Key Messages
The Psychology Behind Incentives: How To Make People Do The Right Thing, Even When It May Not Be In Their Best Interests
In Carrots and Sticks, you can learn how to offer yourself and others incentives to take positive actions, in order to live the life you want.
Tempting people with rewards may be necessary when governments want citizens to take certain actions, like staying away from illegal substances or avoiding littering.
But you can also offer incentives as a way of inspiring yourself or others to strive for goals that will bring them lasting happiness.
The book goes even further and details how humans think and the psychological triggers which make them more likely to respond positively towards rewards.
This insight can help you design incentives which suit individual personalities and needs, allowing for tailored motivation.
The Human Tendency Towards Immediate Gratification: Why We Postpone Long-Term Goals For Short-Term Rewards
Throughout our lives, we tend to favor small and immediate rewards over bigger, long-term ones.
This is because of the uncertainty that comes with being able to achieve future goals or fulfill future promises.
Economist Richard Thaler conducted a study that showed just how much humans prefer present rewards over those promised in the distant future.
Participants in the study were asked to choose between having one apple today, or two apples in one year and one day – they chose the former!
What this shows us is that when people think about something they have to wait for, whether it’s gaining weight or quitting smoking, it can be incredibly hard to get started.
The uncertainty of achieving success makes us settle for whatever small rewards are available now without bothering to pursue something bigger down the line.
How We Use Human Resilience And Creativity To Combat Our Dislike Of Losing
It has been long established that people, like our primate relatives, hate to lose something they have much more than they enjoy gaining something new.
In a study of apes given two choices, when both options effectively offered the same average amount of apple, the apes were much more attuned to the negative idea of losing a piece than they were to the positive idea of gaining one.
Humans typically cope with such situations by being willing to lose things we don’t yet have.
Building on this insight, economist Richard Thaler devised his “Save More Tomorrow” program which attempted to address an ever-increasing concern: people not saving sufficiently for retirement.
Rather than asking people to give up cash already in their bank accounts, this concept encourages them to save when they get a raise – as they’re less likely to feel an immediate loss.
However this begs an important question – why is it so difficult for many people to even begin saving for retirement? The answer lies in the fact that for many, saving for retirement is analogous to ‘losing’ money due to their reluctance or fear of missing out on spending it now.
How To Harness Your Self-Control For Maximum Effectiveness
The Carrots and Sticks book reveals that although we may think we have a lot of self-control, research has proven that it can be limited.
Take for example, one study showing that if tempted with candy before taking a test, the participants gave up taking the test much quicker than when there wasn’t any temptation.
Furthermore, when the test was over and there was still candy available, those same participants found it surprisingly hard to not take it.
These results prove that our capacity for self-control is weakened whenever we must make an effort to say no to something attractive.
The key is to focus self-control on single actions and not try to change multiple things at once such as losing weight and quitting smoking simultaneously.
But while our capacity for self-control may be limited, we can increase it through “exercise” by performing exercises that are targeted at strengthening the mental muscle.
Researchers have suggested this might help us achieve our longer term goals – and who doesn’t want that? So just as physical exercise can improve our bodies, d so too can mental exercises improve our capacity for self-control – helping you take your life (and decisions) in your own hands!
The Powerful Effects Of Carrot And Stick: What Works Better To Motivate Change?
It’s often said that the carrot-and-stick approach works best in changing behavior – offering rewards for good behavior and punishments for bad.
Carrots are considered rewards and sticks represent punishment, but which one truly works best? Curiously enough, the stick.
We know that people are more scared of losing something than they are motivated to gain it – a $100 fine seems worse than earning a $100 reward.
This idea helps explain why the stick may be more effective at changing behavior than rewards.
The other great aspect of using a stick is that it usually doesn’t cost anything – meaning no money has to be exchanged for it to work.
For example, if the government wanted people to quit smoking, then enforcing hefty fines for lighting up would likely have better results than rewarding people who refrain from smoking with costly items such as free food or money.
Bigger Fines Are More Effective Than Small Fines As Punishment For Bad Behavior
When it comes to punishing bad behavior, tiny sticks don’t cut it.
