Forgive the language but I can’t help it. The quote below is one of my all-time favorites. It sounds like an age-old classic but I heard it only in the past few years from a terrific thinker:

A wager is a tax on bullshit. — Julia Galef

A bit blunt but it gets to the idea behind the expression “put your money where your mouth is”. Skin in the game. Wagers and other formal bets have a very strong effect on everyone’s platitudes and generalized claims.

Is someone making bold predictions? Offer a wager and watch them hedge.

Someone talking a big game about what they’d do if they were the boss? Give them a small project with a specific outcome and a variable payout dependant on their performance. See if they accept the opportunity to show how right they are.

As a manager, I am guilty of spouting more than my share of empty claims and dim prognostications. I should be taxed for that. But as an occasional leader, I’m thrilled at the chance to put myself to the test. The moderate risk can have outsized effect.

But don’t take my word for it. Consider the great line from the Scorsese film, The Wolf of Wall Street.

Risk is what keeps us young, isn't it, darling?

Indeed. And while a wager is a type of tax, it is also a form of risk that doubles as a nudge. It is a device that activates our loss aversion in a very tangible way. And as Thaler points out in this week’s book, Nudge, this can really change behavior.

The One Hack To Rule Them All

There is sure to be some merit in all the various productivity hacks out there. Some more than others as this fantastic article explains. But my experience with these hacks is that they are all a superficial cover for my larger noncommitment. There’s a weird bit of self-involvement that takes me away from the actual work.

So perpetual hacks can become a bit like perpetual pilot programs—an advanced means of dodging commitment and softening a standard for success. There is no true risk in trying a hack or a pilot program. I think that’s what makes them so popular. It’s a dalliance.

I’ll take cold showers for a week because it’s novel, free, and a billionaire said it helped them. Or I’ll build a new to-do list on an artful calendar app because its aspirational and feels strategic. But before I then do the actual work, I’ll conduct a fear-setting exercise. Because I really need to visualize the worst that could happen.

Productivity hacks are like the fad diets: we try them in the hopes that they stick to us rather than us stick to them.

I base this on the honest fear I’ve had towards the one hack, the wager, that I know will work for me. I’ve put this one off for a long time. Because it will stick if I use it. But I’m afraid of what happens to me once it actually sticks.

Here’s how Professor Thaler used it at the university with a graduate student named David:

“Thaler intervened by offering David the following deal. David would write Thaler a series of checks for $100, payable on the first day of each of the next few months. Thaler would cash each check if David did not put a copy of a new chapter of the thesis under his door by midnight of the corresponding month. Furthermore, Thaler promised to use the money to have a party to which David would not be invited. David completed his thesis on schedule four months later, never having missed a deadline (though most chapters were completed within mere minutes of being due).”

Specific Loss > Vague Gain

It’s fascinating to me how powerful this device can be. It’s a wager where you lose the bet if you don’t do what you said you’d do. You’re betting on yourself. Why? Because you know this thing, be it a thesis or a weight loss target, is good for you. From a vague, abstract point of view, you know there’s a brighter future with it. You just have to get going with it. But cold showers, to-do lists, and pomodoro techniques are seldom enough to really get your momentum going. The pain of losing something specific, like money, and the threat of humiliation from a party being thrown at your expense (!), is quite compelling.

As our authors explain,

“It is instructive that this incentive scheme worked even though David’s monetary incentive from the university was greater than $100 a month, just from the retirement contribution alone. The scheme worked because the pain of having Thaler cash the check and consume some good wine without him was more salient than the rather abstract and pallid forgone contribution to his retirement savings plan.”

The mention of retirement comes from the broader context that David was working as an “Instructor” at the university. The university’s policy did not recognize Instructors as eligible for employer retirement contributions. To get such contributions, he had to become an “assistant professor”. That couldn’t happen until he completed his thesis and graduated his program. So there was a lot of upside in his situation.

In fact, his whole career was ahead of him if he just … finished … the work. Yet the reluctance and procrastination continued.

Until Thaler introduced a specific loss, the sort of thing we’d all go to great lengths to avoid. I bet that was the best $100 David never spent.

New Year’s Wagers

It is December 20th, 2018 at the time of this writing. We getting close to the New Year. It is a to consider new resolutions. I love this practice and think it’s very healthy. My resolutions in 2018 really led me down some very wonderful paths (including this service I now provide to you, dear reader). But for this year, I’ve resolved to kick it up a notch. Consider it a “resolution for my resolutions.”

I’ll make a wager. I’ll place a bet. For what, I’m not sure yet. I just know that I stand to lose a great deal more, in the long-run, if I don’t set up a potential loss in the short-run.

It’s a bit exhilarating to consider. Nerve-wracking, too, because I know it will work for me. I bet it will work for you, too.

Think about it.