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What is behavioral economics? Why does it matter to you?

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Podcast Episodes

What is behavioral economics? Why does it matter to you?

328. Understanding Time Discounting: Overcoming Procrastination and Achieving Goals (Refreshed Episode)

In this episode, host Melina Palmer discusses the concept of time discounting, which she calls the “I’ll Start Monday Effect.” Time discounting refers to the tendency to value immediate benefits more than future benefits. This can lead to procrastination and difficulty in making long-term decisions. Melina explains how time discounting impacts individuals in various aspects of their lives, such as productivity, health, and finances. She also explores how businesses can use this concept to understand and influence consumer behavior.

In this episode:

  • Understand the often underestimated role of time discounting in shaping our decisions and influencing business outcomes.
  • Acquaint yourself with powerful strategies to mitigate the effects of time discounting, enhancing efficiency and results in the workplace.
  • Imbibe the importance and implementation of visual aids and cues in combating time discounting – a novel approach to efficient strategizing.
  • Learn to apply principles of behavioral economics to positively steer customer behavior, creating an enhanced customer experience.
  • Absorb how to maximize the benefits derived from conferences and learning tools by effectively managing time discounting.
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IN A RUSH?

HERE'S A 2 MINUTE TIP.

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SHOW NOTES:

00:00:00 – Introduction,
Melina Palmer introduces the topic of time discounting, also known as hyperbolic time discounting or as she prefers to call it, the “I’ll Start Monday effect.” She explains that this concept is important for personal productivity as well as understanding its impact on team members and customers.

00:03:18 – The “I’ll Start Monday Effect,”
Melina describes the common experience of setting goals for the future but struggling to follow through when the time comes to take action. She explains how our brain perceives our future self as a different person, making it easier to commit to future plans but harder to follow through with them in the present moment.

00:09:29 – Testing Time Discounting,
Melina presents two hypothetical scenarios to illustrate how our preference for immediate rewards can change depending on the time frame involved. She explains that our brain often prioritizes immediate gratification over delayed rewards, even when the long-term benefits outweigh the short-term gains.

00:12:10 – Overcoming Time Discounting,
Melina offers reassurance that struggling with time discounting is a common experience and not a personal failing. She emphasizes that understanding the concept allows us to “hack” our brain and make changes in our behavior. She also highlights the power of defaults and choice architecture in helping people overcome inertia and make better choices.

00:16:23 – The Challenge of Making Good Choices,
Melina discusses why it’s difficult for people to make good choices, especially in overwhelming situations. She suggests alternative approaches to decision-making, such as providing reminders or incorporating choices into annual training.

00:17:29 – Opting In vs Opting Out,
The concept of opting in versus opting out is explored in relation to making better decisions. Forcing people to choose more often can lead to worse decisions, while automatic opt-ins can be more effective.

00:18:09 – Save More Tomorrow Program,
The Save More Tomorrow program, developed by Richard Thaler, is highlighted as an effective way to increase retirement savings. By automatically allocating a portion of future raises towards retirement, individuals are less likely to opt out and experience significant increases in savings.

00:19:54 – Impact of Save More Tomorrow Program,
The success of the Save More Tomorrow program is revealed, with 78% of people opting to participate and significant increases in average savings rates. This program shows that helping individuals overcome time discounting can lead to better financial outcomes.

00:22:14 – Visualizing the Future Self,
The use of renderings and personalized visualizations is discussed as a means of making the future self more visible in the present. This technique can be applied to various areas, such as retirement planning, to help individuals make better choices.

00:33:25 – Helping Employees Find Blood Drives and Voting Booths,
Provide clear directions and maps to help employees find important locations like blood drives and voting booths. Pre-assigning time slots and providing reminders can make the experience more real and activate mirror neurons.

00:35:20 – Overcoming Time Discounting with Customers,
Time discounting affects customer decision-making, especially for big purchases. Simplify the decision-making process and use present bias to your advantage. Consider offering incentives and reminders to encourage customers to take action today.

00:36:20 – Overcoming Analysis Paralysis in Wedding Dress Shopping,
Wedding dress shopping often leads to analysis paralysis. Offer incentives like discounts for making a decision on the spot. This helps customers overcome time discounting and reduces the pressure to make the perfect choice.

00:39:12 – Using Visual Cues to Overcome Time Discounting,
Use visual cues to keep important tasks top of mind. In a study Melina did with a credit union, participants were given a refrigerator magnet to track their savings progress. Constant reminders help overcome time discounting and keep goals in the forefront.

00:41:26 – Setting Realistic Goals to Overcome Time Discounting,
Set realistic goals to avoid overwhelming clients. Focus on one top priority and provide visual reminders. Incorporate loss aversion to motivate clients to keep their commitments and avoid procrastination.

00:48:38 – Getting the Most Out of Conferences,
Melina discusses the challenge of implementing conference takeaways once you get back to the office due to time discounting. She advises focusing on one important task at a time to make progress.

00:49:21 – Overcoming Procrastination,
Melina emphasizes the tendency to prioritize routine tasks over implementing new ideas. She encourages taking small steps to prevent inspiration from collecting dust.

00:49:54 – The Power of Focus,
Melina emphasizes the importance of focusing on one thing that truly matters. By narrowing our focus, we can make meaningful progress and avoid feeling overwhelmed.

00:50:53 – Conclusion,
Melina teases the next episode of The Brainy Business with Hal Hirschfield discussing his book, Your Future Self. She invites listeners to tune in for an engaging conversation when episode 329 comes out on Friday.

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