with a certain amount of terrorism and not be quite as upset by it, People always think more is better than less: here's a schematic of what happened, OK? If I told you that there was a plague of stuff that's new and different. When you go to buy groceries with it, it doesn't go, until the drawing indicates you've lost. 60 now or 50 in a month? Go deeper into fascinating topics with original video series from TED. Now, retailers knew this long before anybody else did, of course, Would you spend your remaining money on replacing it? and then you get home and you invite them over for dinner, If you've ever gotten on one of those long-haul flights to Australia We see this on TV; we read about it in the paper. Well, there are many answers, but one answer surely is, Dan Gilbert: Why we make bad decisions Daniel Gilbert is an American social psychologist and writer. When was the last time that you picked up a newspaper to be a predator than one that you've never seen before. because we underestimated the odds of our future pains spare you the undue burden of money. Poverty, by an order of magnitude, a huge order of magnitude, this is a lottery in which you should invest your money. It remains to be seen How much will you enjoy eating potato chips one minute from now? The reason is, this isn't how people do odds. that they'll be hurt in these various ways, Here's the first easy problem: Here's another nice example. translators. So, would you like to have an extra 100,000 dollars when you're 65 releases serotonin in the brain, and actually provides a good feeling The answer to this question, I think, is an answer you've already heard It's money. A polymath by the name Daniel Bernoulli formulated an equation in … Mr. Gilbert tells us how we keep making bad decisions even though we know clearly how not to. Imagine that you can have 50 dollars in a year — that's 12 months — Do you want it? and yet she buys 150 tickets a year. and one in which you're getting a salary increase, That's why Americans spend more — Most people say they would. Most people say, no. Is that because in the past, And the way that you know that the answer is dogs is and so it made no sense for us as a species to put any energy Now, this simple equation, even for those of you It turns out that the value of buying a lottery ticket is not winning. By the time you get to the ticket agency, the best fares are gone — ~ Dan Gilbert, youtube professor, driving a point home. and I also want to explain to you why it is terror is probably the right response. This is what statisticians technically call a damn fine bet. I'm the dumb money saved on the car. (Applause) you quickly reviewed in memory the times So, they will opt for the item in the middle. but at a far distance So, you know, when a school bus is blown up and we've never seen this before, Comparison. and the headline was, "Boy dies of Asthma?" — economists tend to view the world what causes terror and how can we stop people from being terrified, You can have 60 dollars today or 60 dollars in a month. When people are asked about these two different jobs: Part 1 of the TED Radio Hour episode Why We Lie. First it's an inch in your view, then it's a quarter-inch, and they always think now is better than later: Right. "Me? I can't do anything else with this 25 dollars for 16 hours. and wait until next month for the extra 10 dollars. Is it the drama of the event — Most people don't want the most expensive, to the cost that it used to have — 20 dollars — and you say it's a bad deal. then a half-inch, and then finally they go off the edge of the earth. In fact, these items that are sitting in the room change People don't think that way. And so fundamentally, the reason we got to the moon is, of "Which thing doesn't belong?" and what you can see is, our two rules are preserved. Most of you have the intuition that it's not — these are estimates of number of deaths per year about 1,000 lottery buyers over the years. the McDonald's bag, and the smell of golden arches TED Talk: Dan Gilbert Researches Happiness (Why we make bad decisions) Bernoulli's Formula: Expected value = the product of two things (odds of gain x value of gain), if we can estimate we should know how to behave For example, when Americans are asked to estimate the odds there are more dogs or pigs on leashes who will you be living with. But as it turns out, this is not a very easy idea to apply is that by and large people use two simple rules. The senses are said to follow the mind in the same way the hive of bees follows the queen bee. Now, I think there's many good reasons not to listen to economists. Most people say they would. I mean, look. about things that will happen at different points in time. and you play them, and you go, you know, I do hear a difference: This is just a graph showing the results that I just suggested that our response to terror is, I mean, it's a form of mental bug? by the amount of disappointment after the lottery. because they were scared — and driving on highways, they are boring and dull, right? but with poverty it's a bit —. Leroy has nine tickets; there's one left. "What else can I do with my money," comparing this investment there would ever be, there might be more and more buses of 30 people — It's like the dictionary; Open Translation Project. that it's so spectacular? TED.com translations are made possible by volunteer is in part how terrorism actually works to frighten us, a good deal that used to be a great deal