Heidi Grant Halvorson's Blog, page 2

Here's What Happens When You Extend Deadlines

 In June, the Obama administration pushed back the deadline for employers with fifty or more workers to provide health insurance for their employees by a full year - until Jan 1, 2015.  Admittedly, the implementation of anything as complex as the Affordable Care Act is going to take time, and those involved have been working furiously to try to meet the government’s deadlines. So, at least with respect to this particular part of the ACA, everyone has an additional year to get everything just right.  Sounds like a good thing, doesn't it?
Only - how furiously do you think everyone with this new, extended deadline is working now?  Are they still burning the midnight oil… or are they saying to themselves, Let's take a breather.  We’ve got plenty of time.
What happens when we move back deadlines – once we get past the initial feeling of sweet relief?  Research suggests we have a lot of difficulty using our newly-found time wisely. We wind up facing the same problem again – the same time pressure, the same stress, the same feeling-not-quite ready – only now we’ve gone an additional week, or month, or year without reaching an important goal.   
So why do we squander the time extensions we are given, and what can we do about it?  The answer to the latter requires an understanding of the former, so let’s start there.
Problem #1: We lose motivation
It was first observed by researchers in the early part of the last century that one’s motivation to reach a goal increasesas one’s distance from the goal decreases.  Whether you are a salesperson trying to reach a sales target, or a rat running down a tunnel to get a piece of cheese, the closer you get to success, the more intensely you pursue it.  Psychologists call this largely unconscious mechanism the “Goal Looms Larger Effect,” meaning that the nearer you are to the finish line, the larger the goal “looms” in your mind – the more it dominates your thinking, and benefits from your attention.
Whenever you push back a deadline, you are increasing the distance once again between you and the finish line.  Now, more urgent goals will loom large, and your original goal will languish in the back of your mind.

Problem #2: We procrastinate
In 2012, the IRS received over 10 million tax extension forms – a number that increases every year.  Also increasing, according to Turbo Tax, is the number of people who wait until the last two weeks of tax season to file.  What do we have to thank for these trends?  E-filing.  That’s right – now that it is quicker and easier to file our taxes, or file for an extension, we are waiting even longer to do so.  E-filing takes the pressure off, so it’s easier for those with a tendency to procrastinate to delay. 
But that’s ok, because I work better under pressure, says the procrastinator. Well, I’m here to tell you that you don’t.  No one does. Psychologically, saying your work is better under pressure makes zero sense, because “pressure” is just another way of saying “just barely sufficient time to complete whatever I’m doing.”  How can less time help you do a better job?  This is like claiming that you are more rested when you give yourself fewer hours to sleep. 
It’s really far more accurate to say that if you are a procrastinator, you work because there is pressure.  Without pressure, you don’t work.   Which is why pushing back a deadline is absolutely terrible for procrastinators. (Though naturally, they are usually the ones asking for extensions in the first place.) 


Problem #3: We are terrible judges of how long things take
Psychologists call this the planning fallacy – a pervasive tendency to underestimate how long it will take to do just about anything – and it can be attributed to several different biases.  First, we routinely fail to consider our own past experiences while planning. As any professor can tell you, most college seniors, after four straight years of paper-writing, still can't seem to figure out how long it will take them to write a 10-page paper.  Second, we ignore the very real possibility that things won't go as planned--our future plans tend to be "best-case scenarios." And as a consequence, we budget only enough time to complete the project if everything goes smoothly. Which it never really does.Lastly, we don't think about all the steps or subcomponents that make up the task, and consider how long  each part  of the task will take. When you think about painting a room, you may picture yourself using a roller to quickly slap the paint on the walls, and think that it won't take much time at all--neglecting to consider how you'll first have to move or cover the furniture, tape all the fixtures and window frames, do all the edging by hand, and so on.If you push back a deadline without addressing the poor time planning that landed you in hot water in the first place, you will likely end up in hot water again down the road.
How to Make Good Use of an Extended Deadline
If we want to solve Problems 1 & 2 - keeping motivation high and keeping the pressure on for procrastinators - we need to find ways to shorten the distance between where we are now and where we want to end up.  The most effective solution is to impose interim deadlines, effectively breaking a larger goal up into discrete sub-goals spaced out strategically in time.  These deadlines need to be meaningful as well – if it’s no big deal to miss the deadline, then it’s not a real deadline.
Research by Dan Ariely and Klaus Wertenbroch suggests that many of us understand this implicitly.  In one of their studies, students who had to turn in three papers by the semesters’ end.  Only 27% of them chose to submit all three on the last day – the majority established earlier deadlines for one or more of the papers voluntarily.  In fact, roughly half the students chose to impose deadlines optimally, evenly-spacing them throughout the semester. Those that did turned in superior work and received higher grades. (So much for working best under pressure, eh?)
To solve Problem #3, you need to be very deliberate when it comes to project planning.  Specifically, you need to make sure you explicitly…a) consider how long it has taken to complete s similar project in the past,b) try to identify the ways in which things might not go as planned, and3) break the project down, spelling out all the steps you will need to take to get it done, and estimating the time necessary to complete each step.

