemployed in Manchester

  50. is really quite embarrassing.
  51. But having a son
    who's unemployed in Thailand
  52. is really viewed
    as quite an accomplishment.
  53. (Laughter)

  54. But actually, the power
    to re-brand things --

  55. to understand that
    our experiences, costs, things
  56. don't actually much depend
    on what they really are,
  57. but on how we view them --
  58. I genuinely think can't be overstated.
  59. There's an experiment
    I think Daniel Pink refers to,

  60. where you put two dogs in a box
  61. and the box has an electric floor.
  62. Every now and then,
    an electric shock is applied to the floor,
  63. which pains the dogs.
  64. The only difference is one of the dogs
    has a small button in its half of the box.
  65. And when it nuzzles the button,
    the electric shock stops.
  66. The other dog doesn't have the button.
  67. It's exposed to exactly the same level
    of pain as the dog in the first box,
  68. but it has no control
    over the circumstances.
  69. Generally, the first dog
    can be relatively content.
  70. The second dog lapses
    into complete depression.
  71. The circumstances of our lives
    may actually matter less to our happiness

  72. than the sense of control
    we feel over our lives.
  73. It's an interesting question.
  74. We ask the question -- the whole
    debate in the Western world
  75. is about the level of taxation.
  76. But I think there's another
    debate to be asked,
  77. which is the level of control
    we have over our tax money,
  78. that what costs us 10 pounds
    in one context can be a curse;
  79. what costs us 10 pounds in a different
    context, we may actually welcome.
  80. You know, pay 20,000 pounds
    in tax toward health,
  81. and you're merely feeling a mug.
  82. Pay 20,000 pounds
    to endow a hospital ward,
  83. and you're called a philanthropist.
  84. I'm probably in the wrong country
    to talk about willingness to pay tax.
  85. (Laughter)

  86. So I'll give you one in return:
    how you frame things really matters.

  87. Do you call it "The bailout of Greece"?
  88. Or "The bailout of a load of stupid banks
    which lent to Greece"?
  89. (Laughter)

  90. Because they are actually the same thing.

  91. What you call them
    actually affects how you react to them,
  92. viscerally and morally.
  93. I think psychological value is great,
    to be absolutely honest.
  94. One of my great friends,
    a professor called Nick Chater,
  95. who's the Professor of Decision
    Sciences in London,
  96. believes we should spend far less time
    looking into humanity's hidden depths,
  97. and spend much more time
    exploring the hidden shallows.
  98. I think that's true, actually.
  99. I think impressions have an insane effect
    on what we think and what we do.
  100. But what we don't have is a really
    good model of human psychology --
  101. at least pre-Kahneman, perhaps,
  102. we didn't have a really good model
    of human psychology
  103. to put alongside models of engineering,
    of neoclassical economics.
  104. So people who believed in psychological
    solutions didn't have a model.

  105. We didn't have a framework.
  106. This is what Warren Buffett's
    business partner Charlie Munger calls
  107. "a latticework on which
    to hang your ideas."
  108. Engineers, economists,
    classical economists
  109. all had a very, very robust
    existing latticework
  110. on which practically
    every idea could be hung.
  111. We merely have a collection
    of random individual insights
  112. without an overall model.
  113. And what that means
    is that, in looking at solutions,
  114. we've probably given too much priority
  115. to what I call technical engineering
    solutions, Newtonian solutions,
  116. and not nearly enough
    to the psychological ones.
  117. You know my example of the Eurostar:

  118. six million pounds spent
  119. to reduce the journey time
    between Paris and London
  120. by about 40 minutes.
  121. For 0.01 percent of this money,
    you could have put wi-fi on the trains,
  122. which wouldn't have reduced
    the duration of the journey,
  123. but would have improved its enjoyment
    and its usefulness far more.
  124. For maybe 10 percent of the money,
  125. you could have paid all of the world's top
    male and female supermodels
  126. to walk up and down the train
    handing out free Château Pétrus
  127. to all the passengers.
  128. (Laughter)