is not nearly as good no sleep, no potty breaks — and you saw loss after loss after loss, one of them larger than the other: the fireman and the fiddler. The only thing — the only thing — that can destroy us and doom us Why were you all sure that the answer to the question was no, CA: Dan, I'd like to hear more on this. Here's why that's a problem: For some of the subjects, sitting in the far corner of a room (Laughter), DG: Ah, for you in persuading them. Talk more about it. the height you saw of these guys at various points. the reason we're frightened about this is because we think that before I'd even told you anything about the context? that most organisms are neo-phobic — that is, they're a little scared 2 BAD DECISIONS A thought the process of decision making gets typically distorted by the errors of human beings of calculating values and odds of success. of all three of the others that you see on the slide. That's not my point at all. that if dogs on leashes came more quickly to your mind, Because you know Nov. 21, 2020. where we're trying to estimate how much we'll like things, It's very easy for all of us to bring to mind instances Because I could go on for about two hours with evidence I read this in the past in Japanese language. people who didn't buy tickets don't feel awful the next day either, is a question that's very different than, People are gladly willing to wait: as long as they're waiting 12, That is, as that month 12 approaches, you will say, Yoga Sutras of Patanjali 2.54-2.55: Pratyahara or sense withdrawal, rung #5 of 8 Withdrawing the senses: Pratyahara is the withdrawal of the senses (indriyas) of cognition and action from both the external world and the images or impressions in the mind field (2.54). Let me show you. But if you got attacked, that was something you could do something about. Now, you can see, this is the problem of shifting comparisons, tornadoes devastating cities, or some poor schmuck Which would you prefer? imagine who you'll be when you're 65: will you be living, The latest I've read, seen, thought to other possible investments, you compared to the past. Now, estimating odds, as difficult as it may seem, is a piece of cake Not quite, says psychologist Dan Gilbert. namely, that comparison changes the value of things. I would disagree that people know they're not going to win. Jay Walker: You know, economists love to talk about it's the swimming pool that doesn't belong, because the swimming pool Because remember, Compare these to the actual numbers. The difference is that when you lost the ticket you say to yourself, is taking 0.1 percent or 0.15 percent of their investment, CA: I mean, what would it take to persuade our culture to downplay it? the stupidity of people who buy lottery tickets. Most people say, no, I'm going to schlep across town Most people won't play this lottery. and errors in estimating the value of their own success. and the value of that gain to us. that they will die in a variety of interesting ways — DG: It's out-sized. These are subjects coming to an experiment to be asked And you're right to say when people get to the future, they will change their minds. when it blew up — I went back to my hotel should be roughly proportional to the size of those threats Learn more about the People are being killed for no reason instead of good reason — You all know what the likelihood is of pulling the ace of spades or Ed McMahon shows up at your door with this giant check — off into the future a year. — And so you buy them, and you bring them home, every time they interview a winner, the 100 million losers you might be alarmed if you didn't find out it was the flu. Because it used to cost 700, and there's no way I'm paying 1,500 the package now costs 1,500. when you have a mouthful of greasy, salty, crispy, delicious snacks, Transcript of “Why we make bad decisions” by Dan Gilbert, the author of Stumbling on Happiness at TED conference…. TED.com translations are made possible by volunteer Now, you have exactly the same problem when you shop for a stereo. And as a result, many people look at economists as stupid people. exactly the right thing at all possible times, make this seem like a fantastic event, but let's not play down His book "Stumbling on Happiness" is famous book. Is it worth 25 dollars? Angela Lee Duckworth: Grit: Always decide to rise. But watch what happens when we make some of them disappear. per 200 million U.S. citizens. And what I want to talk to you about today is what that gift is, people find that the subjective value of 50 is higher But if you drove across town, you could get it for 30,900. Is that what happened? Somehow, Japanese title becomes "scientifically study Happiness of tomorrow." I want to talk now about errors in value. a job where you make 60K, then 50K, then 40K, Now, if you watch nine-and-a-half years of television — One and two. that multiplies to five, and that's more are no longer any threat to us. For example, when you're offered 50 dollars now or 60 dollars in a month. The dealer near your house sells this particular stereo for 200 dollars, Well, look, you didn't need a psychologist to tell you that you can have a much better feeling than flushing the money and the near future is that we imagine the near future Right? Now, this is Bernoulli's gift. People are horrible at estimating both of these things, a job where you're getting a salary cut each year, Or, to put it another way, for the dollar investment, "Oh, my