Count Today's Calories, And Check Your Wallet
What do the war in Iraq, your Christmas shopping and this week's Thanksgiving dinner have in common?
They all involve judgments that ask the question "How much?" When it comes to Iraq, you and your elected representatives have to judge how much to spend. For your holiday shopping, you decide how much time you need. When you sit down to your turkey dinner, you figure out how much to eat.
Since these questions do not have objective answers, people fall back on intuitive judgments to decide how much to spend, how much time they need to finish important tasks and how much to indulge themselves at a good meal.
It isn't news that people regularly spend more than they should, give themselves less time than they need to finish important tasks, and overeat, all to their enduring regret. The question is not only why our subjective judgment is often wrong, but why it is wrong in systematic ways -- we don't run early as often as we run late, or underbudget as often as overbudget, or go hungry as often as we overeat. For most people, the errors run in only one direction.
A host of psychological experiments have explored the idea that these errors arise because we use the wrong frames of reference. To see what researchers mean, consider these two experiments:
Carnegie Mellon psychologist Carey Morewedge recently had volunteers sit before a bowl of M&Ms. He and his colleagues told some volunteers that a packet of M&Ms contained about 3/25 their daily recommended caloric intake. The researchers told other volunteers that a packet of M&Ms contained about 3/175 their weekly recommended calories. Volunteers were then allowed to eat as many M&Ms as they pleased.
A mathematician would say that the daily and weekly caloric numbers are equivalent, but the psychologists found that the two frames of reference made a big difference when it came to behavior. Volunteers asked to think about the weekly number of calories ate more than twice as many M&Ms as those asked to think about the daily number of calories.
In another experiment, psychologists asked people who were about to buy lunch at a supermarket to think about the money in their savings accounts, CDs and brokerage accounts. They asked other volunteers to think about the amount of money they had in their wallets, a much smaller sum. After people bought their lunch, researchers checked the receipts -- people who were reminded of the money in their wallets spent $6.68 on average. Those reminded of their total assets spent $9.09 on average, or 36 percent more.
Morewedge said he started examining the effect of frames of reference after he noticed that he spent more money when using a credit card or a debit card, compared with when he used cash. A card offers convenience, of course, but the psychologist realized something else was at work. Spending cash forced him to use a smaller frame of reference -- the cash he had on his person -- whereas using credit allowed him to use a larger frame of reference -- his total assets, including future earnings. Morewedge published his findings in the December issue of Journal of Consumer Research.
The deeper question, of course, is why people choose particular frames of reference. Why not choose smaller frames of reference when it comes to money, time and food, which would allow you to regulate the amount you eat and spend, and make more realistic estimates of the time you need to finish important tasks?
Without their conscious awareness, people seem to choose frames of reference that supply them with the answers they want. By telling themselves they will not overeat at Thanksgiving, but deciding how much to eat based on a weekly or monthly total of calories, rather than a daily number, they get to overeat and feel like they are making a careful decision.
"When I was thinking about eating a sundae I would think of all the exercise I would do in a week and not the exercise I would do that day" to make up for eating the rich food, Morewedge said.
Justin Kruger, a psychologist at the University of Illinois at Urbana-Champaign, found the same phenomenon in public works projects -- have you ever heard of a sports stadium built on time and on budget? In a paper he published in the Journal of Experimental Social Psychology, Kruger noted that the Sydney Opera House was first slated to be completed in 1963 at a cost of $7 million. It took until 1973 for a scaled down version to be completed at $102 million.
Kruger found that the way to limit "planning fallacies" is to systematically unpack schedules and budgets. When it comes to Christmas shopping, for example, don't tell yourself you have six hours to buy a dozen gifts. Rather, calculate the time you need for each item, and you will find your shopping will take longer than you thought. Before you shop, think about how much you will spend on each item.
And if sticking to your budget is a problem for you, leave your credit cards at home and use cash.