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Perspective is everything | Rory Sutherland | TEDxAthens

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    What you have here
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    is an electronic cigarette.
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    It's something that's,
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    since it was invented a year or two ago,
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    has given me untold happiness.
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    (Laughter)
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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 U.K.,
    they banned smoking in public places,
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    I've never enjoyed
    a drinks party ever again.
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    (Laughter)
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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
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    and you stand up
    and you hold a glass of red wine
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    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,
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    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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    (Laughter)
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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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    (Laughter)
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    (Applause)
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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
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    is 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,
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    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
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    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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    (Laughter)
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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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    (Laughter)
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    But actually the power
    to re-brand things -
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    to understand that actually
    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
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    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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    (Laughter)
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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
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    how you react to them,
    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 that we should spend
    far less time
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    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
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    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
    to reduce the journey time
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    between Paris and London
    by about 40 minutes.
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    For 0.01 percent of this money
    you could have put WiFi 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 Chateau Petrus 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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    (Laughter)
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    Why were we not given the chance
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    to solve that problem psychologically?
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    I think it's because there's an imbalance,
    an asymmetry,
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    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 you have to 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,
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    I'll go and 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 per pound spent
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    came when they didn't add any extra trains
    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
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    is not just dependent on its
    numerical quality, 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
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    going, "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? Because road rage,
    impatience and general irritation
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    are massively reduced
    when you can actually see
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    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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    (Laughter)
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    Which isn't a great idea.
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    You're 200 yards away,
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    you realize you've got five seconds to go,
    you floor it.
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    (Laughter)
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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, 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,
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    but you also have weather,
    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
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    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, if you like,
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    to the security lanes in airports.
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    What would happen if you could actually
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    pay twice as much money
    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 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 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 really change
    things quite significantly.
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    Here's a guy you all need to study.
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    Anybody heard of him?
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    Good. One or two.
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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 as
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    "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 actually
    treat it as being absolutely equivalent
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    to any other kind of value.
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    All of us - even those of us
