Perspective is everything | Rory Sutherland | TEDxAthens

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.

What you have here

is an electronic cigarette.

It's something that's,

since it was invented a year or two ago,

has given me untold happiness.

(Laughter)

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

but there's something
much bigger than that.

Which is ever since, in the U.K.,
they banned smoking in public places,

I've never enjoyed
a drinks party ever again.

(Laughter)

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

which is when you go to a drinks party

and you stand up
and you hold a glass of red wine

and you talk endlessly to people,

you don't actually want to spend
all the time talking.

It's really, really tiring.

Sometimes you just want
to stand there silently,

alone with your thoughts.

Sometimes you just want to stand
in the corner and stare out of the window.

Now the problem is, when you can't smoke,

if you stand and stare
out of the window on your own,

you're an antisocial, friendless idiot.

(Laughter)

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

you're a fucking philosopher.

(Laughter)

(Applause)

So the power of reframing things

cannot be overstated.

What we have is exactly the same thing,
the same activity,

but one of them makes you feel great

and the other one,
with just a small change of posture,

makes you feel terrible.

And I think one of the problems
with classical economics

is it's absolutely preoccupied
with reality.

And reality isn't a particularly
good guide to human happiness.

Why, for example,

are pensioners much happier

than the young unemployed?

Both of them, after all,
are in exactly the same stage of life.

You both have too much time
on your hands and not much money.

But pensioners are reportedly
very, very happy,

whereas the unemployed are extraordinarily
unhappy and depressed.

The reason, I think,
is that the pensioners believe

they've chosen to be pensioners,

whereas the young unemployed
feel it's been thrust upon them.

In England the upper middle classes

have actually solved
this problem perfectly,

because they've re-branded unemployment.

If you're an upper-middle-class
English person,

you call unemployment "a year off."

(Laughter)

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

is really quite embarrassing,

but having a son
who's unemployed in Thailand

is really viewed
as quite an accomplishment.

(Laughter)

But actually the power
to re-brand things -

to understand that actually
our experiences, costs, things

don't actually much depend
on what they really are,

but on how we view them -

I genuinely think can't be overstated.

There's an experiment
I think Daniel Pink refers to

where you put two dogs in a box

and the box has an electric floor.

Every now and then an electric shock
is applied to the floor,

which pains the dogs.

The only difference is one of the dogs
has a small button in its half of the box.

And when it nuzzles the button,
the electric shock stops.

The other dog doesn't have the button.

It's exposed to exactly the same level
of pain as the dog in the first box,

but it has no control
over the circumstances.

Generally the first dog
can be relatively content.

The second dog lapses
into complete depression.

The circumstances of our lives
may actually matter less to our happiness

than the sense of control
we feel over our lives.

It's an interesting question.

We ask the question -
the whole debate in the Western world

is about the level of taxation.

But I think there's another debate
to be asked,

which is the level of control
we have over our tax money.

That what costs us 10 pounds
in one context can be a curse.

What costs us 10 pounds
in a different context

we may actually welcome.

You know, pay 20,000 pounds
in tax toward health

and you're merely feeling a mug.

Pay 20,000 pounds to endow a hospital ward

and you're called a philanthropist.

I'm probably in the wrong country
to talk about willingness to pay tax.

(Laughter)

So I'll give you one in return.
How you frame things really matters.

Do you call it the bailout of Greece

or the bailout of a load of stupid banks
which lent to Greece?

Because they are actually the same thing.

What you call them actually affects

how you react to them,
viscerally and morally.

I think psychological value
is great to be absolutely honest.

One of my great friends,
a professor called Nick Chater,

who's the Professor of Decision Sciences
in London,

believes that we should spend
far less time

looking into humanity's hidden depths

and spend much more time
exploring the hidden shallows.

I think that's true actually.

I think impressions have an insane effect

on what we think and what we do.

But what we don't have is a really good
model of human psychology.

At least pre-Kahneman perhaps,

we didn't have a really good model
of human psychology

to put alongside models of engineering,
of neoclassical economics.

So people who believed in psychological
solutions didn't have a model.

We didn't have a framework.

This is what Warren Buffett's
business partner Charlie Munger calls

"a latticework
on which to hang your ideas."

Engineers, economists,
classical economists

all had a very, very robust
existing latticework

on which practically every idea
could be hung.

We merely have a collection
of random individual insights

without an overall model.

And what that means
is that in looking at solutions,

we've probably given too much priority

to what I call technical engineering
solutions, Newtonian solutions,

and not nearly enough
to the psychological ones.

You know my example of the Eurostar.

Six million pounds spent
to reduce the journey time

between Paris and London
by about 40 minutes.

For 0.01 percent of this money
you could have put WiFi on the trains,

which wouldn't have reduced
the duration of the journey,

but would have improved its enjoyment
and its usefulness far more.

For maybe 10 percent of the money,

you could have paid all of the world's
top male and female supermodels

to walk up and down the train handing out
free Chateau Petrus to all the passengers.

You'd still have five [million] pounds
in change,

and people would ask
for the trains to be slowed down.

(Laughter)

Why were we not given the chance

to solve that problem psychologically?

