In this episode, Ramanan speaks with Katy Milkman, the James G. Dinan Professor at The Wharton School of the University of Pennsylvania. Milkman’s research explores ways that insights from economics and psychology can be harnessed to change consequential behaviors for good, such as savings, exercise, vaccination take-up and discrimination.
She is also the author of the bestselling book How to Change: The Science of Getting From Where You Are to Where You Want to Be, which was named one of the eight best books for healthy living in 2021 by the New York Times. In 2018, she began hosting Charles Schwab’s popular podcast Choiceology with Katy Milkman, which explores key lessons from behavioral economics about decision-making.
They discuss planet-friendly behaviors, how the pandemic changed our behaviors, and how startups can spur behavior change. Time stamps and the full transcript are below. This episode is also available on Apple Podcasts and Spotify.
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[00:00:14] Ramanan: Hello everybody. We are continuing our interview series today with Katy Milkman. Dr. Milkman is the James G. Dinan Professor at the Wharton School of the University of Pennsylvania, my alma mater, and also holds a secondary appointment at Penn's Perelman School of Medicine. Her research explores ways that insights from economics and psychology can be harnessed to change very consequential behaviors for good, and that includes things like savings, exercise, vaccination take-up and discrimination.
She has dozens of published articles in leading social science journals such as Management Science, The Proceedings of the National Academy of Sciences and Journal of Finance, all of which have reached a wide audience through regular coverage in major media outlets. She also frequently writes about topics related to behavior science for the Washington Post and Scientific American so please look out for her.
In 2018, she began hosting Charles Schwab's popular podcast, Choiceology with Katy Milkman, which explores key lessons from behavioral economics about decision making. And that podcast is the reason that she's the first of our interviewees to have significantly better audio equipment than us. And so, we are now full of envy and are going to have an upgrade sooner or later.
[00:01:28] So I want to start with a question I always ask our guests, which is can you walk us through your life and career? How did you get interested in the subject of behavior change?
[00:01:36] Katy: Yeah, thanks for asking me that. I actually started down this path in a very funny way. I started my career as an engineer. I studied operations research and financial engineering as an undergraduate. And I got to that topic because I wanted to do something with math that was applied to real world problems and could be helpful to people. And I hated economics when I took it so I said, "Not economics," that wasn't for me. I switched and became an engineer.
And then I liked science and research so much that I decided to pursue a PhD. And around the time I was going to get a PhD, the internet was a new thing and I was pretty sure it was going to be a big thing. So I decided to get a PhD in something that seemed very practical and relevant, which was computer science and business. I thought I'd study tech and how that was going to change our lives. When I got there, I was required to take a year of microeconomic theory at the graduate level, which I thought was going to be awful because I'd hated it so much as an undergrad, but I had a really different experience this time.
And the reason is that I was introduced to concepts not only from traditional economics, but from behavioral economics, which was this new field that people might be familiar with if they know the work of Danny Kahneman, Nobel Laureate. He and Amos Tversky really founded it in the 1970s, 1980s, and made discoveries like people are predictably irrational. They make mistakes or errors in judgment such as overweighting losses relative to gains. Other research shows we’re present biased. We overweight immediate gratification over longterm benefits. And all of a sudden, I said, "Oh, this field of economics is fascinating." It describes real people, real problems, mistakes that we make, and there's an opportunity to improve decision making and improve lives.
So I got really excited about that. I sort of threw out the whole idea of studying the internet and decided I was going to study people and how to improve their decisions. And that's really what launched me on my career. There was one other side trip that was pretty important that came about when I was already interested in this topic and doing work on it, and I was an assistant professor at Penn. And I wandered over to the med school for a seminar and learned that 40% of premature deaths are the result of behaviors that we could change.
[00:03:48] Ramanan: Wow.
[00:03:49] Katy: Yeah, that was my reaction. I would've guessed it was more like 10% perhaps, but the decisions we make about what we eat, whether we smoke, what we drink, whether we're physically active, whether we're safe when we get into vehicles, they really add up. And that put me on the path, not just to studying how do we improve decisions, but with a laser focus on decisions that have real meaningful consequences for our lives, things about health, savings, education, the environment, these are all things where you can see how those small decisions would clearly add up once you understand that kind of accumulation process, and that's what I've been doing since.
