by David Brooks
The Struggle
Erica loved these kinds of hidden patterns. (Like most people, she thought they applied to others but of course not to herself.) She figured she could build her consulting business by gathering data about these unconscious behavioral patterns, especially the ones tied to cultural differences, and then she could sell the information back to companies.
She began collecting information on African American shoppers, Hispanic shoppers, coastal and heartland shoppers. She was especially intrigued by the difference between upscale and downscale shoppers. For all of human history the rich had worked fewer hours than the poor, but over the past generation that trend had been inverted. Attitudes about leisure had become inverted, too. While lower–middle class shoppers wanted video games and movies for the weekends, so they could relax, the rich wanted books and exercise regimens, so they could improve.
Erica developed a collection of analyses about these consumer trends and was ready to pitch her material to potential clients. From the first, building this business was harder than she anticipated. She wrote to companies she thought she could help, called executives she’d met, hounded their assistants. Very few got back to her. During her first few months on her own, Erica’s personality changed. Until now, she had had the usual array of human needs: food, water, sleep, affection, relaxation, and so on. Now she had only one need: clients. Every thought, every dinner conversation, and every chance meeting was evaluated on that basis. She was anxious about being productive each day, but the more anxious she was, the less productive she became. In addition, she fell into an anxiety spiral. She would concentrate on getting enough sleep each night, but the more she concentrated on sleep, the less she could actually get. She worked doggedly to absorb new information, but the more frantically she strived to absorb new knowledge, the less she actually remembered.
Erica had always been an owl. Most people are alert in the morning. About 10 percent are at their most alert around noon. But about 20 percent of the adult population is most alert after six p.m., the owls. But during this period of her life, Erica’s evening alertness turned into all-night insomnia. Time changed shape. It had once flowed at a peaceful, steady pace. Now it was a furious current roaring by. When she pulled into a gas station, she silently calculated how many e-mails she could send on her BlackBerry while her tank was filling up. During every pause before an elevator she brought her phone out of her pocket and was texting. She ate at her desk so that she could e-mail while she chewed. Television and movies dropped out of her life. Her neck began to hurt and her back was sore. In the morning she’d stare at furious scribbles she had written to herself the night before, completely unable to decipher them.
She did things she never thought she would do—cold-calling potential clients and then silently swallowing their dismissive disdain. She’d started this business with dreams of success, but once it was under way she was primarily motivated by fear of failure. It was the thought of the looks she would get from friends and colleagues if her business failed that drove her onward. It was the prospect of having to tell her mother that she’d gone bankrupt.
She’d been a driven person since the Academy, but now she became a detail fanatic. She presented potential clients with little binders of her ideas and proposals. If a page was out of line, if one of the plastic spiral things was bent, she went to Code Red. The rest of the world might be lackadaisical, but not she.
And Erica believed in her product. She believed there were hidden currents of knowledge and, if she could only get her clients to see them, she would change the world. She would give people deeper ways to perceive reality, new powers to serve and succeed. But there were a few roadblocks in her way. When she talked about culture, her potential clients had no idea what she meant. They knew vaguely that culture was important. They used the phrase “corporate culture” with reverence. But still the concept had no concreteness to them. They had been trained to master spreadsheets and numbers. They couldn’t quite bring themselves to take sociological or anthropological categories seriously. To them it was like molding air.
Furthermore, when Erica spoke about different ethnic cultures they broke out in hives. It was one thing for a Chinese-Latina woman to talk about shopping preferences of blacks and whites, urban Jews and rural Protestants. But the mostly white executives had been trained by a generation of consciousness-raising to never, never, never talk in these terms. Never make a generalization about a group of people, never make observations about a minority group, and for God’s sake, never make any comments of this sort in public! That was career suicide. They could laugh when Chris Rock made ethnic jokes. They could listen as Erica noted cultural differences. But they themselves could never, ever go there without facing racism charges, discrimination suits, and boycotts. When Erica asked them to think in ethnic and cultural terms, they had the sudden urge to flee the room in terror.
Erica also had the misfortune to launch her company at the high-water mark of the neuromappers. These were glamorous neurologists who went from business conference to business conference with multicolor fMRI brain scans, promising to unlock the secret synaptic formula to selling toilet paper or energy bars.
The typical neuromapper was a six-foot, shaved-head, cool academic who traipsed into marketing conventions in a leather jacket, jeans, and boots, carrying a motorcycle helmet as though he’d just come in from a neuroscientists’ revival of Grease. He’d be followed around by a camera crew for Finnish television, making a documentary of his life and ideas, and he’d whisper his faux intimacies to his clients while covering the lavalier microphone that was forever clipped to his T-shirt.
His PowerPoint presentation would be polished like fine chrome. He’d start with a series of optical illusions, like the one about the two tabletops that seem totally different but which are exactly the same size and shape, or the picture of the old lady that suddenly flips in the mind’s eye and becomes a beautiful woman in a hat. By the time he was done with the optical illusions the businesspeople were practically wetting their pants in wonder. This was even cooler than the free key chains and tote bags they’d gotten in the vendor area outside.
