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Title:
Perspective is everything
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Description:
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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Speaker:
Rory Sutherland
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What you have here
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is an electronic cigarette.
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It's something that, since it was
invented a year or two ago,
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has given me untold happiness.
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A little bit of it,
I think, is the nicotine,
¶
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but there's something
much bigger than that;
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which is, ever since, in the UK,
they banned smoking in public places,
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I've never enjoyed
a drinks party ever again.
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And the reason, I only worked out
just the other day,
¶
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which is: when you go
to a drinks party and you stand up
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and hold a glass of red wine
and you talk endlessly to people,
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you don't actually want to spend
all the time talking.
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It's really, really tiring.
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Sometimes you just want to stand there
silently, alone with your thoughts.
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Sometimes you just want to stand
in the corner and stare out of the window.
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Now the problem is, when you can't smoke,
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if you stand and stare
out of the window on your own,
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you're an antisocial, friendless idiot.
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If you stand and stare out of the window
on your own with a cigarette,
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you're a fucking philosopher.
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So the power of reframing things
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cannot be overstated.
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What we have is exactly
the same thing, the same activity,
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but one of them makes you feel great
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and the other one,
with just a small change of posture,
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makes you feel terrible.
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And I think one of the problems
with classical economics is,
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it's absolutely preoccupied with reality.
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And reality isn't a particularly good
guide to human happiness.
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Why, for example,
are pensioners much happier
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than the young unemployed?
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Both of them, after all,
are in exactly the same stage of life.
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You both have too much time
on your hands and not much money.
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But pensioners are reportedly
very, very happy,
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whereas the unemployed
are extraordinarily unhappy and depressed.
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The reason, I think,
is that the pensioners believe
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they've chosen to be pensioners,
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whereas the young unemployed
feel it's been thrust upon them.
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In England, the upper-middle classes have
actually solved this problem perfectly,
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because they've re-branded unemployment.
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If you're an upper-middle-class
English person,
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you call unemployment "a year off."
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And that's because having a son
who's unemployed in Manchester
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is really quite embarrassing.
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But having a son
who's unemployed in Thailand
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is really viewed
as quite an accomplishment.
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But actually, the power
to re-brand things --
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to understand that
our experiences, costs, things
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don't actually much depend
on what they really are,
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but on how we view them --
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I genuinely think can't be overstated.
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There's an experiment
I think Daniel Pink refers to,
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where you put two dogs in a box
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and the box has an electric floor.
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Every now and then,
an electric shock is applied to the floor,
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which pains the dogs.
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The only difference is one of the dogs
has a small button in its half of the box.
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And when it nuzzles the button,
the electric shock stops.
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The other dog doesn't have the button.
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It's exposed to exactly the same level
of pain as the dog in the first box,
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but it has no control
over the circumstances.
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Generally, the first dog
can be relatively content.
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The second dog lapses
into complete depression.
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The circumstances of our lives
may actually matter less to our happiness
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than the sense of control
we feel over our lives.
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It's an interesting question.
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We ask the question -- the whole
debate in the Western world
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is about the level of taxation.
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But I think there's another
debate to be asked,
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which is the level of control
we have over our tax money,
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that what costs us 10 pounds
in one context can be a curse;
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what costs us 10 pounds in a different
context, we may actually welcome.
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You know, pay 20,000 pounds
in tax toward health,
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and you're merely feeling a mug.
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Pay 20,000 pounds
to endow a hospital ward,
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and you're called a philanthropist.
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I'm probably in the wrong country
to talk about willingness to pay tax.
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So I'll give you one in return:
how you frame things really matters.
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Do you call it "The bailout of Greece"?
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Or "The bailout of a load of stupid banks
which lent to Greece"?
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Because they are actually the same thing.
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What you call them
actually affects how you react to them,
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viscerally and morally.
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I think psychological value is great,
to be absolutely honest.
