Thinking smarter

Although we are blessed with a very powerful thinking machine – our mind – there is good evidence that we don’t like to think

Shlomo Benartzi

Dealing with behavioral challenges is very much like treating back pain. Similar to back pain, the problems are often obvious. For example, we spend and eat too much but save and exercise too little. However, solutions to these problems are far less obvious.

Fixes for behavioral problems also require personalization, as different people will require different treatments. Effective solutions for behavioral challenges, be they financial or health choices, often require more than one trick, just as with treatments for back pain. I wrote Thinking Smarter (with Roger Lewin) to present a behavioral economics tool set – a tool set comprises many distinct behavioral insights – to help people think and choose wisely. It is not the individual insights that are at the core of the book, but rather our attempt to use a large portfolio of tools to help people make good decisions, just as a good doctor would treat a bad back. By helping a lot of people think and choose wisely, I hope we can not only improve their lives, but also solve some big societal problems.

10,000 new retirees a day

In the book, I address the problem of how individuals can identify both their goals and what is important to them in retirement in order to begin the process of achieving those goals. This is a major societal challenge because, over the next two decades, about 70 million baby boomers are set to retire in the US, and these retirees will need to be able to answer these questions (Pew Research Center,). That amounts to 10,000 new retirees a day. Globally, I am guesstimating that more than a billion people will retire over the next couple of decades. But it is not only the volume of new retirees that makes retirement planning an important issue – it is also the complexity of the problem.

For one thing, retirement involves risks. Some risks are obvious, such as losing money in the stock market. Other risks are less obvious but just as important. For example, what if you win the “longevity lottery” and live to be 100? One study in the UK estimates that one-third of recent newborns there will live to be 100 (UK Office for National Statistics,). The question is, how will people pay for such a long retirement?

Another, but less obvious, risk is cognitive impairment, as about 50% of people in their 80s have some kind of cognitive impairment and are not in a good position to make sound financial decisions (Agarwal et al.,). And, of course, we also have to consider health risks, since out-of-pocket medical expenses can easily add up to hundreds of thousands of dollars, as Anthony Webb & Natalia Zhivan noted in What Is the Distribution of Lifetime Health Care Costs from Age 65?.

Thinking architecture

So, what can be done to help the 70 million baby boomers make the most of their retirement? In order to accommodate dramatic individual differences, we must tailor the solution to the circumstances and preferences of each person. One approach is to use a process called “thinking architecture.” It is a structured process that allows us to break down a complex problem, such as what to do in retirement, into a series of manageable thinking steps, so as to improve outcomes. What makes these steps different from traditional checklists is that each is designed to deal with a particular behavioral challenge or mental blind spot. I know it might feel awkward to seek help “thinking.” After all, we should already know how to think by the time we have passed middle age. But although we have been blessed with a very powerful thinking machine, there’s good evidence that we don’t like to use it, at least to introspect on our life situation.

For instance, researchers at Harvard University and the University of Virginia offered volunteers across a wide age range the opportunity to sit quietly by themselves for six to 15 minutes, the only demand being that they be quiet and think (Wilson et al.,). This proved to be too much for many. Two-thirds of the men chose to give themselves at least one electric shock during the test period in order to avoid thinking. Women were much less averse to thinking and only a quarter of them sought other distractions. The bottom line, however, is that we humans tend to be cognitively lazy and often try to avoid thinking altogether.

Identifying what’s important

Thinking smartly, or even at all, is a challenge. But even when people are motivated to think about what is important to them, they still tend to think too fast or not deeply and broadly enough. For instance, Samuel Bond, Kurt Carlson and Ralph Keeney showed that even when people think hard about goals that are relevant to a weighty decision, they typically miss about half of what, with help, they come to identify as being really important.

You might be familiar with behavioral challenges from reading books like Richard H. Thaler and Cass R. Sunstein’s Nudge, Daniel Kahneman’s Thinking, Fast and Slow, and Chip and Dan Heath’s Decisive. Our short book is in the same genre but attempts to put multiple behavioral solutions together into a system that helps us think better about our goals, whichever complex decisions we face.

Thinking smarter

Although we are blessed with a very powerful thinking machine – our mind – there is good evidence that we don’t like to think

Shlomo Benartzi

Thinking smarter

Although we are blessed with a very powerful thinking machine – our mind – there is good evidence that we don’t like to think

Shlomo Benartzi

Thinking beyond 65

Retirement perceptions: Times are changing

Dementia patients reconnect with memories

Happy feat