Ask Ariely
mod (Andy) note: this was originally posted on his site on 8/31/12
Here’s my column from the WSJ this week — and if you have any questions for me, just email them to [email protected]
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Dear Dan,
In your answer last week about splitting checks at restaurants, you noted that there is a “diminishing sensitivity as the amount of money paid increases.” I’ve noticed this in my own spending. I’ll go out of my way to save a buck and then spend an ungodly sum on some purse. Why is that? And how can I control it?
—Lembry
Diminishing sensitivity is a very basic way that our minds work across many domains of life. For example, imagine that you light up one candle in the middle of the night. This small amount of light will dramatically change your ability to see your surroundings. But what if you already have 10 lit candles and you add one more? Now it would not have much of an effect. The basic idea of diminished sensitivity is that our minds tend to register relative increase; we take any additional amount of stuff as if it were a percentage gain, not an absolute one.
Now, when it comes to money, we should think about it in absolute terms ($10 is $10 regardless of whether we are saving it from a dinner bill or from the price of a new car), but we don’t. We think about money in terms of percentages, too.
What can we do about it? It’s not easy, but we should try to fight this natural tendency. One method that I use from time to time is to take the amount of money that I am thinking about spending and ask myself what else I could get with it. For example, since I like going to the movies (and let’s say that the price of two tickets and popcorn is $25), I ask myself whether a given $25 of spending on a prospective purchase is worth more or less than the pleasure of going to the movies.
When framed this way, it doesn’t matter if the savings come from a dinner bill or a new computer—and it helps me to ask the question “What would I enjoy more?” in a more concrete way. So, the next time you are shopping for a new purse, try to measure its price in terms of another use for that money that you might value more.
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Dear Dan,
I have been on vacation for the last few days in New York City, and while reading your most recent book, on dishonesty, I have been wondering whether people behave more or less honestly on vacation.
—Julie
This is an interesting question, and (sadly) I don’t have any data to share with you on this topic. But here are a few ideas to consider:
Why might people on vacation be more honest? While on vacation people seem to be more relaxed with spending money, which suggests that the motivation to be dishonest for financial gain might be lower. On top of that, people on vacation are more often in a good mood, which they might not want to spoil by behaving badly.
Why might people on vacation be less honest? On vacation, the actions we take are in a new context. As they say, “What happens in Vegas stays in Vegas.” Also, the rules on vacation might seem less clear: What are the regulations for parking in San Francisco? How much should you tip in Portugal? Is it OK to take the towels from this hotel? This sort of wishful blindness can make it easier for us to misbehave while still thinking of ourselves as generally wonderful, honest people.
On balance, then, are vacationers more or less honest? I suspect that they are less honest—but I would love to be proven wrong.
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Dear Dan,
What is it about Internet communication—Facebook, Twitter, email—that seems to make people descend to the lowest common denominator?
—James
It’s easy to blame the Internet, but I think we see such behavior mostly because people generally gravitate toward trafficking in trivialities. Consider your own daily interactions. How much is witty repartee—and how much is the verbal equivalent of cat pictures? The Internet just makes it easier to see how boring our ordinary interactions are.
