Resolutions for the new semester, by the economics
Or, how theory can tell us why resolutions may or may not be useful
At the start of each year we collectively reflect upon the previous year’s achievements — or, too often, failures — and project our thoughts on the year ahead. On a wide scale, newspapers summarize the previous year’s news, give pop quizzes on the best gossip and make predictions on what key events will happen. As individuals, though, we have a certain degree of control over our future and so not only make predictions but resolutions about our future.
A new year’s (or semester’s) resolution is a way of committing us to a goal when short and long-term benefits and costs don’t align. Richard Thaler, author of the behavioral economics book Nudge, refers to an enlightening example at a dinner party of economists (I have tried it myself and urge you not to make the same mistake). The guests, reflecting their economic beliefs in rational behavior, were rapidly devouring packets of nuts before the main food arrived; in fact, they thanked Thaler when he finally took the nuts away. In this anecdote, the nuts were a short-term benefit, but they had long-term implications for the guests’ appetite for better food later on. Exercise has the reverse pattern. It has short-term time and effort costs, but usually only gives benefit over a sustained period of activity — perhaps as long as three months. The news year’s resolution allows us to overcome our short-term myopia by putting in focus our longer term desires.
When putting this forward to a friend he barraged me with several questions. Firstly why do we seem to focus such a large amount of reflection on one day? It is a new year every second — although simply measured from that second a year ago.
I agree that a healthier approach might be to constantly re-evaluate our current behavior throughout the year; that way, I can stop eating pizza before my desired six-pack looks more like “Joe Six-Packs’” stomach (see Google images to understand in painful detail). I would argue, however, that our personal reflection is a “complementary good” to our wider analysis of events in the calendar year. One thought simply stimulates the other and so it seems natural to do the two together.
A second criticism goes further: if we are going to commit to anything at all, a new year’s resolution seems a particularly bad way of doing so. It is a promise to ourselves that has no repercussions if it is broken. I believe this is not a criticism of new years’ resolutions but the way we choose to enact them. Dean Karlan, economics professor at Yale, set up a website, Stickk.com, for people to make credible promises and “put their money where their mouth is.” His website was inspired by his struggle to lose weight and the eventual $15,000 bet that motivated him to follow through on his words.
Finally, why do we choose to make resolutions in January? Blue Monday, the scientifically calculated most depressing day in the year, fell on January 24. If anything, many may see it as the perfect day to eat as much pizza and ice cream that you desire. A new year’s resolution not only often prevents you from doing this, but also adds a weight of guilt every time you break it. But be aware, our decision to delay our sacrifice may be a reflection of “hyperbolic discounting” — when people value rewards today far greater than those tomorrow. It is a temptation simply to say, “Why not start in March?”
This year I had decided to read more, at least 30 books; in addition to only watching a poor movie for every book I read over this target (this has Harry Potter 7 included). However, I have decided to go the cheap route by letting personal shame be the cost of failing my resolution. Perhaps I would be a more learned person if I had made a resolution to be better at economics instead.
William Damazer is Cambridge student participating in the Cambridge-MIT Exchange.