If it’s not possible to set interim deadlines or make sure actions are taken to avoid the planning fallacy, then you really should try to avoid pushing back your deadline altogether.  The odds are good that you’ll have little to show for it but wasted time.

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Danger Where You Least Expect It

People are generally not all that happy about risk. As Nobel Prize-winning psychologist Daniel Kahneman has written, "For most people, the fear of losing $100 is more intense than the hope of gaining $150. [Amos Tversky and I] concluded from many such observations that 'losses loom larger than gains' and that people are loss averse."While the phenomenon of loss aversion has been well-documented, it's worth noting that Kahneman himself refers to "most people" — not all — when describing its prevalence. According to 20 years of research conducted by Columbia University's Tory Higgins, it might be more accurate to say that some of us are particularly risk-averse, not because we are neurotic, paranoid, or even lacking in self-confidence, but because we tend to see our goals as opportunities to maintain the status quo and keep things running smoothly. Higgins calls this a prevention focus, associated with a robust aversion to being wide-eyed and optimistic, making mistakes, and taking chances. The rest of us are promotion-focused, see our goals as opportunities to make progress and end up better off, and are not particularly averse to risky choices when they hold the potential for rich gains.Studies from Columbia's Motivation Science Center have shown that prevention-focused people work more slowly and deliberately, seek reliability over "coolness" or luxury in products, and prefer conservative investments to higher-yielding but less certain ones. Further research conducted by Harvard's Francesca Gino and Joshua Margolis, indicates that prevention-focused people are more likely than the promotion-focused to behave ethically and honestly — not because they are more ethical per se, but because they fear that rule-breaking will land them in hot water.They even drive differently. In one study, researchers at the University of Groningen in the Netherlands equipped customers of a Dutch insurance company with a GPS that was used to monitor their driving habits. The prevention-focused were, not surprisingly, less likely to speed than their promotion-focused fellow drivers. A second study showed that they also needed larger gaps between cars in order to feel comfortable merging.So when people talk about the factors leading to the recent recession, and you hear a lot about excessive risk-taking (what Alan Greenspan famously called "irrational exuberance"), the prevention-focused would probably be last on your list of potential culprits. But you would be wrong.That's because everything I just told you about prevention-focused people is true when everything is running smoothly — when the status quo is acceptable. When the Devil you know is better than the one you don't (a prevention-focused bit of wisdom if ever there was one.)When the prevention-focused feel they are actually in danger of loss — and when they believe that a risky option is the only way to eliminate that loss — it's a very different story.For instance, in one study conducted by Abigail Scholer and her colleagues at Columbia, participants invested $5 in a particular stock. Half were subsequently told that the stock had lost value — not only the initial investment, but an additional $4. The other half were told that the stock had gained $4 in value. (These values were determined — they were told — by a computer simulation of real-world conditions). Then participants were given the option to invest again, this time with a choice: a 75% chance of gaining $6 and a 25% chance of losing $10 (the conservative option), or a 25% chance of gaining $20 and a 75% chance of losing $4 (the risker option). Note that while the odds were longer, only the riskier option could eliminate the loss of $9 for those currently at -$4. Note also that these were undergraduate students to whom the dollar amounts at stake were significant.The promotion-focused chose the risky option roughly 50% of the time, regardless of whether their stock had gained or lost value. But the prevention-focused preferred the risky option only 38% of the time under gain and 75% of the time under loss. In other words, prevention-focused people generally prefer the conservative option when everything is going according to plan, but they will embrace risk when it's their only shot at returning to status quo.This suggests that "excessive exuberance" may be something of a misnomer. Certainly there are risk-loving traders on Wall Street, and some of the blame for the events that led to the recession lies with them. But much of it seems to lie with investment bankers — people who rarely strike anyone as "exuberant." If anything, they appear to despise risk — so much so that they lobbied hard to create a system (i.e., "Too Big To Fail") in which comparatively little risk (for them) existed.These are the people who, counter-intuitively, will take the most dangerous risks under the right circumstances. One of the most famous risk-takers in recent memory is JP Morgan's "London Whale," Bruno Iksil, who doubled down on a losing bet rather than admit his losses, ultimately costing the bank over six billion. Evidence from the Senate hearings on the matter, in the form of recorded phone calls and emails, paints a picture of desperation rather than over-confidence. (Incidentally, Iksil was head of the Chief Investment Office, the purpose of which is to protect the bank by hedging some of its other riskier bets. This is no longer ironic, when understood from the vantage of prevention focus.)This is why the only deterrent to reckless risk-taking is to make sure that reckless risks have real consequences for those who take them — to make sure, as Nassim Taleb has put it, that the players have "skin in the game." These consequences have to be worse than those of the risks themselves, or they will not be effective. And frankly, they still may not deter a true risk-loving, thrill-seeking cowboy trader — but then again, they aren't really the ones you need to look out for.