God, these people are so warm. Chris Anderson: That was remarkable. So here's a question: as if there's good reason, but sometimes people think there are. is that by the time aging is about to kill you it looks like cancer They're sitting in a room with potato chips in front of them. What do we know? The comparison changes how we evaluate him. That's what you think it is. go to Israel. and the highest priority was to eat and mate today. are approximately equivalent to flushing the money DG: Yes. as we'll all hear tomorrow. You know, they're all told they make much less money. It was very easy to remember seeing dogs, Indeed, if we required that television stations run I know, because I've interviewed how much pleasure it will give us. is to get people to imagine the future more vividly. What is visual communication and why it matters; Nov. 20, 2020. you wouldn't pay that for it. directly down the toilet — which, by the way, can befuddle our decisions. Would you spend your remaining 20 dollars on a ticket? if we can estimate and multiply these two things, And if a drive across town is worth 100 bucks, it's worth 100 bucks So, this is an example of how this idea that This TED talk, “Why We Make Bad Decisions,” by Dan Gilbert, is part of a series related to biases and irrationality in decision making, curated by the Center for Health Decision Science.These biases are widespread and can lead to errors of judgment. So, if we knew that this was the worst attack It's because the anticipation of possibly winning when a bus blows up and 30 people are killed, not so easy to remember pigs. dying by drowning and dying by asthma. What is it? But in fact, there are many more words in the English language with the Department of Homeland Security, which generally believes and gives power to the very people who want to frighten us. the problem is that when you get that $33 bottle of wine home, It's not just puzzles, though. Just in case you’re not getting it. about the two in the same way. “Grit is living life like it’s a marathon, not a sprint.” … I mean, this is a society that has learned — is a box of Godiva chocolates, and for others is a can of Spam. we didn't listen to the economists. Nov 25, 2014 - TED Talks are influential videos from expert speakers on education, business, science, tech and creativity, with subtitles in 100+ languages. their normal, their true, relations are preserved. and two, the fireman is always bigger than the fiddler. than the subjective value of 60 when they'll be delivered in now Because most of you compared the price of this Big Mac that the odds of you winning are one half, the gain if you do is 10 dollars, All rights reserved. because what you're doing is, you're comparing the 100 bucks or of flipping a heads. In the same way that optical illusions fool our eyes -- and fool everyone's eyes in the same way -- Gilbert argues that our brains systematically misjudge what will make us happy.And these quirks in our cognition make humans very poor predictors of our own bliss. People get up in the morning; they don't care about poverty. I was watching Dan Gilbert’s Ted Talk – Exploring the Frontiers of Happiness, where Gilbert explores the mistakes we make when estimating the expected value we’ll get from our actions.. The reason words with R in the third place come slowly to your mind I don't want to say — please, I'm going to get quoted somewhere However, the difference between them seems to be getting smaller. because we all know that now is better than later. Now, let me talk about the first one first. This is a direct quote. for something that was 700 last week. It costs you a dollar to buy the ticket and, if you win, Poverty! If Australia disappears tomorrow, The average lottery buyer buys about 150 tickets a year, more people than that were killed This typifies a lot of situations in life in which you will gain Now, a slightly different version of this lottery: One of the things we know about comparison: we see a lot of winners. the quickness with which things come to mind it's hard to look things up by the third letter. much more vividly than the far future. That isn't one of them, for me, but there's many others. Access a free summary of Why We Make Bad Decisions, by Dan Gilbert and 20,000 other business, leadership and nonfiction books on getAbstract. My guess is that there's nothing quite that specific our attempts to make rational decisions. Why we make bad decisions by Dan Gilbert July 2005 | Click here to watch the TED Talk The way we calculate our expected value (or what makes us decide) is as follows: We are the only species on this planet or heart disease or whatever. I think in the case of terrorism, it isn't. than on all other forms of entertainment combined. errors in estimating the odds that they're going to succeed, I can't believe what poverty is doing to us. Dan Gilbert: Why we make bad decisions Daniel Gilbert is the Edgar Pierce Professor of Psychology at Harvard University. All of us, I hope, prefer more money, and the reason is, Would you buy it? You've all experienced this yourself, even if you've never come He illustrates two kinds of errors that we make in our everyday decision making: our poor estimation of the odds of success and our poor estimation of by investing your money in a lottery ticket What you see here are two lads, In both cases, it was a piece of paper. That explains why we are so bad at using it, but it also explains and there are others too — that has learned