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← 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.

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Showing Revision 21 created 03/02/2015 by Ivana Korom.

  1. What you have here
  2. is an electronic cigarette.
  3. It's something that's,
  4. since it was invented a year or two ago,
  5. has given me untold happiness.
  6. (Laughter)
  7. A little bit of it, I think,
    is the nicotine,
  8. but there's something
    much bigger than that.
  9. Which is ever since, in the U.K.,
    they banned smoking in public places,
  10. I've never enjoyed
    a drinks party ever again.
  11. (Laughter)
  12. And the reason,
    I only worked out just the other day,
  13. which is when you go to a drinks party
  14. and you stand up
    and you hold a glass of red wine
  15. and you talk endlessly to people,
  16. you don't actually want to spend
    all the time talking.
  17. It's really, really tiring.
  18. Sometimes you just want
    to stand there silently,
  19. alone with your thoughts.
  20. Sometimes you just want to stand
    in the corner and stare out of the window.
  21. Now the problem is, when you can't smoke,
  22. if you stand and stare
    out of the window on your own,
  23. you're an antisocial, friendless idiot.
  24. (Laughter)
  25. If you stand and stare out of the window
    on your own with a cigarette,
  26. you're a fucking philosopher.
  27. (Laughter)
  28. (Applause)
  29. So the power of reframing things
  30. cannot be overstated.
  31. What we have is exactly the same thing,
    the same activity,
  32. but one of them makes you feel great
  33. and the other one,
    with just a small change of posture,
  34. makes you feel terrible.
  35. And I think one of the problems
    with classical economics
  36. is it's absolutely preoccupied
    with reality.
  37. And reality isn't a particularly
    good guide to human happiness.
  38. Why, for example,
  39. are pensioners much happier
  40. than the young unemployed?
  41. Both of them, after all,
    are in exactly the same stage of life.
  42. You both have too much time
    on your hands and not much money.
  43. But pensioners are reportedly
    very, very happy,
  44. whereas the unemployed are extraordinarily
    unhappy and depressed.
  45. The reason, I think,
    is that the pensioners believe
  46. they've chosen to be pensioners,
  47. whereas the young unemployed
    feel it's been thrust upon them.
  48. In England the upper middle classes
  49. have actually solved
    this problem perfectly,
  50. because they've re-branded unemployment.
  51. If you're an upper-middle-class
    English person,
  52. you call unemployment "a year off."
  53. (Laughter)
  54. And that's because having a son
    who's unemployed in Manchester
  55. is really quite embarrassing,
  56. but having a son
    who's unemployed in Thailand
  57. is really viewed
    as quite an accomplishment.
  58. (Laughter)
  59. But actually the power
    to re-brand things -
  60. to understand that actually
    our experiences, costs, things
  61. don't actually much depend
    on what they really are,
  62. but on how we view them -
  63. I genuinely think can't be overstated.
  64. There's an experiment
    I think Daniel Pink refers to
  65. where you put two dogs in a box
  66. and the box has an electric floor.
  67. Every now and then an electric shock
    is applied to the floor,
  68. which pains the dogs.
  69. The only difference is one of the dogs
    has a small button in its half of the box.
  70. And when it nuzzles the button,
    the electric shock stops.
  71. The other dog doesn't have the button.
  72. It's exposed to exactly the same level
    of pain as the dog in the first box,
  73. but it has no control
    over the circumstances.
  74. Generally the first dog
    can be relatively content.
  75. The second dog lapses
    into complete depression.
  76. The circumstances of our lives
    may actually matter less to our happiness
  77. than the sense of control
    we feel over our lives.
  78. It's an interesting question.
  79. We ask the question -
    the whole debate in the Western world
  80. is about the level of taxation.
  81. But I think there's another debate
    to be asked,
  82. which is the level of control
    we have over our tax money.
  83. That what costs us 10 pounds
    in one context can be a curse.
  84. What costs us 10 pounds
    in a different context
  85. we may actually welcome.
  86. You know, pay 20,000 pounds
    in tax toward health
  87. and you're merely feeling a mug.
  88. Pay 20,000 pounds to endow a hospital ward
  89. and you're called a philanthropist.
  90. I'm probably in the wrong country
    to talk about willingness to pay tax.
  91. (Laughter)
  92. So I'll give you one in return.
    How you frame things really matters.
  93. Do you call it the bailout of Greece
  94. or the bailout of a load of stupid banks
    which lent to Greece?
  95. Because they are actually the same thing.
  96. What you call them actually affects
  97. how you react to them,
    viscerally and morally.
  98. I think psychological value
    is great to be absolutely honest.
  99. One of my great friends,
    a professor called Nick Chater,
  100. who's the Professor of Decision Sciences
    in London,
  101. believes that we should spend
    far less time
  102. looking into humanity's hidden depths
  103. and spend much more time
    exploring the hidden shallows.