  129. You'd still have five million
    pounds in change,

  130. and people would ask
    for the trains to be slowed down.
  131. (Laughter)

  132. Why were we not given the chance
    to solve that problem psychologically?

  133. I think it's because there's an imbalance,
  134. an asymmetry in the way we treat creative,
    emotionally driven psychological ideas
  135. versus the way we treat rational,
    numerical, spreadsheet-driven ideas.
  136. If you're a creative person,
    I think, quite rightly,
  137. you have to share
    all your ideas for approval
  138. with people much more rational than you.
  139. You have to go in
    and have a cost-benefit analysis,
  140. a feasibility study,
    an ROI study and so forth.
  141. And I think that's probably right.
  142. But this does not apply
    the other way around.
  143. People who have an existing framework --
  144. an economic framework,
    an engineering framework --
  145. feel that, actually,
    logic is its own answer.
  146. What they don't say is,
    "Well, the numbers all seem to add up,
  147. but before I present this idea,
    I'll show it to some really crazy people
  148. to see if they can come up with
    something better."
  149. And so we -- artificially,
    I think -- prioritize
  150. what I'd call mechanistic ideas
    over psychological ideas.
  151. An example of a great psychological idea:

  152. the single best improvement
    in passenger satisfaction
  153. on the London Underground,
  154. per pound spent,
  155. came when they didn't add
    any extra trains,
  156. nor change the frequency of the trains;
  157. they put dot matrix display boards
    on the platforms --
  158. because the nature of a wait is not just
    dependent on its numerical quality,
  159. its duration,
  160. but on the level of uncertainty
    you experience during that wait.
  161. Waiting seven minutes for a train
    with a countdown clock
  162. is less frustrating and irritating
  163. than waiting four minutes,
    knuckle biting, going,
  164. "When's this train
    going to damn well arrive?"
  165. Here's a beautiful example
    of a psychological solution

  166. deployed in Korea.
  167. Red traffic lights have a countdown delay.
  168. It's proven to reduce
    the accident rate in experiments.
  169. Why?
  170. Because road rage, impatience and general
    irritation are massively reduced
  171. when you can actually see
    the time you have to wait.
  172. In China, not really understanding
    the principle behind this,
  173. they applied the same principle
    to green traffic lights --
  174. (Laughter)

  175. which isn't a great idea.

  176. You're 200 yards away, you realize
    you've got five seconds to go,
  177. you floor it.
  178. (Laughter)

  179. The Koreans, very assiduously,
    did test both.

  180. The accident rate goes down
    when you apply this to red traffic lights;
  181. it goes up when you apply it
    to green traffic lights.
  182. This is all I'm asking for, really,
    in human decision making,

  183. is the consideration
    of these three things.
  184. I'm not asking for the complete primacy
    of one over the other.
  185. I'm merely saying
    that when you solve problems,
  186. you should look
    at all three of these equally,
  187. and you should seek as far as possible
  188. to find solutions which sit
    in the sweet spot in the middle.
  189. If you actually look at a great business,

  190. you'll nearly always see all of these
    three things coming into play.
  191. Really successful businesses --
  192. Google is a great, great
    technological success,
  193. but it's also based
    on a very good psychological insight:
  194. people believe something
    that only does one thing
  195. is better at that thing than something
    that does that thing and something else.
  196. It's an innate thing
    called "goal dilution."
  197. Ayelet Fishbach has written
    a paper about this.
  198. Everybody else at the time
    of Google, more or less,

  199. was trying to be a portal.
  200. Yes, there's a search function,
    but you also have weather,
  201. sports scores, bits of news.
  202. Google understood
    that if you're just a search engine,
  203. people assume you're a very,
    very good search engine.
  204. All of you know this, actually,
    from when you go in to buy a television,
  205. and in the shabbier end
    of the row of flat-screen TVs,
  206. you can see, are these
    rather despised things
  207. called "combined TV and DVD players."
  208. And we have no knowledge whatsoever
    of the quality of those things,
  209. but we look at a combined
    TV and DVD player and we go, "Uck.
  210. It's probably a bit of a crap telly
    and a bit rubbish as a DVD player."
  211. So we walk out of the shops
    with one of each.
  212. Google is as much a psychological success
    as it is a technological one.
  213. I propose that we can use
    psychology to solve problems