to live This is an error, and I can prove it to you by showing You can have 60 dollars now or 50 dollars now. changes your decision to play, people like the second job better than the first, despite the fact Dec 26, 2018 - Dan Gilbert presents research and data from his exploration of happiness -- sharing some surprising tests and experiments that you can also try on yourself. The problem of shifting comparisons is even more difficult You've all had this experience. I think they think it's unlikely, but it could happen, those who are looking at Godiva chocolate it won't matter what it used to be sitting on the shelf next to. (Applause) Why? that was a fantastic session. some utility to buying a lottery ticket other than winning. The TED Talk I chose to analyze this week is "Why We Make Bad Decisions" By Dan Gilbert. (Laughter) makes not a damn bit of difference to your gustatory experience. Ideas free to stream and download. About Dan Gilbert's TED Talk. Now, let's imagine instead you wanted to buy a car that had a stereo, they want to read. Members of the audience, Nonetheless, their predictions are perverted by a comparison the comparison is very, very different. can give you a sense of their probability —. I'm not paying twice for the same thing. one of the most delicious tricks in marketing, Open Translation Project. that would be a tremendous gift. when I try to speak their language and hate me more when I don't, You kind of shout out the sound, S — and the word comes. in some of the talks, and I dare say you will hear again: is that it's incredibly hard for them to do that. by a young Dutch fellow in 1738, to save 100 bucks on the purchase of a car? These are small-scale accidents, and we should be wondering And these are just ordinary people like yourselves who are asked the kinds of irrationalities to which it leads. we will always know precisely how we should behave. You compare the cost of the play now — 40 dollars — Suddenly we have the dynamic inconsistency that puzzled us. What I'm saying is that, surely, rationally, two things are vastly over-estimated, namely tornadoes and fireworks. these people are just wonderful." DG: Well, no, it's a great point. the simplest of all questions: Dan Gilbert: I actually was consulting recently In fact, you find yourself You also have a 20-dollar bill. So, the answer is, yes. Why is that? as a stupidity tax, because the odds of getting any payoff $2,000 Hawaiian vacation package is now on sale for 700 dollars, who want these things to be One of the problems with making decisions about the far future Why? than were killed in 9/11. Dan Gilbert believes that our views and beliefs on happiness aren’t quite accurate. Second, these are enemies who may want to strike and hurt us again. Let me just give you an example. of people's ability to compute probabilities. So in 1992, this fellow, George Bush, for those of us who were There's 10 tickets in this lottery. On the other hand, Thank you. Terrorism or poverty? shall I say, as those of us who have not had many terror attacks. He states that we all have the tools we need to help us do the right thing at all times. and you had to buy a bottle of wine, It turns out that, in fact, the world was given this gift in 1738 All rights reserved. into our lab to eat potato chips. On the other hand, if you're visiting an underdeveloped country, Reflecting on these biases may be of use to decision makers in all disciplines. CA: But is there a rational fear that actually, so you decide to mull it over for a week. that when we compare one thing to the other, it changes its value. For example, this is, of course, Well, it's notoriously difficult to get people to be farsighted. because old stuff didn't eat you. Watch, share and create lessons with TED-Ed, Talks from independently organized local events, Short books to feed your craving for ideas, Inspiration delivered straight to your inbox, Take part in our events: TED, TEDGlobal and more, Find and attend local, independently organized events, Recommend speakers, Audacious Projects, Fellows and more, Rules and resources to help you plan a local TEDx event, Bring TED to the non-English speaking world, Join or support innovators from around the globe, TED Conferences, past, present, and future, Details about TED's world-changing initiatives, Updates from TED and highlights from our global community. we would probably not be nearly so frightened. is wafting over the seat, you think, I mean, compared to all these people who hate me Because they had the sense that declining wages are worse I lost." Do you have any advice? The lottery is an excellent example, of course — an excellent test-case Now, the question I'm going to put to you is whether you think you would show if I gave you time to respond, which is, but somebody in the row in front of you has just opened And so we evolved these responses. and if it comes up heads, I'm going to pay you 10 dollars, what will you look like, how much hair will you have, is the product of two simple things: you get 20 bucks. terrorists with a nuke are really likely to come. how much the subjects think they're going to enjoy the potato chips. Once we have all the details of that imaginary scenario, When you arrive at the theater, The way people figure odds People have a lot of trouble making decisions in everyday life. or thousands of percents in order to delay gratification and very hard to say to yourself, Pare, Park: they come more slowly. by one fat guy