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One of my great friends,
a professor called Nick Chater,
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who's the Professor of Decision
Sciences in London,
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believes we should spend far less time
looking into humanity's hidden depths,
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and spend much more time
exploring the hidden shallows.
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I think that's true, actually.
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I think impressions have an insane effect
on what we think and what we do.
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But what we don't have is a really
good model of human psychology --
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at least pre-Kahneman, perhaps,
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we didn't have a really good model
of human psychology
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to put alongside models of engineering,
of neoclassical economics.
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So people who believed in psychological
solutions didn't have a model.
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We didn't have a framework.
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This is what Warren Buffett's
business partner Charlie Munger calls
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"a latticework on which
to hang your ideas."
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Engineers, economists,
classical economists
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all had a very, very robust
existing latticework
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on which practically
every idea could be hung.
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We merely have a collection
of random individual insights
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without an overall model.
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And what that means
is that, in looking at solutions,
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we've probably given too much priority
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to what I call technical engineering
solutions, Newtonian solutions,
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and not nearly enough
to the psychological ones.
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You know my example of the Eurostar:
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six million pounds spent
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to reduce the journey time
between Paris and London
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by about 40 minutes.
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For 0.01 percent of this money,
you could have put wi-fi on the trains,
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which wouldn't have reduced
the duration of the journey,
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but would have improved its enjoyment
and its usefulness far more.
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For maybe 10 percent of the money,
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you could have paid all of the world's top
male and female supermodels
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to walk up and down the train
handing out free Château Pétrus
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to all the passengers.
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You'd still have five million
pounds in change,
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and people would ask
for the trains to be slowed down.
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Why were we not given the chance
to solve that problem psychologically?
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I think it's because there's an imbalance,
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an asymmetry in the way we treat creative,
emotionally driven psychological ideas
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versus the way we treat rational,
numerical, spreadsheet-driven ideas.
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If you're a creative person,
I think, quite rightly,
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you have to share
all your ideas for approval
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with people much more rational than you.
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You have to go in
and have a cost-benefit analysis,
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a feasibility study,
an ROI study and so forth.
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And I think that's probably right.
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But this does not apply
the other way around.
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People who have an existing framework --
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an economic framework,
an engineering framework --
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feel that, actually,
logic is its own answer.
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What they don't say is,
"Well, the numbers all seem to add up,
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but before I present this idea,
I'll show it to some really crazy people
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to see if they can come up with
something better."
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And so we -- artificially,
I think -- prioritize
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what I'd call mechanistic ideas
over psychological ideas.
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An example of a great psychological idea:
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the single best improvement
in passenger satisfaction
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on the London Underground,
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per pound spent,
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came when they didn't add
any extra trains,
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nor change the frequency of the trains;
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they put dot matrix display boards
on the platforms --
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because the nature of a wait is not just
dependent on its numerical quality,
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its duration,
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but on the level of uncertainty
you experience during that wait.
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Waiting seven minutes for a train
with a countdown clock
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is less frustrating and irritating
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than waiting four minutes,
knuckle biting, going,
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"When's this train
going to damn well arrive?"
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Here's a beautiful example
of a psychological solution
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deployed in Korea.
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Red traffic lights have a countdown delay.
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It's proven to reduce
the accident rate in experiments.
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Why?
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Because road rage, impatience and general
irritation are massively reduced
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when you can actually see
the time you have to wait.
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In China, not really understanding
the principle behind this,
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they applied the same principle
to green traffic lights --
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which isn't a great idea.
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You're 200 yards away, you realize
you've got five seconds to go,
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you floor it.
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The Koreans, very assiduously,
did test both.
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The accident rate goes down
when you apply this to red traffic lights;
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it goes up when you apply it
to green traffic lights.
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This is all I'm asking for, really,
in human decision making,
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is the consideration
of these three things.
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I'm not asking for the complete primacy
of one over the other.
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I'm merely saying
that when you solve problems,
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you should look
at all three of these equally,
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and you should seek as far as possible
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to find solutions which sit
in the sweet spot in the middle.