[00:04:26] Ramanan: That's amazing. And that is the appropriate launching pad for our first substantive question. So in your new book, How to Change, which I encourage, frankly, anyone listening to this to get and read, you compare behavior change to tennis in that you'll get further faster if you customize your strategy. And you outline a number of targeted strategies for the different root causes of behavioral inertia, which is a concept I'm very familiar with. Our world is startups, early stage companies.
[00:04:58] Any commentary, ideas, thoughts on how they should design behavior change strategies?
Most founders don't always think about that topic. And so the question is around their design process and also, just to make a long question even longer, are there things only startups can do that might help catalyze behavior that much larger institutions would struggle with?
[00:05:27] Katy: Yeah. It's a great question. Okay. So starting with what startups should think about in terms of design, I think one of the most important things to understand is that people are fundamentally lazy, that we are looking for the shortcuts in life. And by the way, I say that with no insult intended. We're talking to probably a lot of tech folks, so they'll appreciate the best software is lazy, too, right? Think about an algorithm. You don't want a greedy algorithm. You want a lazy and efficient algorithm. That's how humans are designed.
So I don't think it's a bug. I think it's a feature of our operating systems that makes a lot of sense, but you have to design for that. When you are trying to retain customers, don't expect them to click three things, right? You need to make it as easy as possible for them to do the right thing.
So that's sort of my number one takeaway from behavioral science for thinking about startups is, don't expect people to jump through any hoops for you. And obviously, if you look at Apple and their great design, right, a baby can figure it out. It's so easy. That's what you always want.
In terms of things that only startups can do that big organizations can't, at least in my experience in working with organizations, I've been delighted to find that one of the things that startups can do that big organizations struggle with is pivot really quickly and redesign quickly. And I think AB testing is really undervalued. Even though it's heavily valued, I still think it's undervalued and underused to figure out how to get things right. People have in mind, “this is the way,” and they think, “This is the best design. This is what the user will like most.” And the more we can AB test, the more we discover that our intuitions so often are wrong.
That's sort of the reason the field of behavioral economics exists. Humans are complicated, confusing. We often don't respond to incentives the way you might expect. And so I think that makes A/B testing even more important. And I think big companies aren't always attuned to that, aren't always doing that, aren't always able to pivot when they discover, oops, this A/B test showed what we were doing before wasn't as great as it could have been. But I think that's a really exciting opportunity for young companies to take advantage of.
[00:07:36] Ramanan: I'm really glad you mentioned that because it is, you're absolutely right, and I once wrote a blog post on Kahneman and the substance of it was, intuition is often wrong and that can actually be addressed. So next question is, a lot of listeners of this podcast are deeply concerned about the climate crisis and want to think about implementing behavior adjustments.
[00:08:00] Without necessarily focusing on the climate crisis itself, but to the extent you can, it would be great, what advice would you give them on implementing effective changes in their own lives, behavior changes that lead to a more climate and planet-friendly lifestyle?
Can the lessons in your book be applied to those actions?
[00:08:31] Katy: I hope so and I certainly think so. And as you mentioned, the sort of biggest lesson at the heart of my book is that it's really important to understand what are the barriers to change in a specific situation, and then tailor the solutions you use that are based in science to that specific challenge.
So the barrier that might lead someone not to take their medications, for instance, might be they forget, which could be a really different barrier than someone who's not getting to the gym because they hate exercise, right? And so you'd want really different solutions—one might need reminders and the other might need a different way to make workouts less miserable.
So tailoring, I think, is critically important and it's something that can apply here as well. In my book, I walk through a number of different barriers that are quite common and that research and behavioral science suggests ways to overcome. I think there are two that are probably most relevant to the climate crisis. The first one is present bias or impulsivity, and that's our tendency to care much more than makes sense from sort of a rational economic framework, we care much more about right now, our instant gratification, than about the future.
So we're timing inconsistent. If I can buy the fancy gadget right now, but it means I won't have enough in retirement, so what? I still had to do it, right? If I can eat the pizza now, but it means I won't be as healthy and live as long, I ignore that future cost and I focus on the fact that it tastes good as opposed to the salad, which tastes a little less good, but is better for me in the long run. So present bias leads us to make lots of mistakes.
