Title: Commitment Devices
Activity: Use a commitment device to help achieve an important, difficult goal.
Background: A commitment device is a tool set in place by individuals in the present to help their future selves achieve goals that otherwise would be difficult to accomplish. When talking about achieving goals, in economics we often refer to Time Inconsistency, a concept explaining how our future selves do not always agree with or act in accordance with our current self beliefs. More specifically, our current selves tends to value long-term benefits, while our future selves are more easily influenced by our immediate surroundings and short-term cravings. This often results in us failing to successfully execute against our goals, no matter how excited or confident we were in setting them up. And that’s the beauty of commitment devices — a tool our current self can leverage to ensure maximum chance of success when it’s time for our future self to execute against our plans.
For example, let’s say you decide it’s time to start going to the gym regularly again (go current self!). You look at your calendar and choose to go every Tuesday and Thursday after work. It’s a good plan that fits in perfectly with your schedule. Then Tuesday comes along and you find yourself extra busy at work. You need to stay late to finish a project and are exhausted afterwards, so you decide to skip that day (classic future self move). It’s OK, you will make up for it on Thursday (great idea, new current self). But on Thursday you get a call from your friends who want to try that new restaurant around the corner for dinner. You haven’t seen your friends in a while and decide that would be more fun than a day at the gym (come on, future self!). Not to worry though, you commit to making up for it over the weekend (hmm getting harder and harder to trust current self).
I think it’s safe to say we’ve all been there before. If it’s not skipping a gym session, it’s failing to eat a healthy meal, getting distracted while trying to finish a project, going out instead of saving money, or hitting snooze instead of waking up early. This is why it’s critical to understand this economic concept and to help your current self to put safeguards in place to avoid future self slip ups.
There are many examples of commitment device strategies. Some common examples include: buying a gym membership, cutting up credit cards, buying small packets of snacks and not keeping alcohol or dessert in the house. For this month’s activity, I focused on two specific types of commitment devices:
- Long term contract: I decided to tackle my long term goal of getting back into learning Spanish — something I’d been wanting to do for some time, but never seemed to fit into my schedule. I have tried and have started the process a few times, jumping into studying Spanish for a few days in a row only to find myself stopping as soon as it became cumbersome. This time around, to leverage the concept of commitment devices, I signed up for a Spanish class that meets weekly, paying upfront for 10 weeks of classes and locking myself into the classes and book work for each one.
- Social accountability: I also had a friend leverage social accountability, another form of a commitment device, to accomplish two goals incredibly important to him: a) eating healthier and b) exercising five times a week. Instead of simply willing himself to accomplish this goal every day (an approach that often leads to failure), he created a spreadsheet to track his progress which he shared on a daily basis with a mutual friend. This friend would check the spreadsheet each day and hold him accountable for his goals, reaching out if he missed a day to understand why.
Results: The results of leveraging commitment devices were successful in both cases. After months of trying and failing to get back into Spanish, knowing I had prepaid for 10 Spanish classes finally encouraged the continuous studying and learning I had been wanting throughout the month. Meanwhile, my friend, who had failed at sticking to these two exact goals for some time, had the most successful month in terms of eating well and exercising he’s ever had. By acknowledging the power of time inconsistency, we were both able to put safeguards in place to help our future selves stick to our goals.
Next Steps: It’s exciting to see the power of commitment devices come to life — I plan to continue to explore various commitment devices to accomplish other, difficult to achieve goals. I’ve already started buying less junk food and more vegetables for the house when grocery shopping so that my future self is more likely to eat healthy and avoid sweets (sorry future self – love, current self).
“Save Me From Myself.” Audio blog post. Freakonomics Radio. N.p., 26 Dec. 2013.
Bryan, Gharad, Dean Karlan, and Scott Nelson. “Commitment Devices.” Annual Review of Economics 2.1 (2010): 671-98. Web.
“Bestiary of Behavioral Economics/Commitment Devices.” Bestiary of Behavioral Economics/Commitment Devices – Wikibooks, Open Books for an Open World. N.p., n.d. Web. 11 July 2017.
Love this post – favorite one yet.