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If you actually look at a great business,
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you'll nearly always see all of these
three things coming into play.
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Really successful businesses --
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Google is a great, great
technological success,
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but it's also based
on a very good psychological insight:
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people believe something
that only does one thing
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is better at that thing than something
that does that thing and something else.
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It's an innate thing
called "goal dilution."
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Ayelet Fishbach has written
a paper about this.
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Everybody else at the time
of Google, more or less,
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was trying to be a portal.
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Yes, there's a search function,
but you also have weather,
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sports scores, bits of news.
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Google understood
that if you're just a search engine,
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people assume you're a very,
very good search engine.
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All of you know this, actually,
from when you go in to buy a television,
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and in the shabbier end
of the row of flat-screen TVs,
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you can see, are these
rather despised things
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called "combined TV and DVD players."
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And we have no knowledge whatsoever
of the quality of those things,
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but we look at a combined
TV and DVD player and we go, "Uck.
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It's probably a bit of a crap telly
and a bit rubbish as a DVD player."
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So we walk out of the shops
with one of each.
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Google is as much a psychological success
as it is a technological one.
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I propose that we can use
psychology to solve problems
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that we didn't even realize
were problems at all.
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This is my suggestion for getting people
to finish their course of antibiotics.
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Don't give them 24 white pills;
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give them 18 white pills and six blue ones
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and tell them to take
the white pills first,
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and then take the blue ones.
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It's called "chunking."
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The likelihood that people will get
to the end is much greater
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when there is a milestone
somewhere in the middle.
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One of the great mistakes,
I think, of economics
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is it fails to understand
that what something is --
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whether it's retirement,
unemployment, cost --
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is a function, not only of its amount,
but also its meaning.
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This is a toll crossing in Britain.
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Quite often queues happen at the tolls.
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Sometimes you get very,
very severe queues.
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You could apply
the same principle, actually,
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to the security lanes in airports.
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What would happen if you could actually
pay twice as much money
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to cross the bridge,
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but go through a lane
that's an express lane?
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It's not an unreasonable thing to do;
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it's an economically
efficient thing to do.
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Time means more
to some people than others.
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If you're waiting trying
to get to a job interview,
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you'd patently pay a couple of pounds more
to go through the fast lane.
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If you're on the way
to visit your mother-in-law,
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you'd probably prefer --
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you'd probably prefer to stay on the left.
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The only problem is if you introduce
this economically efficient solution,
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people hate it ...
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because they think you're deliberately
creating delays at the bridge
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in order to maximize your revenue,
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and, "Why on earth should I pay
to subsidize your incompetence?"
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On the other hand,
change the frame slightly
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and create charitable yield management,
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so the extra money you get
goes not to the bridge company,
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it goes to charity ...
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and the mental willingness
to pay completely changes.
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You have a relatively
economically efficient solution,
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but one that actually meets
with public approval
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and even a small degree of affection,
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rather than being seen as bastardy.
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So where economists
make the fundamental mistake
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is they think that money is money.
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Actually, my pain experienced
in paying five pounds
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is not just proportionate to the amount,
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but where I think that money is going.
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And I think understanding that
could revolutionize tax policy.
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It could revolutionize
the public services.
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It could actually change things
quite significantly.
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[Ludwig Von Mises is my hero.]
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Here's a guy you all need to study.
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He's an Austrian School economist
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who was first active in the first half
of the 20th century in Vienna.
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What was interesting
about the Austrian School
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is they actually grew up alongside Freud.
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And so they're predominantly
interested in psychology.
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They believed that there was
a discipline called praxeology,
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which is a prior discipline
to the study of economics.
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Praxeology is the study of human choice,
action and decision-making.
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I think they're right.
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I think the danger
we have in today's world
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is we have the study of economics
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considers itself to be a prior discipline
to the study of human psychology.