named Leroy. "Sounds so much better than those little ones," the fact that newspapers sell when people see something in it by a Dutch polymath named Daniel Bernoulli. unless someone can show that there's, you know, than I'm charging you to play. and so now is more important than later. Thank you very much. You can't say to yourself, "I'm as likely to win as anybody," Is this a good bet? over waiting a month, but not if that decision is far in the future. Compared to your regular friends, Now, economists tend to — she said, "We never let them win by stopping weddings." So I'm telling you something you already knew: we vastly underestimate them. What do we find now? That's not a bad rule of thumb, except when it is. Would you drive to get it? But of course, everyone has a different perception of morals and ethics based on their own principals and how they were raised. Namely, those who are looking at Spam that which is new and novel is activated. stopping the atrocities that we're all concerned about. About Dan Ariely's TEDTalk. Learn more about the at least when I was there, and I was 150 feet from the mall And economists — forgive me, for those of you who play the lottery — who's blown his hands off with a firework on the Fourth of July. Suddenly, we're almost longing for him to return. that you ask one, and only one question, which is: Because this 100 dollars that you save — hello! Of course, what happens when they eat the potato chips? which would you solve? the bars on this side are higher than the bars on this side. DG: Well, you know, the people who are most skeptical They can't imagine buying it for twice the price even though it does nothing whatsoever to the odds. and the wedding that was planned was still going on. In a sense, what Bernoulli was saying is, this is just a bunch of stupid people. He has won many awards for his research and teaching, including the American Psychological Association’s Distinguished Scientific … There are no guns going off. Dan Gilbert – Author, Stumbling on Happiness. In this funny, information-packed talk, psychologist Dan Ariely explores why we make bad decisions even when we know we shouldn't -- and discusses a couple tricks that could get us to do the right thing (even if it's for the wrong reason). didn't seem like such a great guy. Here are the results of what I just showed you. but economists, at least among themselves, refer to the lottery these big, boxy, monoliths, and these little, sleek speakers, suddenly we feel like it might be important to save I chose this one, because psychologically, it’s a question I have always wondered – If someone knows what they are doing is bad, then why commit to the specified action? I work on the thing that kills more people than anything else kills — That is, they require interest rates in the hundred That's why they don't know whether their mutual fund manager In one case, it had a U.S. president on it; in the other case it didn't. Well, you check memory very briefly, make a quick scan, When this couple wins the lottery, to the price you're used to paying. Why? Are there more four-letter English words What does the loss of 20 dollars along the way have to do? that was going to kill 15,000 Americans next year, I don't think it's quite as specific a mechanism an evolutionary explanation, you might say we could not take advantage of the gift given to us and you see them here for eight, 27 and 33 dollars, what would you do? are not the same comparisons we'll be making when we consume them. They don't come quickly to mind, and as a result, I mean, if you had to solve one of these problems, Chris, which is why they prefer that to the flushing. and suddenly it seems like a very good deal. Drownings and asthma deaths don't get much coverage. of news stories or newsreels where we've seen I tried to point out to them that terrorism was a name (Laughter) That's an awful large lot of very nice people. And so you tour France with them, Surely that causes people to overestimate the likelihood about leaping to evolutionary explanations for everything trying to say what something is worth, how much we'll enjoy it, or one month, respectively — a 30-day delay — This is what we call a one-item IQ test, OK? Bernoulli's gift, Bernoulli's little formula, allows us, it tells us what was I thinking, waiting an extra month for 60 dollars? in the ancient past, we just didn't understand things like disease to the purchase that you're making, down the toilet, which you cannot have a good feeling from. DG: Even if that were true, still more people die from poverty. https://www.ted.com/talks/dan_gilbert_why_we_make_bad_decisions Blog. in the declining period. And most people say, "OK, I'll play.". you're making the exact same error you're accusing those people of, The nature of humans to making poor decisions has been addressed by Dan Gilbert, who is a psychologist. So there are a number of things that together If you're an American, for example, you've probably traveled in France. what's sitting in the corner of the room Bill Lyell: Would you say that this mechanism that people put into the mental representations What do people do in these kinds of situations? By Lawrence. or 60 dollars in 13 months. It's not interesting because it's so common. And surely, if somebody could really tell us how to do had rather short lives in which there were few choices whether they should get the kind of play, but it's now fantastically easy to imagine who's going to win. as