  104. I think that's true actually.
  105. I think impressions have an insane effect
  106. on what we think and what we do.
  107. But what we don't have is a really good
    model of human psychology.
  108. At least pre-Kahneman perhaps,
  109. we didn't have a really good model
    of human psychology
  110. to put alongside models of engineering,
    of neoclassical economics.
  111. So people who believed in psychological
    solutions didn't have a model.
  112. We didn't have a framework.
  113. This is what Warren Buffett's
    business partner Charlie Munger calls
  114. "a latticework
    on which to hang your ideas."
  115. Engineers, economists,
    classical economists
  116. all had a very, very robust
    existing latticework
  117. on which practically every idea
    could be hung.
  118. We merely have a collection
    of random individual insights
  119. without an overall model.
  120. And what that means
    is that in looking at solutions,
  121. we've probably given too much priority
  122. to what I call technical engineering
    solutions, Newtonian solutions,
  123. and not nearly enough
    to the psychological ones.
  124. You know my example of the Eurostar.
  125. Six million pounds spent
    to reduce the journey time
  126. between Paris and London
    by about 40 minutes.
  127. For 0.01 percent of this money
    you could have put WiFi on the trains,
  128. which wouldn't have reduced
    the duration of the journey,
  129. but would have improved its enjoyment
    and its usefulness far more.
  130. For maybe 10 percent of the money,
  131. you could have paid all of the world's
    top male and female supermodels
  132. to walk up and down the train handing out
    free Chateau Petrus to all the passengers.
  133. You'd still have five [million] pounds
    in change,
  134. and people would ask
    for the trains to be slowed down.
  135. (Laughter)
  136. Why were we not given the chance
  137. to solve that problem psychologically?
  138. I think it's because there's an imbalance,
    an asymmetry,
  139. in the way we treat creative,
    emotionally-driven psychological ideas
  140. versus the way we treat rational,
    numerical, spreadsheet-driven ideas.
  141. If you're a creative person,
    I think quite rightly,
  142. you have to share
    all your ideas for approval
  143. with people much more rational than you.
  144. You have to go in and you have to have
    a cost-benefit analysis,
  145. a feasibility study,
    an ROI study and so forth.
  146. And I think that's probably right.
  147. But this does not apply
    the other way around.
  148. People who have an existing framework,
  149. an economic framework,
    an engineering framework,
  150. feel that actually logic
    is its own answer.
  151. What they don't say is,
    "Well the numbers all seem to add up,
  152. but before I present this idea,
  153. I'll go and show it
    to some really crazy people
  154. to see if they can come up
    with something better."
  155. And so we, artificially I think,
  156. what I'd call mechanistic ideas
    over psychological ideas.
  157. An example of a great psychological idea:
  158. The single best improvement
    in passenger satisfaction
  159. on the London Underground per pound spent
  160. came when they didn't add any extra trains
    nor change the frequency of the trains,
  161. they put dot matrix display boards
    on the platforms.
  162. Because the nature of a wait
  163. is not just dependent on its
    numerical quality, its duration,
  164. but on the level of uncertainty
    you experience during that wait.
  165. Waiting seven minutes for a train
    with a countdown clock
  166. is less frustrating and irritating
  167. than waiting four minutes, knuckle-biting
  168. going, "When's this train
    going to damn well arrive?"
  169. Here's a beautiful example
    of a psychological solution
  170. deployed in Korea.
  171. Red traffic lights have a countdown delay.
  172. It's proven to reduce the accident rate
    in experiments.
  173. Why? Because road rage,
    impatience and general irritation
  174. are massively reduced
    when you can actually see
  175. the time you have to wait.
  176. In China, not really understanding
    the principle behind this,
  177. they applied the same principle
    to green traffic lights.
  178. (Laughter)
  179. Which isn't a great idea.
  180. You're 200 yards away,
  181. you realize you've got five seconds to go,
    you floor it.
  182. (Laughter)
  183. The Koreans, very assiduously,
    did test both.
  184. The accident rate goes down
    when you apply this to red traffic lights;
  185. it goes up when you apply it
    to green traffic lights.
  186. This is all I'm asking for really
    in human decision making,
  187. is the consideration
    of these three things.
  188. I'm not asking for the complete
    primacy of one over the other.
  189. I'm merely saying
    that when you solve problems,
  190. you should look
    at all three of these equally
  191. and you should seek as far as possible
  192. to find solutions which sit
    in the sweet spot in the middle.
  193. If you actually look at a great business,
  194. you'll nearly always see all of these
    three things coming into play.
  195. Really, really successful businesses -
  196. Google is a great,
    great technological success,
  197. but it's also based
    on a very good psychological insight:
  198. People believe something
    that only does one thing
  199. is better at that thing than something
    that does that thing and something else.