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But as Charlie Munger says,
"If economics isn't behavioral,
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I don't know what the hell is."
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Von Mises, interestingly, believes
economics is just a subset of psychology.
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I think he just refers to economics
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as "the study of human praxeology
under conditions of scarcity."
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But Von Mises, among many other things,
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I think uses an analogy which is probably
the best justification and explanation
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for the value of marketing,
the value of perceived value
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and the fact that we should treat it
as being absolutely equivalent
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to any other kind of value.
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We tend to, all of us, even those of us
who work in marketing,
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think of value in two ways:
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the real value, which is when
you make something in a factory
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or provide a service,
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and then there's a dubious value,
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which you create by changing
the way people look at things.
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Von Mises completely rejected
this distinction.
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And he used this following analogy:
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he referred to strange economists
called the French physiocrats,
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who believed that the only true value
was what you extracted from the land.
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So if you're a shepherd
or a quarryman or a farmer,
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you created true value.
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If however, you bought
some wool from the shepherd
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and charged a premium
for converting it into a hat,
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you weren't actually creating value,
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you were exploiting the shepherd.
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Now, Von Mises said that modern
economists make exactly the same mistake
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with regard to advertising and marketing.
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He says if you run a restaurant,
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there is no healthy distinction to be made
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between the value you create
by cooking the food
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and the value you create
by sweeping the floor.
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One of them creates, perhaps,
the primary product --
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the thing we think we're paying for --
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the other one creates a context
within which we can enjoy
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and appreciate that product.
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And the idea that one of them
should have priority over the other
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is fundamentally wrong.
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Try this quick thought experiment:
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imagine a restaurant
that serves Michelin-starred food,
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but where the restaurant smells of sewage
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and there's human feces on the floor.
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The best thing you can do there
to create value
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is not actually to improve
the food still further,
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it's to get rid of the smell
and clean up the floor.
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And it's vital we understand this.
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If that seems like a sort
of strange, abstruse thing --
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in the UK, the post office
had a 98 percent success rate
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at delivering first-class
mail the next day.
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They decided this wasn't good enough,
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and they wanted to get it up to 99.
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The effort to do that
almost broke the organization.
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If, at the same time,
you'd gone and asked people,
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"What percentage of first-class mail
arrives the next day?"
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the average answer, or the modal answer,
would have been "50 to 60 percent."
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Now, if your perception
is much worse than your reality,
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what on earth are you doing
trying to change the reality?
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That's like trying to improve the food
in a restaurant that stinks.
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What you need to do is,
first of all, tell people
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that 98 percent of first-class mail
gets there the next day.
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That's pretty good.
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I would argue, in Britain,
there's a much better frame of reference,
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which is to tell people that more
first-class mail arrives the next day
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in the UK than in Germany,
because generally, in Britain,
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if you want to make us happy
about something,
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just tell us we do it
better than the Germans.
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Choose your frame of reference
and the perceived value,
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and therefore, the actual value
is completely transformed.
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It has to be said of the Germans
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that the Germans and the French
are doing a brilliant job
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of creating a united Europe.
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The only thing they didn't expect
is they're uniting Europe
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through a shared mild hatred
of the French and Germans.
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But I'm British;
that's the way we like it.
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What you'll also notice
is that, in any case,
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our perception is leaky.
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We can't tell the difference
between the quality of the food
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and the environment
in which we consume it.
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All of you will have seen this phenomenon
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if you have your car washed or valeted.
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When you drive away,
your car feels as if it drives better.
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And the reason for this --
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unless my car valet
mysteriously is changing the oil
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and performing work which I'm not paying
him for and I'm unaware of --
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is because perception
is, in any case, leaky.
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Analgesics that are branded
are more effective at reducing pain
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than analgesics that are not branded.
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I don't just mean through reported
pain reduction --
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actual measured pain reduction.
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And so perception
actually is leaky in any case.
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So if you do something
that's perceptually bad in one respect,
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you can damage the other.
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