Alan Krueger, and the economics of small wins (and losses)

by Charles Duhigg in Uncategorized

Obama speaking with Krueger - AP photo

Earlier this week President Obama announced that Alan Krueger will be leading his economics team.  Not much of the coverage has focused on Krueger’s awesome (but not terribly important) work on Rockonomics, the economics of the rock industry.

Coverage has, however, mentioned Krueger’s recent studies of how peoples’ habits change as they spend more and more time unemployed. In a paper published earlier this year, Krueger and a colleague interviewed 6,025 unemployed workers every week over half-a-year. The results are kind of fascinating. For years, economists assumed that the longer people are unemployed – and the smaller their savings become – the harder they look for a job. Desperation, economists assumed, breeds effort.

Kruger found the opposite: “The amount of time devoted to job search declines sharply over the spell of unemployment,” he wrote. The longer someone is out of work, the less and less time they spend each day looking for a job – after 12 weeks, in fact, their efforts have fallen by a third. The unemployed also start sleeping more the longer they’re out of work – particularly in the morning.

Of course, this isn’t surprising to anyone who has ever looked for a job. Unemployment is soul crushing. But there might also be another factor influencing this  malaise: As small losses begin accumulating in someone’s life, their habits start changing.

To understand what’s going on, consider the Theory of Small Wins. As I explain in my book:

Small wins are exactly what they sound like. “Small wins are a steady application of a small advantage,” one Cornell professor wrote in 1984. “Once a small win has been accomplished, forces are set in motion that favor another small win.” Small wins fuel transformative changes by leveraging tiny advantages into patterns that convince people that bigger achievements are within reach.

For example, when gay rights organizations started campaigning against homophobia in the late 1960s, their initial efforts yielded only a string of failures. They pushed to repeal laws used to prosecute gays and were roundly defeated in state legislatures. Teachers tried to create curriculums to counsel gay teens, and were fired for suggesting that homosexuality should be embraced. It seemed like the gay community’s larger goals— ending discrimination and police harassment, convincing the American Psychiatric Association to stop defining homosexuality as a mental disease — were out of reach.

Then, in the early 1970s, the American Library Association’s Task Force on Gay Liberation decided to focus on one modest goal: convincing the Library of Congress to reclassify books about the gay liberation movement from HQ 71–471 (“Abnormal Sexual Relations, Including Sexual Crimes”) to another, less pejorative category. In 1972, after receiving a letter requesting the reclassification, the Library of Congress agreed to make the shift, reclassifying books into a newly created category HQ 76.5 (“Homosexuality, Lesbianism— Gay Liberation Movement, Homophile Movement”).

It was a minor tweak of an old institutional habit regarding how books were shelved, but the effect was electrifying. News of the new policy spread across the nation. Gay rights organizations, citing the victory, started fund-raising drives. Within a few years, openly gay politicians were running for political office in California, New York, Massachusetts, and Oregon, many of them citing the Library of Congress’s decision as inspiration. In 1973, the American Psychiatric Association, after years of internal debate, rewrote the definition of homosexuality so it was no longer a mental illness — paving the way for the passage of state laws that made it illegal to discriminate against people because of their sexual orientation.

And it all began with one small win.

Small wins are powerful because they change how people habitually see the world. Small wins, for instance, are at the center of the routines Olympian Michael Phelps deploys before each race.

But small losses also have a similar, though opposite, power. When small losses accumulate, people can become so sensitized to disappointments that they start to anticipate them, and as a result, become less motivated to try. In one study, for instance, researchers asked people to play a simple video game that involved tilting a board to move a ball through a maze. For half the participants, however, the game was stacked so that the ball would fall off the maze in about 50% of attempts, no matter how skillfully they worked the joystick.

There was no reason why failing at the game should matter. There were no prizes. But when researchers monitored people in the ‘losing’ group, they found they became significantly more anxious as the game progressed and the losses accumulated. What’s more, whereas subjects playing the normal game usually started a new attempt as soon as their old game ended, those in the ‘losing’ group dawdled. On average, they would pause for almost a minute before starting a new game. They would sigh and take a break, or simply stare into space. And what’s more, those pauses got longer and longer the more they lost. It was as if the pain of losing – even though it didn’t matter – started to weigh heavier and heavier. The participants weren’t aware they were slowing down. It’s just that they started habitually pausing to regroup after each loss, and that habit got stronger and stronger.

That’s why job hunters spend less time looking for work the longer they are unemployed: Small losses and disappointments accumulate, and new ‘coping habits’ – like sleeping longer or taking more frequent frivolous breaks  – emerge until they have encroached on the time normally spent applying for jobs.

So what’s the solution?

Well, one study indicates it’s reseting expectations. If a job seeker’s goal isn’t, say, getting a job, but instead to simply make a connection at a company, then when they send in a resume, they’ll feel a sense of accomplishment. Or, rather than setting a goal of getting an interview, someone should set a more modest goal of simply sending out 20 resumes. This seems counter to what we’ve learned: most self-help tomes tell us to focus on the big, end prize. But the problem with big prizes is that people stumble on the way, and small losses can sap motivation the same way that small wins build it.

So, instead, find ways to construct small wins every day – and eventually they will snowball into a larger accomplishment.

One Response to “Alan Krueger, and the economics of small wins (and losses)”

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