I think it's really important in thinking about climate change, that present bias just adds insult to injury in this crisis because the consequences are delayed and that's just a recipe for disaster with human nature. So what do we do? Well, there are two key insights that are most relevant from research to solving for present bias. One is finding ways to actually change the nature of whatever it is that you need to do now to make it more fun, to make it give you more instant gratification.
So can we look for enjoyable, fun, gamified ways to achieve our goals with regard to the climate? Can we do them with friends? That's one way to make it more fun. Can we get rewards for doing it from apps or our employers? What are ways that we can make it instantly gratifying? How can we solve for this in a way that isn't a chore?
And then the second is something that actually my colleagues Todd Rogers and Max Bazerman at Harvard have called future lock-in. Even when we're present biased, we will still be eager to say, "Oh, and yeah, future me, next week, I'll eat this salad. Next week, I'll do the thing that's good." It's just right now when we don't want to do the thing that we know is good in our long-term interests.
So future lock-in is to say, "All right, you care about driving a fuel efficient car in the long run. Maybe you're not willing to do it today 'cause that's going to be a hassle. But how about we agree your next car is going to be a fuel efficient car? Are you willing to commit to that? Or how about next week, you eat only vegan meals at lunch? Are you willing to pre-commit to that?"
People are much more willing in advance to pre-commit and say, "Yeah, future me will do that." And if you can find ways to get those commitments to be locked in, that's the future lock-in component, you can get people to act in ways that are more forward-looking.
[00:11:58] Ramanan: Very interesting, very interesting.
[00:12:00] Katy: So I think those are some useful tools. The other big one I would say is social, that we are creatures who care immensely about our peers and what they're doing, and that can be a hindrance or a help, depending on whether your peers are doing things that are aligned with say, for instance, doing what's good for the climate or not. And so that's another thing that I think we have to think a lot about.
And there's been some wonderful research done by folks like Bob Cialdini at Arizona State University showing that if we communicate to people most people support using less energy or your neighbors are more energy efficient on average than you are and so on, that actually often changes people's behavior because they want to conform to those norms.
[00:12:42] Ramanan: Light bulbs are going off in my own head… May I ask a quick follow-up question about future lock-in?
[00:12:50] Katy: Yeah, please.
[00:12:53] Ramanan: Does research suggest that when people make a future commitment, they actually are more likely to live up to it?
[00:13:00] Katy: If you say, "Oh, yes, I will eat only vegan meals next week or only vegetarian lunches," well, then when next week becomes today, you're like, "Well, how about the week after this one," right? So the important feature of future lock-in is to make it work, you need to actually lock in your future commitments in some way. So just saying it out loud, maybe you feel a little inconsistent if you don't follow through.
There are some evidence that simply making a plan for the future can be enough that it'll have a little bit of sticking power, but better yet is to try to convince people to make commitments to things where there's some cost or penalty if they actually don't follow through, or to order meals in advance so that they'll literally show up on their doorstep and those meals are likely to be healthier, more environmentally friendly, and so on than what they would order if they were just choosing five minutes before dinner time.
[00:13:48] Ramanan: That is really interesting ... I'm going to shift direction a little bit, because there's so much we can talk about. So the pandemic has been a massive global experiment in behavioral science in so many ways.
[00:14:07] Are there things you've observed as the pandemic's unfolded, not necessarily just in the US, but certainly we can focus on the US, that have been interesting to you, something you look at and say, "Ha, this either validates something we hypothesized or some new hypotheses have arisen?"
[00:14:26] Katy: Yeah, we've learned so much about human nature from this. I already was mentioning how hard it is for companies to experiment and pivot and we knew that, we knew that companies weren't doing that enough. One of the things that I think has been most interesting to me about this is how many companies that said, "We'd never consider hybrid. We'd never let at people work from home, never in a million years," were forced to try it because there was no other option and then realized actually, this was working quite well for them, and now are committed to continuing to do that.
How many conferences said, "We'd never go virtual. We would never consider having a green option where people could Zoom in," and it's working, and now they're going to consider making that possible. So there are a lot of people who got on a plane every week to do their jobs who are still doing them just fine without that and obviously, that's a huge contributor to global emissions, all the planes that we take.