I think it's because there's an imbalance,
an asymmetry,

in the way we treat creative,
emotionally-driven psychological ideas

versus the way we treat rational,
numerical, spreadsheet-driven ideas.

If you're a creative person,
I think quite rightly,

you have to share
all your ideas for approval

with people much more rational than you.

You have to go in and you have to have
a cost-benefit analysis,

a feasibility study,
an ROI study and so forth.

And I think that's probably right.

But this does not apply
the other way around.

People who have an existing framework,

an economic framework,
an engineering framework,

feel that actually logic
is its own answer.

What they don't say is,
"Well the numbers all seem to add up,

but before I present this idea,

I'll go and show it
to some really crazy people

to see if they can come up
with something better."

And so we, artificially I think,
prioritize

what I'd call mechanistic ideas
over psychological ideas.

An example of a great psychological idea:

The single best improvement
in passenger satisfaction

on the London Underground per pound spent

came when they didn't add any extra trains
nor change the frequency of the trains,

they put dot matrix display boards
on the platforms.

Because the nature of a wait

is not just dependent on its
numerical quality, its duration,

but on the level of uncertainty
you experience during that wait.

Waiting seven minutes for a train
with a countdown clock

is less frustrating and irritating

than waiting four minutes, knuckle-biting

going, "When's this train
going to damn well arrive?"

Here's a beautiful example
of a psychological solution

deployed in Korea.

Red traffic lights have a countdown delay.

It's proven to reduce the accident rate
in experiments.

Why? Because road rage,
impatience and general irritation

are massively reduced
when you can actually see

the time you have to wait.

In China, not really understanding
the principle behind this,

they applied the same principle
to green traffic lights.

(Laughter)

Which isn't a great idea.

You're 200 yards away,

you realize you've got five seconds to go,
you floor it.

(Laughter)

The Koreans, very assiduously,
did test both.

The accident rate goes down
when you apply this to red traffic lights;

it goes up when you apply it
to green traffic lights.

This is all I'm asking for really
in human decision making,

is the consideration
of these three things.

I'm not asking for the complete
primacy of one over the other.

I'm merely saying
that when you solve problems,

you should look
at all three of these equally

and you should seek as far as possible

to find solutions which sit
in the sweet spot in the middle.

If you actually look at a great business,

you'll nearly always see all of these
three things coming into play.

Really, really successful businesses -

Google is a great,
great technological success,

but it's also based
on a very good psychological insight:

People believe something
that only does one thing

is better at that thing than something
that does that thing and something else.

It's an innate thing called goal dilution.

Ayelet Fishbach has written
a paper about this.

Everybody else at the time of Google,
more or less,

was trying to be a portal.

Yes, there's a search function,

but you also have weather,
sports scores, bits of news.

Google understood
that if you're just a search engine,

people assume you're a very,
very good search engine.

All of you know this actually

from when you go in to buy a television.

And in the shabbier end
of the row of flat screen TVs

you can see are these
rather despised things

called combined TV and DVD players.

And we have no knowledge whatsoever
of the quality of those things,

but we look at a combined TV
and DVD player and we go, "Uck.

It's probably a bit of a crap telly
and a bit rubbish as a DVD player."

So we walk out of the shops
with one of each.

Google is as much a psychological success
as it is a technological one.

I propose that we can use psychology
to solve problems

that we didn't even realize
were problems at all.

This is my suggestion for getting people
to finish their course of antibiotics.

Don't give them 24 white pills.

Give them 18 white pills and six blue ones

and tell them to take
the white pills first

and then take the blue ones.

It's called chunking.

The likelihood that people
will get to the end is much greater

when there is a milestone
somewhere in the middle.

One of the great mistakes,
I think, of economics

is it fails to understand
that what something is,

whether it's retirement,
unemployment, cost,

is a function, not only of its amount,
but also its meaning.

This is a toll crossing in Britain.

Quite often queues happen at the tolls.

Sometimes you get very,
very severe queues.

You could apply the same principle
actually, if you like,

to the security lanes in airports.

What would happen if you could actually

pay twice as much money
to cross the bridge,

but go through a lane
that's an express lane?

It's not an unreasonable thing to do.

It's an economically
efficient thing to do.

Time means more to some people
than others.

If you're trying to get
to a job interview,

you'd patently pay a couple of pounds more
to go through the fast lane.

If you're on the way
to visit your mother in-law,

you'd probably prefer to stay on the left.

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

people hate it.

Because they think you're deliberately
creating delays at the bridge

in order to maximize your revenue,

and "Why on earth should I pay
to subsidize your incompetence?"

On the other hand,
change the frame slightly

and create charitable yield management,

so the extra money you get goes
not to the bridge company,

it goes to charity,

and the mental willingness
to pay completely changes.

You have a relatively
economically efficient solution,

but one that actually meets
with public approval

and even a small degree of affection,

rather than being seen as bastardy.

So where economists
make the fundamental mistake

is they think that money is money.

Actually my pain experienced
in paying five pounds

is not just proportionate to the amount,

but where I think that money is going.

And I think understanding
that could revolutionize tax policy.