  200. It's an innate thing called goal dilution.
  201. Ayelet Fishbach has written
    a paper about this.
  202. Everybody else at the time of Google,
    more or less,
  203. was trying to be a portal.
  204. Yes, there's a search function,
  205. but you also have weather,
    sports scores, bits of news.
  206. Google understood
    that if you're just a search engine,
  207. people assume you're a very,
    very good search engine.
  208. All of you know this actually
  209. from when you go in to buy a television.
  210. And in the shabbier end
    of the row of flat screen TVs
  211. you can see are these
    rather despised things
  212. called combined TV and DVD players.
  213. And we have no knowledge whatsoever
    of the quality of those things,
  214. but we look at a combined TV
    and DVD player and we go, "Uck.
  215. It's probably a bit of a crap telly
    and a bit rubbish as a DVD player."
  216. So we walk out of the shops
    with one of each.
  217. Google is as much a psychological success
    as it is a technological one.
  218. I propose that we can use psychology
    to solve problems
  219. that we didn't even realize
    were problems at all.
  220. This is my suggestion for getting people
    to finish their course of antibiotics.
  221. Don't give them 24 white pills.
  222. Give them 18 white pills and six blue ones
  223. and tell them to take
    the white pills first
  224. and then take the blue ones.
  225. It's called chunking.
  226. The likelihood that people
    will get to the end is much greater
  227. when there is a milestone
    somewhere in the middle.
  228. One of the great mistakes,
    I think, of economics
  229. is it fails to understand
    that what something is,
  230. whether it's retirement,
    unemployment, cost,
  231. is a function, not only of its amount,
    but also its meaning.
  232. This is a toll crossing in Britain.
  233. Quite often queues happen at the tolls.
  234. Sometimes you get very,
    very severe queues.
  235. You could apply the same principle
    actually, if you like,
  236. to the security lanes in airports.
  237. What would happen if you could actually
  238. pay twice as much money
    to cross the bridge,
  239. but go through a lane
    that's an express lane?
  240. It's not an unreasonable thing to do.
  241. It's an economically
    efficient thing to do.
  242. Time means more to some people
    than others.
  243. If you're trying to get
    to a job interview,
  244. you'd patently pay a couple of pounds more
    to go through the fast lane.
  245. If you're on the way
    to visit your mother in-law,
  246. you'd probably prefer to stay on the left.
  247. The only problem is if you introduce
    this economically efficient solution,
  248. people hate it.
  249. Because they think you're deliberately
    creating delays at the bridge
  250. in order to maximize your revenue,
  251. and "Why on earth should I pay
    to subsidize your incompetence?"
  252. On the other hand,
    change the frame slightly
  253. and create charitable yield management,
  254. so the extra money you get goes
    not to the bridge company,
  255. it goes to charity,
  256. and the mental willingness
    to pay completely changes.
  257. You have a relatively
    economically efficient solution,
  258. but one that actually meets
    with public approval
  259. and even a small degree of affection,
  260. rather than being seen as bastardy.
  261. So where economists
    make the fundamental mistake
  262. is they think that money is money.
  263. Actually my pain experienced
    in paying five pounds
  264. is not just proportionate to the amount,
  265. but where I think that money is going.
  266. And I think understanding
    that could revolutionize tax policy.
  267. It could revolutionize
    the public services.
  268. It could really change
    things quite significantly.
  269. Here's a guy you all need to study.
  270. Anybody heard of him?
  271. Good. One or two.
  272. He's an Austrian school economist
  273. who was first active in the first half
    of the 20th century in Vienna.
  274. What was interesting
    about the Austrian school
  275. is they actually grew up alongside Freud.
  276. And so they're predominantly
    interested in psychology.
  277. They believed that there was a discipline
    called praxeology,
  278. which is a prior discipline
    to the study of economics.
  279. Praxeology is the study of human choice,
    action and decision making.
  280. I think they're right.
  281. I think the danger
    we have in today's world
  282. is we have the study of economics
  283. considers itself to be a prior discipline
    to the study of human psychology.
  284. But as Charlie Munger says,
    "If economics isn't behavioral,
  285. I don't know what the hell is."
  286. Von Mises, interestingly, believes
    economics is just a subset of psychology.
  287. I think he just refers to economics as
  288. "the study of human praxeology
    under conditions of scarcity."
  289. But von Mises, among many other things,
  290. I think uses an analogy which is probably
    the best justification and explanation
  291. for the value of marketing,
    the value of perceived value
  292. and the fact that we should actually
    treat it as being absolutely equivalent
  293. to any other kind of value.
  294. All of us - even those of us
    who work in marketing -
  295. tend to think of value in two ways.
  296. There's the real value,
  297. which is when you make something
    in a factory and provide a service,
  298. and then there's a kind of dubious value,
  299. which you create by changing
    the way people look at things.