So I think it's been a massive experiment with some features of our life that we felt we couldn't live without, we couldn't do our work without, that were costly for the climate, and we've learned actually we can. I think it's a nice illustration that we need to experiment more even when we're not forced to, right? It shouldn't have taken this crisis to push employers and individuals to explore these possibilities given there's another crisis looming, but it did. We've learned a lot. I hope one of the things we've learned is never say never and that we should be more open to trying different things, especially when there's this much on the line.
[00:16:02] Ramanan: I couldn't agree more. My own life and the life of my firm, so to speak, has changed as a result of the pandemic, a lot of it having to do with remote and distributed work. We're an eight-person firm in five countries in three continents and we would not have thought of that pre-pandemic.
So next question is, and we touched on this briefly before we began the podcast, what is the interaction between behavior change, which one associates with individual action, and policy change, which obviously is on behalf of a collective? And I would say that the starting point is the climate crisis, but that point applies to a lot of things, not just the climate crisis.
[00:16:45] How do you think about the intersection between “I'm helping people change behavior” and ultimately a change in policy; how do you see these things coupling with each other?
[00:16:59] Katy: I guess my own research, I focus primarily on understanding how do we change individuals' behaviors in ways that lead them to be healthier, more financially secure, and achieve better educational and work outcomes. And I'm not as focused on shifting policy, but I will say that there's wonderful research, and one of the leading thinkers in this area is Robert Frank of Cornell University suggesting how important it is to look at the feedback loops between behavior change and change in policy support, right?
So it's not just that if I structure messaging in the best possible way or your environment in the best possible way to encourage you to drive a fuel-efficient car or conserve energy in your home, it's not just that that reduces your footprint or your carbon footprint individually. It also tends to lead you to become more supportive of environmental causes.
Because as you change behavior, you change your attitudes about the world to align with those behavior changes. I'm conserving more, you're proud of that. I'm driving a more fuel-efficient car, you start to recognize there's this feedback loop. These are parts of my identity and now I want to vote differently and I want to support different kinds of policies. So there definitely is evidence of a connection between individual action and support for policy change.
[00:18:12] Ramanan: Super helpful. And we will, hopefully, one day speak with Dr. Frank as well for more. I'm going to wrap us up with last, but very definitely not least, you co-head the Behavior Change for Good Initiative at Penn with Angela Duckworth. And that's kind of a superset of our investment thesis—we're focused on Behavior Change for Climate and Sustainability and Behavior Change for Good certainly covers that, but it covers many things.
[00:18:48] What can you tell us about it? And what's new and topical and high-interest for you?
[00:18:53] Katy: Yeah. The Behavior Change for Good Initiative is one of the neatest things I've ever been involved with. It's existed now for a little over five years. It brings together about 145 scientists from different fields and different places in the world who are all interested in behavior change, but look at it with a really different lens, right? So computer scientists, doctors, economists, psychologists, neuroscientists, lawyers, and we put out challenges to this team of 145 scientists whenever we find an opportunity to do a project with an organization at scale, and we say, "Help us test your best ideas, what are your best ideas to solve an important problem?" And we'll actually go out and implement them and do what we call mega-studies, not just a simple AB test, but a massive test, an A, B, C, D test, all the way to Z, and see, in a tournament style, what works best.
So we've done these kinds of studies to try to promote exercise in partnership with 24-Hour Fitness. We did studies like this with Walmart to try to encourage vaccination and figure out what messaging was most effective there. And we've seen really big returns on this approach when we throw more things at the wall and have a broader range of people involved in idea generation.
And I hope we'll be able to bring this approach to bear on more and more important problems, including climate change. I think of it as sort of like the Manhattan Project in a weird way, right? We've done these massive big science efforts in other parts of the world. And I think it's time to be thinking about it in terms of behavior change when the stakes are so high in so many parts of our lives.
[00:20:33] Ramanan: And how can viewers or listeners of our little show here, how can they find their way to learning more?
[00:20:47] Katy: We have a website, bcfg.wharton.upenn.edu. And it has lots of information about the work we do, the scientific publications we've put out, our model for science, and all the members of our team, many of whom are doing fantastic research about the climate and behavior change.
[00:21:14] Ramanan: Katy, this was the most fun I've had in a very long time. I want to thank you again very much for the time and the insights, and this is probably not the last you're hearing from us. Thank you.
[00:21:33] Katy: Thank you so much for having me. This was really fun for me as well. I appreciate the opportunity to meet and chat.
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