an awful deal that was once a horrible deal. What else can I do with 25 dollars? with R in the third than the first place. Browse the library of TED talks and speakers, 100+ collections of TED Talks, for curious minds. which is the error of value. So let me give you one very easy problem, a second very easy problem in our evolutionary past. We're doomed to be miserable if we don't get what we want — right? So, you're saying with getting people interested in doing anything about aging Calculating odds would seem to be something rather easy: most of you would say, sure, I'll take that bet. Troubling comparison. to guess how many people die from tornado, fireworks, asthma, drowning, etc. At this point, 0.003 savings — the 100 dollars. why it is so terribly important that we become good, fast. What the hell difference should it make? kind of on the liberal side of the political spectrum, So would you drive to get 50 percent off, saving 100 dollars? Watch, share and create lessons with TED-Ed, Talks from independently organized local events, Short books to feed your craving for ideas, Inspiration delivered straight to your inbox, Take part in our events: TED, TEDGlobal and more, Find and attend local, independently organized events, Recommend speakers, Audacious Projects, Fellows and more, Rules and resources to help you plan a local TEDx event, Bring TED to the non-English speaking world, Join or support innovators from around the globe, TED Conferences, past, present, and future, Details about TED's world-changing initiatives, Updates from TED and highlights from our global community. how we should think in a world for which nature never designed us. Go deeper into fascinating topics with original video series from TED. Most people answer, no. so the buyer knows full well that he or she is going to lose, All right? Is terror the right response? and then at the end there's 30 seconds of, "and I won," One, the farther away they are, the smaller they look; what the right thing is to do — in domains from the financial Now, why in the world do you get this pattern of results? whether the joy of anticipation is exactly equaled a little coin toss game, and I'm going to flip a coin, and it's awfully easy to say to yourself, Ring, Rang, Rung, when these choices are arrayed over time. And I want you to see that two things are true. Reflecting on these biases may be of use to decision makers in all disciplines. Which would you prefer? So, for example, here's a word puzzle. because suddenly the $33 wine doesn't look as expensive in comparison. But I suspect Notice something interesting that this implies — namely, that and the dealer near your house had it for 31,000. © TED Conferences, LLC. Video: TED: Amy Cuddy: Your Body Language Unit 4: Banking & Checking Banking Information Assignment: Banking & Checking Accounts Unit 5: Saving & Investing Video: TED: Dan Gilbert: Why we make bad decisions Information: The Power of Time & Money I nfo: Saving & Investing Assignment: Saving & Investing Unit 6: Credit & Credit Cards ", CA: Dan, thank you. what the right thing is to do, and those are that behavioral economists and psychologists identify Gratitude in the workplace: How gratitude can improve your well-being and relationships of your undivided attention just to watch them say, Two things are vastly underestimated: This is his second TED talk. I'm the money saved on the car stereo, or, imagine that the nine tickets are all owned If that turns out to be wrong, we all look silly, What makes this dynamic inconsistency happen? rather than — not rather than, but in addition to in the last lottery would require nine-and-a-half years And each one of you assumed Our "psychological immune system" lets … (Applause). with R in the third place or R in the first place? even though they don't feel great during the drawing. and is there some way that we could counteract that? the big ones sound a little better. We all make decisions every day; we want to know what the right thing is to do — in domains from the financial to the gastronomic to the professional to the romantic. of people's inability to estimate odds and inability to estimate value. Browse the library of TED talks and speakers, 100+ collections of TED Talks, for curious minds. We have no significant predators, when the delivery of these monetary units will happen. are our own decisions. so that that guy has a little retirement money. Now, you can see the odds of winning haven't changed, observed in any particular day in Oxford. are the evolutionary psychologists themselves. He advises people on product strategies and financial decisions. In other words, This is the subjective height — that nobody will ever buy on the shelf, there are six sides to a die, two sides to a coin, 52 cards in a deck. the Big One is to come? (Laughter) think potato chips are going to be quite tasty; but in fact, it's not very simple in everyday life. is a comparison you'll never make again. They are going to recede towards the vanishing point in the horizon, But these are tricks around the margins. It is one of the original Ted Talks that really drive home the difficulties of making sound decisions that involve both time and money. As Plato said, what space is to size, time is to value. Now, let's just change one thing in this scenario. It's easy to see Leroy getting the check, right? they might as well wait 13. Suddenly, 25 dollars for a Big Mac might be a good deal. and they use this wisdom to help you — doesn't require that you actually go to the store and buy anything. That's a tough one. And so a retailer, if you were to go into a wine shop People died; so be it. and I want you to notice two things. Watch through to the end for a sparkling Q&A with some familiar TED faces. doesn't know where it came from. as spectacular as they possibly can. and 25 dollars buys you a gourmet meal, it's exorbitant for a Big Mac. and what do you find? This kind of thinking drives economists crazy, and it should. CA: We've evolved to get all excited These are the results of the hard problem I gave you: How much is this Big Mac worth? "Me? In your wallet you have a ticket, for which you paid 20 dollars. as the one you alluded to, but maybe a more fundamental one underlying it. requires that we first talk a bit about pigs. Well, Bernoulli tells us it is. The comparisons we make when we are appraising value, Dan Gilbert, author of "Stumbling on Happiness," challenges the idea that we'll be miserable if we don't get what we want. These guys can tell us. the things that normally cause species to become extinct Here's a slightly different story: but you have to pay four dollars for the privilege of playing with me, with everybody who lost? that American security dollars should go to making borders safer. and realized that they're not going to serve you any food, I very much resonate with what you're saying, Here's another example of how comparing to the past So there's a large role here played by the media, but they clip coupons to save one dollar off of toothpaste. If we're not here in 10,000 years, it's going to be because translators. Daniel Todd Gilbert (born November 5, 1957) is an American social psychologist and writer. If we're so damn stupid, how did we get to the moon? Nine of them have been sold to these individuals. based on people's psychological reaction to a set of events, we're the masters of our physical environment; What's hard in our decision-making is when these two rules conflict. which is to say, "I'm here today, compared to trying to estimate value: of near and far future, people begin to make decisions into worrying about those things? from your own hometown, and you thought, It's because the mind recalls words by their first letter. Dan Gilbert: Why We Make Bad Decisions. But the simple English translation — much less precise, And these are subjective values, But certainly I see your point: that there can be Because in this new context, It doesn't know what you saved it on. which you can't even remember hearing. If you're a smart retailer, then, you will put a very expensive item think they won't be nearly so tasty. And this is a systematic error people make. To the extent that you can equalize the amount of detail Why in the world would anybody ever play the lottery? I lost." as saying, "Terrorism is fine and we shouldn't be so distressed." and that if they were concerned about terrorism they might ask that it hasn't made a damn bit of difference. 60 is always better than 50, We already know, for example, in the United States, When was the last time that you saw extensive interviews our general tendency is to orient towards through their own lenses, which is: no matter what you're saving it on. There are two kinds of errors people make when trying to decide than rising wages, even when the total amount of wages is higher You go to the stereo store, you see two sets of speakers — and that's what I want to talk to you about today. when, with one trip across town, they can get it for half off. how this idea could lead you astray. Comparing with the past causes many of the problems Dan Gilbert, author of Stumbling on Happiness and a noted behavorial psychologist, explains in his TED talk how we are terribly accurate in making poor decisions.. Due to an array of cognitive biases and “lazy thinking”, on a daily basis people approach their lives with a faulty toolkit. Surely the kinds of play that at least American media give to — we still make certain kinds of mistakes. about these dramatic attacks. The expected value of this lottery is two dollars; Look, I can prove this to you: here's a little lottery. in people's attempts to assign value. we believe more is better than less. I can't even set it on fire — they took my cigarette lighter! And if it looks like Greek to you, it's because, well, it's Greek. OK? I'll take the 50 dollars now. Now, you see a very interesting pattern here, which is first of all, but they show the reverse pattern when you push the entire decision Watch what happens when we drop some out. that is, the goodness that we can count on getting — We have the tendency for people to go for 50 dollars now Aubrey de Grey: My name's Aubrey de Grey, from Cambridge. Right? and forgive me, but in raw numbers these are very tiny accidents. and overestimated the value of our present pleasures. CA: What causes the bug? Why you should listen. how easy it is to make this impatience go away by simply changing more people have died as a result of not taking airplanes — This TED talk, “Why We Make Bad Decisions,” by Dan Gilbert, is part of a series related to biases and irrationality in decision making, curated by the Center for Health Decision Science.These biases are widespread and can lead to errors of judgment. And what psychologists and behavioral economists have discovered then dogs on leashes are more probable. that then does not carry through and change their experience. but it captures the gist of what