Then he’d flip on the fMRI scans and start talking about the left- and right-brain differences and his theories of reptilian-brain impulses. Somewhere deep inside this spiel there was some serious science, but it was submerged under layers of pizzazz. The brain scans were awesome. He’d explain that from the top down the brain looks like a rounder version of Ohio. Then he’d get excited as the scans would roll by. Look, a sip of Pepsi makes the front of the brain—around Cleveland, Akron, and Canton—light up. Look! A Frito Lay chip makes the area around Mansfield light up, with a little activity also in Columbus! Look what happens when you give people an image of FedEx. Dayton turns orange! Toledo is red!
A breakfast cereal really should be exciting the medial frontal cortex, he’d declare. Commercials with LeBron James should set the ventral premotor cortex on fire! You want to lodge your brand, he tells everyone, in the ventral striatum! You’ve got to get the client emotionally involved!
This was science with sex appeal! This was not Erica’s vague talk about culture. This was colors on a screen produced by multimillion-dollar machinery that you can see and measure. The neuromappers had their exclusive NeuroFocus Insight System or their NeuroFramework Product Strategy services. They could pinpoint the pure brain essences that would unlock the selling code! Well, of course the executives loved it. Of course every time Erica went in to pitch her services she hit a wall of apathy. Her potential clients wanted somebody who could paint their dorsolateral prefrontal activation bright green! Erica was out of phase with the marketing fads.
One day Erica was pitching her expertise to the CEO of an autoparts company. He interrupted her after about ten minutes. “You know, I respect you. We’re the same,” he said, “but you are boring me. I just don’t relate to what you are offering.”
Erica couldn’t think of any rejoinder.
; “Why don’t you try a different approach? Instead of telling me what you’re offering, why don’t you ask me what I want?” Erica wondered if he was putting the moves on her. But he continued. “Ask me what makes me unhappy. Ask me what keeps me up at night. Ask me what part of my job I wish somebody would take care of for me. It’s not about you. It’s about me.”
Erica realized this was no pickup line. It was a life lesson. She didn’t make a sale to that guy. She left his office confused, her mind jumbled. But the meeting did change everything. From now on her approach was “I’ll do whatever you need.” She would find a way to use her tools to solve whatever problem the clients threw at her. She would come at them and she would say, “What do you want me to do? How can I serve?”
Erica took herself out for a walk one day and thought this thing through. She was failing to sell cultural segmentation. She didn’t want to join the ranks of the neuromappers because she noticed that the advice they derived from their science was actually quite banal. What could she possibly offer?
It never occurred to her to quit. As Angela Duckworth of the University of Pennsylvania has argued, people who succeed tend to find one goal in the distant future and then chase it through thick and thin. People who flit from one interest to another are much, much less likely to excel at any of them. School asks students to be good at a range of subjects, but life asks people to find one passion that they will follow forever.
Behavioral Economics
Erica figured she needed to find some field of expertise she could bring to her client’s problems. She needed some body of knowledge that related to her interest in culture and deep decision making, but which also was palatable in the marketplace. She had to find a language to describe consumer psychology that businesspeople could understand—something familiar and scientific. And that’s how she came upon behavioral economics.
Over the previous decade a group of economists had worked to apply the insights of the cognitive revolution to their own field. Their chief argument, which appealed to Erica a great deal, was that classical economics got human nature partially or largely wrong. The human being imagined by classical economics is smooth, brilliant, calm, and perpetually unastonished by events. He surveys the world with a series of uncannily accurate models in his head, anticipating what will come next. His memory is incredible; he is capable of holding a myriad of decision-making options in his mind, and of weighing the trade-offs involved in each one. He knows exactly what he wants and never flip-flops between two contradictory desires. He seeks to maximize his utility (whatever that is). His relationships are all contingent, contractual, and ephemeral. If one relationship is not helping him maximize his utility, then he trades up to another. He has perfect self-control and can restrain impulses that may prevent him from competing. He doesn’t get caught up in emotional contagions or groupthink, but makes his own decisions on the basis of incentives.
Classical economists readily concede that this sort of person doesn’t actually exist. But they argue that this caricature is close enough to reality to allow them to build models that accurately predict real human behavior. Moreover, the caricature allows them to build rigorous mathematical models, which are the measures of true genius in the economics profession. It allows them to turn economics from a soft squishy muddleheaded field like psychology into a hard, rigorous, and tough-minded field like physics. It allows them to formulate laws that govern the study of behavior, and wield the mighty powers of numbers. As M. Mitchell Waldrop put it, “Theoretical economists use their mathematical prowess the way great stags of the forest use their antlers: to do battle with one another and to establish dominance. A stag who doesn’t use his antlers is nothing.”
Behavioral economists argue that the caricature is not accurate enough to produce reliable predictions about real events. Two psychologists, Daniel Kahneman and Amos Tversky, were the pioneers. Then their insights were picked up by economists proper: including Richard Thaler, Sendhil Mullainathan, Robert Schiller, George Akerlof, and Colin Camerer. These scholars investigate cognition that happens below the level of awareness. Rationality is bounded by emotion. People have a great deal of trouble exercising self-control. They perceive the world in biased ways. They are profoundly influenced by context. They are prone to groupthink. Most of all, people discount the future; we allow present satisfaction to blot out future prosperity.