That’s why Carrots and Sticks emphasizes the importance of imposing substantial cash fines as an effective deterrent.
The larger the fine, the better!
A $3 fine for parents who are late to pick up their children from kindergarten? Won’t work – it actually results in even more tardy parents!
They pay their small fine, but still don’t feel badly about showing up late.
For a cash fine to be a true deterrent, the amount imposed must be large enough to make potential lawbreakers think twice.
A $300 fine would definitely do the trick!
Plus, if they know that their fine is funding something they strongly disapprove of – like Scientologists, or a cause they don’t actually support – then they’re even less likely to make that mistake again.
In short, tiny sticks aren’t a deterrent – but a big stick will make potential lawbreakers think twice.
Using Severe Punishment As A Tool For Breaking Bad Habits
When it comes to changing behavior, lots of little punishments just don’t cut it.
The temptation to partake in the bad habit is still too great and can often overpower the tiny incentive of punishment.
That’s why researchers suggest using one big stick as a deterrent instead.
The idea is to replace the small tax levied on each pack of cigarettes with a smoking permit for $5,000 which will allow holders to purchase 2,500 cigarettes.
The cost may seem high but smokers would be far less likely to act on their impulse when faced with such a large sum of money.
It’s much more effective than a few dollars per pack as the enormity of the punishment will cause an immediate reaction that could prevent an addiction from spiralling out of control.
In other words, lots of little sticks might feel like nothing more than a tickle while one big stick is sure to make someone capitulate quicker than you can say “quit”.
How To Make An Effective Commitment Contract: Severe Punishments, Public Exposure, And A Neutral Referee
Creating and maintaining a commitment contract is one of the most effective ways to ensure that your long-term goals are met.
After all, it provides a formal way of taking undesirable behavior off the table and shielding you from doing bad things in the future.
But for any contract to be effective, the punishment for not following through needs to be as serious as the bad behavior the contract addresses.
In other words, there must be some sort of negative consequence for breaking the terms of your contract in order for it to really sink in that you need to stop doing whatever it is you swore off!
Another thing to consider when creating a commitment contract is finding an impartial referee; someone who can act as a reliable authority and make sure punishments are applied if needed.
Ideally, it should be someone who isn’t too friendly (so they won’t let any bad behavior slide) but also someone you trust to remain fair and help you keep your end of the bargain.
If judged thoughtfully, these elements ( severe punishment, public exposure and a trustworthy referee) can all effectively set yourself up with a commitment contract and help you stay on track with meeting your goals!
Make Long-Term Commitment Contracts To Reach Realistic Goals And Maintain Lasting Change
If you want to make lasting, permanent changes in your life, it’s vital to start with realistic goals.
Trying for a drastic, seemingly impossible goal may seem rewarding in the short term, but if you don’t have a commitment contract that will ensure you reach and stick to those goals then it won’t last.
Take losing weight as an example.
Most dieters tend to aim for a significant amount of weight loss – oftentimes more than 10 percent – but unless they have a long-term contract that maintains that weightloss there is likely to be no real change in the grand scheme of things.
Instead they should set smaller, attainable goals such as 5 percent of their current weight.
This is much easier to accomplish and can still make a big difference over time.
Making use of long-term commitment contracts are an absolute must when wanting to make permanent changes.
Dieters should lay out commitments like daily weigh ins, pre-determined punishments for exceeding their goal weights and even allowable fluctuations within that initial goal range.
Following these guidelines and using them as leverage will help ensure that success is achieved not just temporarily, but permanently too!
Wrap Up
The overall message of Carrots and Sticks is that in order to achieve long-term goals, we must be disciplined and find ways of rewarding ourselves along the way.
We can use “commitment contracts” to make sure we stay on track with our goals and have severe punishments for not meeting them.
With this strategy, people can fulfill their ambitions and reach the successes they desire.
Ultimately, Carrots and Sticks is a book about how to stop settling for short-term satisfaction in favor of true successes in the long run.
It reminds us that disciplining ourselves today will lead to better outcomes tomorrow.