Bernoulli had to say — was this: is the only thing on this slide that's actually very dangerous. I have to show you something from my own lab, so let me sneak this in. At a very close distance, the fiddler looks taller than the fireman, At no point will the fireman look taller than the fiddler. is causing people to pass up the better deal. Assuming you wanted to go to Hawaii, would you buy this package? our distress about things that happen, about threats, Along the way, you lost something. Here's the second problem: But even when we compare with the possible, instead of the past, We have time for some questions for Dan Gilbert. Any animal you see that you've seen before is less likely Well, by and large people are enormously impatient. And of course, you all know that the answer is dogs. This problem of shifting comparisons can bedevil And I'm going to show you one or two of them. You want to buy a car stereo. but if you drive across town, you can get it for 100 bucks. and threats to come. It's a number of things, and you hit on several of them. they don't want the least expensive. What you knew is, you paid three dollars in the past; 25 is outrageous. who don't like equations, is something that you're quite used to. (Applause). The way that more of you are likely to die than the combination And as the Israeli mother said, And at some point you may have met a couple Is it the fact that it's an intentional attack by, quote, outsiders? by not using their seatbelts in the same country. by waiting, but you have to be patient. is to say something used to be higher, Again, an easy decision, This tendency to compare to the past When you arrive you discover you've lost one of them. You're on your way to the theater, DG: Yes, of course. Now, just in case you're not getting it, In his TED Talk, “Why We Make Bad Decisions”, he presents research and data he has found in his exploration of happiness. They were evolved for a world namely, that our brains were evolved for a very different world It's not because she is stupid or he is stupid. But one thing that psychologists have tried that seems to work rarely met anybody who was terribly different from themselves, a 30-second interview with each loser to the gastronomic to the professional to the romantic. It's not making headlines, it's not making news, it's not flashy. And there's a good reason to be, You're on your way to the theater. No point. Dan Ariely 3: Beware conflicts of interest; Dan Ariely 2: Our buggy moral code; Dan Ariely 1: Are we in control of our own decisions? TED Talk: "Why We Make Bad Decisions" Presented by Dan Gilbert However, Dan explains why people tend to make the wrong decisions. But rather, if you're looking for But in fact, to decide whether a Big Mac is worth 25 dollars requires in which people lived in very small groups, Maybe that isn't so remarkable, but what is remarkable is And a mall blows up, because it seems to me that the problem The fact that all those tickets are owned by one guy that has ever held its own fate in its hands. I should say, lose more — gambling how many people do you know got up and said, Here's a $2,000 Hawaiian vacation package; it's now on sale for 1,600. isn't because they're improbable, unlikely or infrequent. And the problem, of course, is that this comparison you made in the store it's not a tree falling on us by accident. and systems that cause poverty and so forth, And many of the things we've heard about from our speakers today — Well, the question with which I'd like to end is this: They're so nice to me. David Blaine: How I held my breath for 17 minutes; Dan Gilbert 3: The psychology of your future self; Dan Gilbert 2: Why we make bad decisions; Dan Gilbert 1: The surprising science of happiness the likelihood that you would play the lottery is very small. CA: There's no question. DG: Well, go to Israel. Here’s a nugget you can use to check and improve your ability to make effective decisions about whether something is worth it or not. and then a third, hard, problem. I think in general you're battling a very fundamental human tendency, and in your wallet you have two 20-dollar bills. © TED Conferences, LLC. the kind of coverage, that they do. I work on aging — and I'm interested in doing something about it, the odds that this action will allow us to gain something, Dan Gilbert believes that, in our ardent, lifelong pursuit of happiness, most of us have the wrong map. Well, of course, I went to the theater to see the play. Indeed, this is kind of like the Sesame Street game and then everybody's unhappy about it, and an hour-and-a-half later — than the one in which we are living. Now, the idea is simple when we're applying it to coin tosses, you discover that somewhere along the way you've lost the ticket. how the hell do you cash things that size, I don't know. but when you go to spend that money you won't be making that comparison. Here's an example: if I were to tell you, let's play The expected value of any of our actions — Rather than asking, and you entirely violate the décor of your house. https://www.ted.com/talks/dan_gilbert_why_we_make_bad_decisions/transcript disliking them enough almost to qualify for French citizenship. What are the odds that years later you'll turn on the stereo and go, Imagine that you're going to the theater. you've seen dogs and pigs on leashes. because you're not as likely to win as Leroy. First, it's a human agent trying to kill us — We all make decisions every day; we want to know