  214. that we didn't even realize
    were problems at all.
  215. This is my suggestion for getting people
    to finish their course of antibiotics.
  216. Don't give them 24 white pills;
  217. give them 18 white pills and six blue ones
  218. and tell them to take
    the white pills first,
  219. and then take the blue ones.
  220. It's called "chunking."
  221. The likelihood that people will get
    to the end is much greater
  222. when there is a milestone
    somewhere in the middle.
  223. One of the great mistakes,
    I think, of economics

  224. is it fails to understand
    that what something is --
  225. whether it's retirement,
    unemployment, cost --
  226. is a function, not only of its amount,
    but also its meaning.
  227. This is a toll crossing in Britain.

  228. Quite often queues happen at the tolls.
  229. Sometimes you get very,
    very severe queues.
  230. You could apply
    the same principle, actually,
  231. to the security lanes in airports.
  232. What would happen if you could actually
    pay twice as much money
  233. to cross the bridge,
  234. but go through a lane
    that's an express lane?
  235. It's not an unreasonable thing to do;
  236. it's an economically
    efficient thing to do.
  237. Time means more
    to some people than others.
  238. If you're waiting trying
    to get to a job interview,
  239. you'd patently pay a couple of pounds more
    to go through the fast lane.
  240. If you're on the way
    to visit your mother-in-law,
  241. you'd probably prefer --
  242. (Laughter)

  243. you'd probably prefer to stay on the left.

  244. The only problem is if you introduce
    this economically efficient solution,

  245. people hate it ...
  246. because they think you're deliberately
    creating delays at the bridge
  247. in order to maximize your revenue,
  248. and, "Why on earth should I pay
    to subsidize your incompetence?"
  249. On the other hand,
    change the frame slightly
  250. and create charitable yield management,
  251. so the extra money you get
    goes not to the bridge company,
  252. it goes to charity ...
  253. and the mental willingness
    to pay completely changes.
  254. You have a relatively
    economically efficient solution,
  255. but one that actually meets
    with public approval
  256. and even a small degree of affection,
  257. rather than being seen as bastardy.
  258. So where economists
    make the fundamental mistake

  259. is they think that money is money.
  260. Actually, my pain experienced
    in paying five pounds
  261. is not just proportionate to the amount,
  262. but where I think that money is going.
  263. And I think understanding that
    could revolutionize tax policy.
  264. It could revolutionize
    the public services.
  265. It could actually change things
    quite significantly.
  266. [Ludwig Von Mises is my hero.]

  267. Here's a guy you all need to study.

  268. He's an Austrian School economist
  269. who was first active in the first half
    of the 20th century in Vienna.
  270. What was interesting
    about the Austrian School
  271. is they actually grew up alongside Freud.
  272. And so they're predominantly
    interested in psychology.
  273. They believed that there was
    a discipline called praxeology,
  274. which is a prior discipline
    to the study of economics.
  275. Praxeology is the study of human choice,
    action and decision-making.
  276. I think they're right.
  277. I think the danger
    we have in today's world
  278. is we have the study of economics
  279. considers itself to be a prior discipline
    to the study of human psychology.
  280. But as Charlie Munger says,
    "If economics isn't behavioral,
  281. I don't know what the hell is."
  282. Von Mises, interestingly, believes
    economics is just a subset of psychology.

