Many of you are familiar with the bestselling books “Freakonomics,” “SuperFreakonomics,” and “How to Think Like a Freak” by Steve Levitt and Stephen Dubner.
For those of you unfamiliar, the authors look at problems quite differently than most of us and make a case for some quite unexpected solutions. So how can an author and an unorthodox economist help us? Let’s take a look.
You are a football coach. Your team is facing 4th down and 4 yards from your own 10 yard line. Should you punt? The statistics say no. The statistics say that you should never punt when it is 4th and 4, no matter where you are on the field. Why don’t football coaches go for it on 4th down?
Now let’s pretend you are a world class soccer player playing in the World Cup. The game has come down to your penalty kick. Where should you kick the ball to have the best chance for success? Amazingly, the statistics tell us that kicking right down the middle is the best way to succeed. In fact, center kicks are more likely to succeed by 7 percentage points over kicks to the corners. So why do only 17% of World Cup penalty kicks get aimed to the center? Do these players not want to win? Do they not know these statistics?
According to Levitt and Dubner, the answer is neither one of these. Obviously, players want to win and they know the statistics. So, why don’t they do it? Well, what if the goalkeeper doesn’t dive? You’ll look like an idiot. At least if you try to kick to the corners and the goalie blocks it, you’ll get credit for a good effort. The football coach doesn’t go for it on 4th down because he might lose his job immediately if he doesn’t adhere to conventional wisdom. Here lies the problem. Often we care much more about what people will think than what gets the best results. Many times we’re faced with options that seem obvious, but upon further analysis, there’s another way that’s even better.
Think about some of the ways we operate:
1. We don’t like to admit that we don’t know something – many times the incentives we set for ourselves and others don’t have a lot to do with actual results and how well we do our jobs. All too often, incentives don’t have as much to do with winning as they do with maintaining the status quo.
2. We operate within boundaries – Dubner and Levitt tell the story of Takeru Kobayashi, the former Nathan’s Hot Dog eating champion. When he began competitive eating, the record was 25 1/8 hotdogs eaten in 12 minutes. In his first contest he ate 50 hotdogs. Kobayashi broke the record by redefining the problem and not accepting perceived limits. He didn’t ask, “How do I eat more hotdogs?” Kobayashi asked, “How do I make hot dogs easier to eat?” He saw the record as a non-issue and it was. He almost doubled the world record in his first contest.
We can do the same thing if we ignore many of the limits we face every day: time, financial, expectation, social acceptability limits. Don’t think that just because the majority of people do something in a particular way that this is the best way.
3. We think like adults – We are often overwhelmed with problems we face because they seem insurmountable. How do we fix the educational system in America? Why don’t Americans save more? How will I pay off my debt? Oftentimes it pays to think small. Dubner and Levitt point out that in China, they improved student test scores by 25% to 50%. Did they develop a complex system? No. They noticed that one in four children has bad eyesight and provided free eyeglasses.
Think about how young children find out about things. They ask a lot of questions. They ask a lot of silly questions. They have fun. They are curious. Perhaps most important, they are unbiased. They don’t know as much as we do so they don’t carry around preconceptions that stop us from seeing things as they are. This means they don’t rule out potential solutions that seem goofy or unreasonable.
4. We try to manipulate people into doing things we want them to do – we know that we should treat people with decency and dignity. Sometimes though, we don’t believe that doing this will give us the best result. Imagine you’re a non-profit and offer your donors the opportunity to give one time and never hear from you again. We all know that receiving multiple solicitations from charities can get overwhelming and even annoying. However, charities keep doing it because the perception is that it works.
One non-profit tried something different. Smile Train is a charity that works to fix cleft palates in babies. They ran a “one and done” campaign where they promised donors that if they made a gift, Smile Train would never solicit them again. You might have expected an uptick in donations at the beginning and a fall-off over time but you would be wrong. Only 1/3 of donors chose this option and today, Smile Train is collecting more donations than ever.
So to start the new year, make a commitment to yourself that you will begin to think differently. Admit what you don’t know. Remove boundaries that keep you from making the best decisions possible. Ask a lot of questions and look for answers to smaller problems. Lastly, incentivize people to do the right thing but don’t manipulate them.
At the very least, when your favorite football team faces 4th down, yell “GO FOR IT.”
Darcella K Craven has over 20 years of experience in corporate, government, non-profit and military organizations. She is currently the Executive Director of the Veterans Business Resource Center, a non-profit organization dedicated to assisting Honorably Discharged Veterans, National Guard and Reservist and Active Duty personnel and their families with transitioning back into civilian life with starting and expanding businesses. An Army Veteran, she holds a Masters of Arts in Management from Webster University and is currently pursuing her Doctors of Management focusing on impact of military experience on small business decision making. Darcella has been featured in numerous articles for her transition from the military and the welfare system to an accomplished business woman and is actively involved in many civic organizations.
Article co-authored by Damon Chaffin, VBRC Business Consultant