  300. Von Mises completely rejected
    this distinction.
  301. And he used this following analogy.
  302. He referred actually to strange economists
    called the French Physiocrats,
  303. who believed that the only true value
    was what you extracted from the land.
  304. So if you're a shepherd
    or a quarryman or a farmer,
  305. you created true value.
  306. If however, you bought
    some wool from the shepherd
  307. and charged a premium
    for converting it into a hat,
  308. you weren't actually creating value,
  309. you were exploiting the shepherd.
  310. Now von Mises said that modern economists
    make exactly the same mistake
  311. with regard to advertising and marketing.
  312. He says, if you run a restaurant,
  313. there is no healthy distinction to be made
  314. between the value you create
    by cooking the food
  315. and the value you create
    by sweeping the floor.
  316. One of them creates, perhaps,
    the primary product -
  317. the thing we think we're paying for -
  318. the other one creates a context
  319. within which we can enjoy
    and appreciate that product.
  320. And the idea that one of them should
    actually have priority over the other
  321. is fundamentally wrong.
  322. Try this quick thought experiment.
  323. Imagine a restaurant
    that serves Michelin-starred food,
  324. but actually where
    the restaurant smells of sewage
  325. and there's human feces on the floor.
  326. The best thing you can do there
    to create value
  327. is not actually to improve
    the food still further,
  328. it's to get rid of the smell
    and clean up the floor.
  329. And it's vital we understand this.
  330. If that seems like some strange,
    abstruse thing,
  331. in the U.K., the post office
    had a 98 percent success rate
  332. at delivering first-class mail
    the next day.
  333. They decided this wasn't good enough
  334. and they wanted to get it up to 99.
  335. The effort to do that
    almost broke the organization.
  336. If at the same time you'd gone
    and asked people,
  337. "What percentage of first-class mail
    arrives the next day?"
  338. the average, or the modal answer
    would have been 50 to 60 percent.
  339. Now if your perception
    is much worse than your reality,
  340. what on earth are you doing
    trying to change the reality?
  341. That's like trying to improve
    the food in a restaurant that stinks.
  342. What you need to do
  343. is first of all tell people
  344. that 98 percent of mail gets there
    the next day, first-class mail.
  345. That's pretty good.
  346. I would argue, in Britain there's
    a much better frame of reference,
  347. which is to tell people
  348. that more first-class mail
    arrives the next day
  349. in the U.K. than in Germany.
  350. Because generally in Britain if you want
    to make us happy about something,
  351. just tell us we do it better
    than the Germans.
  352. (Laughter)
  353. (Applause)
  354. Choose your frame of reference
    and the perceived value
  355. and therefore the actual value
    is completely transformed.
  356. It has to be said of the Germans
  357. that the Germans and the French
    are doing a brilliant job
  358. of creating a united Europe.
  359. The only thing they didn't expect
    is they're uniting Europe
  360. through a shared mild hatred
    of the French and Germans.
  361. But I'm British,
    that's the way we like it.
  362. What you also notice is that
    in any case our perception is leaky.
  363. We can't tell the difference
    between the quality of the food
  364. and the environment
    in which we consume it.
  365. All of you will have seen this phenomenon
  366. if you have your car washed or valeted.
  367. When you drive away,
    your car feels as if it drives better.
  368. And the reason for this,
  369. unless my car valet
    mysteriously is changing the oil
  370. and performing work which
    I'm not paying him for and I'm unaware of,
  371. is because perception
    is in any case leaky.
  372. Analgesics that are branded
    are more effective at reducing pain
  373. than analgesics that are not branded.
  374. I don't just mean through
    reported pain reduction,
  375. actual measured pain reduction.
  376. And so perception actually
    is leaky in any case.
  377. So if you do something
    that's perceptually bad in one respect,
  378. you can damage the other.
  379. I'll end very quicky
  380. with something without which
    you'd never be happy for me to miss
  381. which is the perfect demonstration
  382. of creating economically
    fairly sustainable value,
  383. through doing nothing to the product,
  384. and everything to the way
    in which it's consumed and perceived.
  385. (Video) Man:
    Shreddies are supposed to be square.
  386. Woman: Have any of these
    diamond shapes gone out?
  387. [Diamond Shreddies]
    Woman: New Diamond Shreddies cereal
  388. Same 100% Whole Grain Wheat
    in a delicious diamond shape.
  389. Rory Sutherland: Very finally,
    here's the poster campaign.
  390. (Laughter)
  391. (Applause)
  392. Some Canadians are inherently
    very conservative,
  393. and were very annoyed that their
    square Shreddies had been taken away.
  394. It was kind of a new-coat
    marketing moment.
  395. So after long thought and deliberation,
  396. they arrived at a compromise.
  397. Thank you very much.
  398. (Applause)