It could revolutionize
the public services.

It could really change
things quite significantly.

Here's a guy you all need to study.

Anybody heard of him?

Good. One or two.

He's an Austrian school economist

who was first active in the first half
of the 20th century in Vienna.

What was interesting
about the Austrian school

is they actually grew up alongside Freud.

And so they're predominantly
interested in psychology.

They believed that there was a discipline
called praxeology,

which is a prior discipline
to the study of economics.

Praxeology is the study of human choice,
action and decision making.

I think they're right.

I think the danger
we have in today's world

is we have the study of economics

considers itself to be a prior discipline
to the study of human psychology.

But as Charlie Munger says,
"If economics isn't behavioral,

I don't know what the hell is."

Von Mises, interestingly, believes
economics is just a subset of psychology.

I think he just refers to economics as

"the study of human praxeology
under conditions of scarcity."

But von Mises, among many other things,

I think uses an analogy which is probably
the best justification and explanation

for the value of marketing,
the value of perceived value

and the fact that we should actually
treat it as being absolutely equivalent

to any other kind of value.

All of us - even those of us
who work in marketing -

tend to think of value in two ways.

There's the real value,

which is when you make something
in a factory and provide a service,

and then there's a kind of dubious value,

which you create by changing
the way people look at things.

Von Mises completely rejected
this distinction.

And he used this following analogy.

He referred actually to strange economists
called the French Physiocrats,

who believed that the only true value
was what you extracted from the land.

So if you're a shepherd
or a quarryman or a farmer,

you created true value.

If however, you bought
some wool from the shepherd

and charged a premium
for converting it into a hat,

you weren't actually creating value,

you were exploiting the shepherd.

Now von Mises said that modern economists
make exactly the same mistake

with regard to advertising and marketing.

He says, if you run a restaurant,

there is no healthy distinction to be made

between the value you create
by cooking the food

and the value you create
by sweeping the floor.

One of them creates, perhaps,
the primary product -

the thing we think we're paying for -

the other one creates a context

within which we can enjoy
and appreciate that product.

And the idea that one of them should
actually have priority over the other

is fundamentally wrong.

Try this quick thought experiment.

Imagine a restaurant
that serves Michelin-starred food,

but actually where
the restaurant smells of sewage

and there's human feces on the floor.

The best thing you can do there
to create value

is not actually to improve
the food still further,

it's to get rid of the smell
and clean up the floor.

And it's vital we understand this.

If that seems like some strange,
abstruse thing,

in the U.K., the post office
had a 98 percent success rate

at delivering first-class mail
the next day.

They decided this wasn't good enough

and they wanted to get it up to 99.

The effort to do that
almost broke the organization.

If at the same time you'd gone
and asked people,

"What percentage of first-class mail
arrives the next day?"

the average, or the modal answer
would have been 50 to 60 percent.

Now if your perception
is much worse than your reality,

what on earth are you doing
trying to change the reality?

That's like trying to improve
the food in a restaurant that stinks.

What you need to do

is first of all tell people

that 98 percent of mail gets there
the next day, first-class mail.

That's pretty good.

I would argue, in Britain there's
a much better frame of reference,

which is to tell people

that more first-class mail
arrives the next day

in the U.K. than in Germany.

Because generally in Britain if you want
to make us happy about something,

just tell us we do it better
than the Germans.

(Laughter)

(Applause)

Choose your frame of reference
and the perceived value

and therefore the actual value
is completely transformed.

It has to be said of the Germans

that the Germans and the French
are doing a brilliant job

of creating a united Europe.

The only thing they didn't expect
is they're uniting Europe

through a shared mild hatred
of the French and Germans.

But I'm British,
that's the way we like it.

What you also notice is that
in any case our perception is leaky.

We can't tell the difference
between the quality of the food

and the environment
in which we consume it.

All of you will have seen this phenomenon

if you have your car washed or valeted.

When you drive away,
your car feels as if it drives better.

And the reason for this,

unless my car valet
mysteriously is changing the oil

and performing work which
I'm not paying him for and I'm unaware of,

is because perception
is in any case leaky.

Analgesics that are branded
are more effective at reducing pain

than analgesics that are not branded.

I don't just mean through
reported pain reduction,

actual measured pain reduction.

And so perception actually
is leaky in any case.

So if you do something
that's perceptually bad in one respect,

you can damage the other.

I'll end very quicky

with something without which
you'd never be happy for me to miss

which is the perfect demonstration

of creating economically
fairly sustainable value,

through doing nothing to the product,

and everything to the way
in which it's consumed and perceived.

(Video) Man:
Shreddies are supposed to be square.

Woman: Have any of these
diamond shapes gone out?

[Diamond Shreddies]
Woman: New Diamond Shreddies cereal

Same 100% Whole Grain Wheat
in a delicious diamond shape.

Rory Sutherland: Very finally,
here's the poster campaign.

(Laughter)

(Applause)

Some Canadians are inherently
very conservative,

and were very annoyed that their
square Shreddies had been taken away.

It was kind of a new-coat
marketing moment.

So after long thought and deliberation,

they arrived at a compromise.

Thank you very much.

(Applause)