    who work in marketing -
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    tend to think of value in two ways.
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    There's the real value,
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    which is when you make something
    in a factory and provide a service,
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    and then there's a kind of 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 actually 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.
  • 15:05 - 15:08
    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 -
  • 15:33 - 15:35
    the thing we think we're paying for -
  • 15:35 - 15:37
    the other one creates a context
  • 15:37 - 15:40
    within which we can enjoy
    and appreciate that product.
  • 15:40 - 15:43
    And the idea that one of them should
    actually have priority over the other
  • 15:43 - 15:44
    is fundamentally wrong.
  • 15:44 - 15:46
    Try this quick thought experiment.
  • 15:46 - 15:49
    Imagine a restaurant
    that serves Michelin-starred food,
  • 15:49 - 15:52
    but actually where
    the restaurant smells of sewage
  • 15:52 - 15:54
    and there's human feces on the floor.
  • 15:55 - 15:58
    The best thing you can do there
    to create value
  • 15:58 - 16:01
    is not actually to improve
    the food still further,
  • 16:01 - 16:04
    it's to get rid of the smell
    and clean up the floor.
  • 16:05 - 16:08
    And it's vital we understand this.
  • 16:08 - 16:10
    If that seems like some strange,
    abstruse thing,
  • 16:10 - 16:15
    in the U.K., the post office
    had a 98 percent success rate
  • 16:15 - 16:18
    at delivering first-class mail
    the next day.
  • 16:18 - 16:19
    They decided this wasn't good enough
  • 16:19 - 16:22
    and they wanted to get it up to 99.
  • 16:23 - 16:26
    The effort to do that
    almost broke the organization.
  • 16:27 - 16:29
    If at the same time you'd gone
    and asked people,
  • 16:29 - 16:32
    "What percentage of first-class mail
    arrives the next day?"
  • 16:32 - 16:36
    the average, or the modal answer
    would have been 50 to 60 percent.
  • 16:37 - 16:40
    Now if your perception
    is much worse than your reality,
  • 16:40 - 16:43
    what on earth are you doing
    trying to change the reality?
  • 16:43 - 16:46
    That's like trying to improve
    the food in a restaurant that stinks.
  • 16:48 - 16:49
    What you need to do
  • 16:49 - 16:51
    is first of all tell people
  • 16:51 - 16:55
    that 98 percent of mail gets there
    the next day, first-class mail.
  • 16:55 - 16:57
    That's pretty good.
  • 16:57 - 17:00
    I would argue, in Britain there's
    a much better frame of reference,
  • 17:00 - 17:01
    which is to tell people
  • 17:01 - 17:03
    that more first-class mail
    arrives the next day
  • 17:03 - 17:05
    in the U.K. than in Germany.
  • 17:05 - 17:09
    Because generally in Britain if you want
    to make us happy about something,
  • 17:09 - 17:11
    just tell us we do it better
    than the Germans.
  • 17:11 - 17:12
    (Laughter)
  • 17:12 - 17:14
    (Applause)
  • 17:15 - 17:18
    Choose your frame of reference
    and the perceived value
  • 17:18 - 17:21
    and therefore the actual value
    is completely transformed.
  • 17:21 - 17:23
    It has to be said of the Germans
  • 17:23 - 17:26
    that the Germans and the French
    are doing a brilliant job
  • 17:26 - 17:28
    of creating a united Europe.
  • 17:28 - 17:30
    The only thing they didn't expect
    is they're uniting Europe
  • 17:30 - 17:33
    through a shared mild hatred
    of the French and Germans.
  • 17:33 - 17:36
    But I'm British,
    that's the way we like it.
  • 17:38 - 17:41
    What you also notice is that
    in any case our perception is leaky.
  • 17:41 - 17:44
    We can't tell the difference
    between the quality of the food
  • 17:44 - 17:46
    and the environment
    in which we consume it.
  • 17:46 - 17:48
    All of you will have seen this phenomenon
  • 17:48 - 17:50
    if you have your car washed or valeted.
  • 17:51 - 17:54
    When you drive away,
    your car feels as if it drives better.
  • 17:56 - 17:57
    And the reason for this,
  • 17:57 - 18:00
    unless my car valet
    mysteriously is changing the oil
  • 18:00 - 18:03
    and performing work which
    I'm not paying him for and I'm unaware of,
  • 18:03 - 18:05
    is because perception
    is in any case leaky.
  • 18:05 - 18:09
    Analgesics that are branded
    are more effective at reducing pain
  • 18:09 - 18:11
    than analgesics that are not branded.
  • 18:11 - 18:14
    I don't just mean through
    reported pain reduction,
  • 18:14 - 18:15
    actual measured pain reduction.
  • 18:15 - 18:20
    And so perception actually
    is leaky in any case.
  • 18:21 - 18:24
    So if you do something
    that's perceptually bad in one respect,
  • 18:24 - 18:25
    you can damage the other.
  • 18:25 - 18:27
    I'll end very quicky
  • 18:27 - 18:30
    with something without which
    you'd never be happy for me to miss
  • 18:30 - 18:32
    which is the perfect demonstration
  • 18:32 - 18:35
    of creating economically
    fairly sustainable value,
  • 18:35 - 18:37
    through doing nothing to the product,
  • 18:37 - 18:40
    and everything to the way
    in which it's consumed and perceived.
  • 18:40 - 18:44
    (Video) Man:
    Shreddies are supposed to be square.
  • 18:44 - 18:48
    Woman: Have any of these
    diamond shapes gone out?
  • 18:49 - 18:51
    [Diamond Shreddies]
    Woman: New Diamond Shreddies cereal
  • 18:51 - 18:55
    Same 100% Whole Grain Wheat
    in a delicious diamond shape.
  • 18:56 - 18:59
    Rory Sutherland: Very finally,
    here's the poster campaign.
  • 18:59 - 19:01
    (Laughter)
  • 19:01 - 19:04
    (Applause)
  • 19:09 - 19:12
    Some Canadians are inherently
    very conservative,
  • 19:12 - 19:15
    and were very annoyed that their
    square Shreddies had been taken away.
  • 19:15 - 19:18
    It was kind of a new-coat
    marketing moment.
  • 19:18 - 19:21
    So after long thought and deliberation,
  • 19:21 - 19:22
    they arrived at a compromise.
  • 19:22 - 19:24
    Thank you very much.
  • 19:24 - 19:26
    (Applause)
Title:
Perspective is everything | Rory Sutherland | TEDxAthens
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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Video Language:
English
Team:
TED
Project:
TEDxTalks
Duration:
19:33
  • Hello.
    I would like to draw your attention to the existing TED.com transcription and translation.
    http://www.amara.org/en/videos/B2EY76mtmMZc/en/426/?tab=subtitles
    I am really nobody and am not sure about how TED OTP community should address already transcribed/translated talks for TEDx talks.
    Would you like to join our conversation at https://www.facebook.com/groups/ITranslateTEDTalks/permalink/10151729886961472/ .

English subtitles

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