i’m enjoying reading “Breakdown of Will” by Ainslie. One name his work goes by is pico-economics. If that name is not intended to be sarcastic then it’s at least ironic given that Economics is currently king of the social sciences and Ainslie’s model underminds the king’s legitamacy. The market stalls of pico economics are set out inside your head. The market participants negotate for your attention, slices of your time. I recorded a bit of audio from the market floor in an old blog posting.
Re-negotiate your cable contract once a year. Oh, and your long distance service. Rebalance your investments annually. Keep an eye on your mortgage rate and refinance at appropriate times, but not too often. Consider having a health savings account. Clip coupons. Keep track of those rebates. Join frequent flyer programs as appropriate. Be sure you have a will. Check that your love ones know your end of life desires. Eat more vegetables. Take regular breaks to avoid typing injuries. Get plenty of sleep.
Here, let me quote a fragment from the book:
I have described a model of learned interests that compete freely on the basis of timeframes over which of their rewards will be prefered. … a person is a population of these roommates each clamoring for control of the room … to continue to exist each interest must be the highest bidder at some time or it will be extinquished …
But pico-economics is not like classical economics. Not at all! The math that governs in the attention marketplace of your head is taken straight out of bizzaro world. It might as well be non-linear. We don’t respect the future; even if you think you do. You don’t.
At the heart of this bizzaro math is deeply hardwired preference for immediate gratification over longer term goals. This evil math is time scale free so we will scratch an itch in preference to eating some ice cream, and eat ice cream that’s at hand in preference to a fine meal with friends in half hour, and that we will go off to long lunch rather than finish that deliverable the team needs to make progress next month, etc. etc.
The preference for short term ones v.s. long term is so pervasive that we tend to gloss over how odd it is. Would you like to stop what your doing and have some ice cream? How do you decide that turning your attention to the fun of a bowl of ice cream is worth it? The utilitarian answer is that you weigh the alternative and if it’s better than what your doing then you switch. What’s curious about living in the bizzaro world of pico-economics is that this calculation is radically different depending on how close at hand that ice cream is. Going out to get it? Going into the kitchen? Plucking it off the desert cart? Dipping your spoon the bowl? Each step closer and in the competition for your attention the ice cream becomes vastly more likely to seize control of your scarce attention. So much so that it makes no economic sense at all.
From animal experiments they know exactly how out of wack your internal calculator is. If the pleasure of ice cream is 2, 20, or 200 seconds away for the spoon, the desert cart, and the kitchen respectively then you will treat see the fun of ice cream as 66 units, 8, or 1 unit respectively. If we replaced ice cream with a financial reward this implies that people have to struggle to avoid accepting a dime in two seconds v.s. $6.60 in few minutes later. Rationally this makes no sense; since I could make a mint moving ice cream closer to my customers.
That our attention is so badly behaved creates a problem what we struggle with continually. For example we all know not to buy the ice cream and bring it home; i.e. to avoid the temptation. Ainslie reports a delightful experiment involving pigions. Pigeons have the same bizzaro internal marketplace. So if you put them in a cage and give them some buttons to peck you can show that they will peck a button that gives smaller rewards sooner over a button that delivers significantly larger rewards later. Amazingly this setup annoys the pigion. He knows that he is making bad choices. Apparently there is a rational market regulating pigion in there scolding the his irrational free market animal pigion. How do we know? Well they can augement the experiment to add a third button pecking that will disabled the short term reward button. The pigeon will use that third button to lock in his commitment to the longer term reward.
Avoiding temptation and using external devices to make binding commitments are both means to force your internal bizzaro attention economy to behave better. We don’t trust ourselves anymore than we trust other parties. We engage in lots of these strategic games in an attempt to keep the bizzaro internal economy from doing more harm. Most of these work by reducing our options. We lock in our savings in long term investments, we don’t buy the ice cream, and the pigeon pecks that third button.