Think Like a Freak

by Steven D. Levitt

The key is to learn to climb inside other people’s minds to figure out what really matters to them.

The problem is that while some incentives are obvious, many aren’t. And simply asking people what they want or need doesn’t necessarily work.

Don’t listen to what people say; watch what they do.)

With any problem, it’s important to figure out which incentives will actually work, not just what your moral compass tells you should work. The key is to think less about the ideal behavior of imaginary people and more about the actual behavior of real people. Those real people are much more unpredictable.

The most radical accomplishment of once-and-done is that it changed the frame of the relationship between the charity and the donor.

Whenever you interact with another entity, whether it’s your best friend or some faceless bureaucracy, the interaction falls into one of a handful of frameworks.

There’s the financial framework that governs everything we bu...

There’s an “us-versus-them...

The “loved-one” f...

There’s a collaborative framework that shapes how you behave with work colleagues

the “authority-figure” framework,

So you can plainly get into trouble by getting your frames mixed up. But it can also be incredibly productive to nudge a relationship from one framework into another. Whether through subtle cues or concrete incentives, a lot of problems can be solved by shifting the dynamic between parties, whether it’s two people or two billion.

We should also note the obvious point that no one likes to feel manipulated.

Thinking like a Freak may sometimes sound like an exercise in using clever means to get exactly what you want, and there’s nothing wrong with that. But if there is one thing we’ve learned from a lifetime of designing and analyzing incentives, the best way to get what you want is to treat other people with decency. Decency can push almost any interaction into the cooperative frame.

So while designing the right incentive scheme certainly isn’t easy, here’s a simple set of rules that usually point us in the right direction: 1. Figure out what people really care about, not what they say they care about. 2. Incentivize them on the dimensions that are valuable to them but cheap for you to provide. 3. Pay attention to how people respond; if their response surprises or frustrates you, learn from it and try something different. 4. Whenever possible, create incentives that switch the frame from adversarial to cooperative.

5. Never, ever think that people will do something just because it is the “right” thing to do. 6. Know that some people will do everything they can to game the system, finding ways to win that you never could have imagined. If only to keep yourself sane, try to applaud their ingenuity rather than curse their greed.

And so it was that David Lee Roth and King Solomon both engaged in a fruitful bit of game theory—which, narrowly defined, is the art of beating your opponent by anticipating his next move.

A person who is lying or cheating will often respond to an incentive differently than an honest person.

Teach Your Garden to Weed Itself.

Our best advice would be to simply smile and change the subject. As hard as it is to think creatively about problems and come up with solutions, in our experience it is even harder to persuade people who do not wish to be persuaded.

First, understand how hard persuasion will be—and why.

One reason may be that smart people simply have more experience with feeling they are right, and therefore have greater confidence in their knowledge, whatever side of an issue they’re on. But being confident you are right is not the same as being right.

Rather than try to persuade people of the worthiness of a goal—whether it’s conserving energy or eating better or saving more for retirement—it’s more productive to essentially trick people with subtle cues or new default settings.

if you desperately want to persuade someone who doesn’t want to be persuaded? The first step is to appreciate that your opponent’s opinion is likely based less on fact and logic than on ideology and herd thinking. If

As the behavioral sage Daniel Kahneman has written: “[W]e can be blind to the obvious, and we are also blind to our blindness.”

how can you build an argument that might actually change a few minds?

It’s not me; it’s you.

Your argument may be factually indisputable and logically airtight but if it doesn’t resonate for the recipient, you won’t get anywhere.

Don’t pretend your argument is perfect.

If you make an argument that

promises all benefits and no costs, your opponent will never buy it—nor should he.

If you paper over the shortcomings of your plan, that only gives your opponent reason...

One reason is that the opposing argument almost certainly has value—something you can learn from and use to strengthen your own argument.

Keep the insults to yourself.

you should tell stories.

By “story,” we don’t mean “anecdote.” An anecdote is a snapshot, a one-dimensional shard of the big picture.

A story, meanwhile, fills out the picture. It uses data, statistical or otherwise, to portray a sense of magnitude; without data, we have no idea how a story fits into the larger scheme of things. A good story also includes the passage of time, to show the degree of constancy or change; without a time frame, we can’t judge whether we’re looking at something truly noteworthy or just an anomalous

blip. And a story lays out a daisy chain of events, to show the causes that lead up to a particular situation and the consequences that result from it.

There is in fact a huge upside to quitting when done right, and we suggest you give it a try.

At least three forces bias us against quitting. The first is a lifetime of being told by Churchill wannabes that quitting is a sign of failure.

The second is the notion of sunk costs.

Think about all the time, brainpower, and social or political capital you continued to spend on some commitment only because you didn’t like the idea of quitting.

The third force that keeps people from quitting is a tendency to focus on concrete costs and pay too little attention to opportunity cost. This is the notion that for every dollar or hour or brain cell you spend on one thing, you surrender the opportunity to spend it elsewhere.

Quitting is hard in part because it is equated with failure, and nobody likes to fail, or at least be seen failing. But is failure necessarily so terrible?

Resources are not infinite: you cannot solve tomorrow’s problem if you aren’t willing to abandon today’s dud.

failure can provide valuable feedback.

“Knowing when the time is right to walk away is a perpetual challenge.”

The key is failing fast and failing cheap.

When failure is demonized, people will try to avoid it at all costs—even when it represents nothing more than a temporary setback.

A premortem tries to find out what might go wrong before it’s too late. You gather up everyone connected with a project and have them imagine that it launched and failed miserably. Now they each write down the exact reasons for its failure. Klein has found the premortem can help flush out the flaws or doubts in a project that no one had been willing to speak aloud.