As Dan Ariely writes in his book Predictably Irrational, “If I were to distill one main lesson from the research described in this book, it is that we are pawns in a game whose forces we largely fail to comprehend. We usually think of ourselves as sitting in the driver’s seat, with ultimate control over the decisions we make and the direction our life takes; but, alas, this perception has more to do with our desires—with how we want to view ourselves—than with reality.”
Behavioral economists argue that stray intuitions, such as a sense of fairness, have powerful economic effects. Pay scales are not only set by what the market will bear. People demand salaries that seem fair, and managers have to take these moral intuitions into account when setting pay scales.
Behavioral economists look for the ways real human beings depart from the rational ideal. There is peer pressure, overconfidence, laziness, and self-delusion. People sometimes take out extended warranties when they buy appliances even though these warranties almost never justify the cost. Health officials in New York thought that if they posted calorie information near the menu boards at fast-food restaurants, people might eat more healthily. In fact, diners actually ordered slightly more calories than before the law went into effect.
Classical economists often believe that economies as a whole tend toward equilibrium, but behavioral economists are more likely to analyze the way shifts in the animal spirits—in confidence, trust, fear, and greed—can lead to bubbles, crashes, and global crises. If the fathers of classical economics knew what we know now about the inner workings of the human mind, some behavioral economists argue, there is no way they would have structured the field as it is.
Behavioral economics came much closer to explaining the reality Erica saw around her every day. She also recognized immediately that this field offered her a way to describe the mind’s hidden processes in a language that would be familiar to MBA grads in corporations across America.
Deep in her heart, Erica did not think the way the behavioral economists did. She saw cultures first. She saw society as an organic creature—a complex growth of living relationships. The behavioral economists may be behavioral, but they were still economists. That is to say, the behavioral economists acknowledged complexities and errors that the classical economists ignored, but they still argued that human errors were predictable, systemic, and expressible in mathematical formulas. Erica suspected they were trimming their sails. If they acknowledged that behavior was not law-governed—if it was too unpredictable to be captured in mathematics and models—then they would no longer be economists. They wouldn’t get published in economic journals or get to go to economic conferences. They’d have to move their offices over to the psychology departments, a big step down in the academic pecking order.
Nonetheless, just as the behavioral economists had an incentive to pretend that what they were doing was still rigorous, tough-minded science, so did Erica. Her clients respected science. They, too, had been trained to think of society as a mechanism. If she had to adopt some of their mind-set in order to get them to listen to her, so be it.
Erica decided she would build her consulting business not on cultural segmentation, which the market wasn’t ready for, but on behavioral economics, which was hot and in demand.
Heuristics
Erica read the major behavioral economists. Behind every choice, they said, there is a choice architecture, an unconscious set of structures that helps frame the decision. This choice architecture often comes in the forms of heuristics. The mind stores certain “if … then …” rules of thumb, which get activated by context and can be trotted out and app
lied in appropriate or near-appropriate circumstances.
First, for example, there is priming. One perception cues a string of downstream thoughts that alters subsequent behavior. If you ask test subjects to read a series of words that vaguely relate to being elderly (“bingo,” “Florida,” “ancient”), when they leave the room they will walk more slowly than when they came in. If you give them a group of words that relate to aggressiveness (“rude,” “annoying,” “intrude”), they will be quicker to interrupt somebody in conversation after the experiment is supposedly over.
If you tell somebody stories about high achievement just before they perform some test or exercise, they will perform better than if you had not told them those stories. If you merely use the words “succeed,” “master” and “achieve” in a sentence, they will do better. If you describe what it is like to be a college professor, they will do better on knowledge tests. On the other hand, if you play into negative stereotypes, they will do worse. If you remind African American students that they are African Americans just before they take a test, their scores will be much lower than if you had not reminded them. In one case, Asian American women were reminded of their ethnicity before a math test. They did better. Then they were reminded they were women. They did worse.
Priming can work in all sorts of ways. In one experiment, some students in a group were asked to write down the first three digits of their phone number and then all were asked to guess the year of Genghis Khan’s death. The students who wrote down the digits were more likely to guess he lived in the first millennium, with a three-digit death year.
Another heuristic involves anchoring. No piece of information is processed in isolation. Mental patterns are contagious, and everything is judged in comparison to something else. A $30 bottle of wine may seem expensive when surrounded by $9 bottles of wine, but it seems cheap when surrounded by $149 bottles of wine (which is why wine stores stock those superexpensive wines that almost nobody actually buys). The manager of a Brunswick pool-table store tried an experiment. One week he showed customers to his lowest priced pool table first, at $329, and then worked his way up. The ones who bought any table that week spent on average $550. The next week he showed customers to the $3,000 table first and worked his way down. That week, the average sale topped $1,000.