  283. I think he just refers to economics
  284. as "the study of human praxeology
    under conditions of scarcity."
  285. But Von Mises, among many other things,
  286. I think uses an analogy which is probably
    the best justification and explanation
  287. for the value of marketing,
    the value of perceived value
  288. and the fact that we should treat it
    as being absolutely equivalent
  289. to any other kind of value.
  290. We tend to, all of us, even those of us
    who work in marketing,

  291. think of value in two ways:
  292. the real value, which is when
    you make something in a factory
  293. or provide a service,
  294. and then there's a dubious value,
  295. which you create by changing
    the way people look at things.
  296. Von Mises completely rejected
    this distinction.
  297. And he used this following analogy:
  298. he referred to strange economists
    called the French physiocrats,
  299. who believed that the only true value
    was what you extracted from the land.
  300. So if you're a shepherd
    or a quarryman or a farmer,
  301. you created true value.
  302. If however, you bought
    some wool from the shepherd
  303. and charged a premium
    for converting it into a hat,
  304. you weren't actually creating value,
  305. you were exploiting the shepherd.
  306. Now, Von Mises said that modern
    economists make exactly the same mistake

  307. with regard to advertising and marketing.
  308. He says if you run a restaurant,
  309. there is no healthy distinction to be made
  310. between the value you create
    by cooking the food
  311. and the value you create
    by sweeping the floor.
  312. One of them creates, perhaps,
    the primary product --
  313. the thing we think we're paying for --
  314. the other one creates a context
    within which we can enjoy
  315. and appreciate that product.
  316. And the idea that one of them
    should have priority over the other
  317. is fundamentally wrong.
  318. Try this quick thought experiment:

  319. imagine a restaurant
    that serves Michelin-starred food,
  320. but where the restaurant smells of sewage
  321. and there's human feces on the floor.
  322. (Laughter)

  323. The best thing you can do there
    to create value

  324. is not actually to improve
    the food still further,
  325. it's to get rid of the smell
    and clean up the floor.
  326. And it's vital we understand this.
  327. If that seems like a sort
    of strange, abstruse thing --

  328. in the UK, the post office
    had a 98 percent success rate
  329. at delivering first-class
    mail the next day.
  330. They decided this wasn't good enough,
  331. and they wanted to get it up to 99.
  332. The effort to do that
    almost broke the organization.
  333. If, at the same time,
    you'd gone and asked people,
  334. "What percentage of first-class mail
    arrives the next day?"
  335. the average answer, or the modal answer,
    would have been "50 to 60 percent."
  336. Now, if your perception
    is much worse than your reality,
  337. what on earth are you doing
    trying to change the reality?
  338. That's like trying to improve the food
    in a restaurant that stinks.
  339. What you need to do is,
    first of all, tell people
  340. that 98 percent of first-class mail
    gets there the next day.
  341. That's pretty good.
  342. I would argue, in Britain,
    there's a much better frame of reference,
  343. which is to tell people that more
    first-class mail arrives the next day
  344. in the UK than in Germany,
    because generally, in Britain,
  345. if you want to make us happy
    about something,
  346. just tell us we do it
    better than the Germans.
  347. (Laughter)

  348. (Applause)

  349. Choose your frame of reference
    and the perceived value,

  350. and therefore, the actual value
    is completely transformed.
  351. It has to be said of the Germans
  352. that the Germans and the French
    are doing a brilliant job
  353. of creating a united Europe.
  354. The only thing they didn't expect
    is they're uniting Europe
  355. through a shared mild hatred
    of the French and Germans.
  356. But I'm British;
    that's the way we like it.
  357. (Laughter)

  358. What you'll also notice
    is that, in any case,

  359. our perception is leaky.
  360. We can't tell the difference
    between the quality of the food
  361. and the environment
    in which we consume it.
  362. All of you will have seen this phenomenon
  363. if you have your car washed or valeted.
  364. When you drive away,
    your car feels as if it drives better.
  365. (Laughter)

  366. And the reason for this --

  367. unless my car valet
    mysteriously is changing the oil
  368. and performing work which I'm not paying
    him for and I'm unaware of --
  369. is because perception
    is, in any case, leaky.
  370. Analgesics that are branded
    are more effective at reducing pain

  371. than analgesics that are not branded.
  372. I don't just mean through reported
    pain reduction --
  373. actual measured pain reduction.
  374. And so perception
    actually is leaky in any case.
  375. So if you do something
    that's perceptually bad in one respect,
  376. you can damage the other.
  377. Thank you very much.

  378. (Applause)