When a decision-maker is faced with a self-control problem, he or she is always tempted to prioritize his or her present self’s gratification at a given moment by scrapping the long-term plan, ultimately causing extensive damage to the decision- maker. In order to avoid such self-destructive behaviors, he or she must first thoroughly understand the structure of self-control problems and make a sophisti- cated choice that takes into account the lenient future self. Putting otherwise, when making a plan to save money, lose weight, or abstain from something, it is necessary to ensure that the plan is sufficiently feasible by realizing that the Fig. 6.1 Avoiding self-destructive choices
discount rate will suddenly go up and the future self will become impatient immediately prior to executing the plan. Needless to say, the kind of plan that even the short-sighted, impatient self can execute would not generate a great result;
however, it can often ensure greater benefits in the long run, compared to the inconsistent behaviors that would occur if the decision-maker were so naı¨ve that he or she were unaware of the preference reversal.
In Wong’s field experiment that I introduced in Chap.4, 80 % of the 450 subjects were unaware or only partially aware of their own self-control problems, even though they were students at Singapore’s most prestigious national university (see Table4.3). More than one in four in the entire population of my online survey was also this type of naı¨ve decision-maker (see Table5.2). As the debt and obesity data shown in the previous chapter indicate, one should be able to considerably improve the quality of one’s choices by becoming aware of the structure of one’s self-control problems and thereby learning to make sophisticated decisions that take into account the future self’s gratification.
6.2.2 The Self-Control Problem and Willpower That You Can Realize Only by Being Inconsistent
So, how can we know the degree of one’s own hyperbolic property or the serious- ness of one’s own self-control problems? If we were to call the self-regulation ability that enables us to cope with strong temptations at hand and thereby attain long-term interests “willpower,” getting to know the seriousness of one’s own self- control problems closely relates to the question of how one can test one’s own willpower.
As a matter of fact, we can only learn the seriousness of our own self-control problems and the strength of our own willpower through experience. It may be true that we can probably estimate our self-control problems to some extent by learning from examples in books and daily life or observing the behavior of parents and other relatives. However, the bottom line is that you can never know your own personal attribute regarding how inconsistent you tend to be unless you actually act inconsistently several times.
This has two important implications. First, it means that some sort of willpower test is needed to ascertain the seriousness of one’s own self-control problems. In other words, you need to take on a task that would require willpower—to save a fixed amount of money every month, to jog the predetermined course every morning, etc.—and create an opportunity to find out how serious your own self- control problems are and what level of ability you have in handling them. Saving a fixed amount of money every month and jogging every morning in themselves have long-term benefits, and even if you lose that intense fight, there is the significant secondary benefit of realizing through the test your own willpower level.
Roland Be´nabou and Jean Tirole say that the seriousness of a decision-maker’s self-control problems and the strength of his or her willpower are signaled through his or her own choices and behaviors, in what is called “self-signaling” (Be´nabou and Tirole 2004). I explained earlier that a self-control problem arises when a conflict of interest (agency problem) arises between the long-term self as a principal (planner) and the short-term self as an agent (doer). If information on the attribute of agent can be obtained through self-signaling from daily behavior, it would enable the long-term self—the principal—to anticipate the short-term self’s behavior and take some sort of action.
However, a difficult task that requires you to reject a pleasure at hand can work as a test of willpower only when you voluntarily put yourself “on the line,” where you could be tempted if you let down your guard; the test mostly loses its meaning when you are externally compelled to perform the task regardless of your own will.
It may be related to the fact that children who had extremely strict upbringings often grow up to become dogmatic adults with no self-control—or, conversely, children who grew up freely are often able to consistently make definite choices later in life.
Restraining the impulse for an immediate gain can be regarded as self-control only when one restrains oneself voluntarily with the intention to attain certain predetermined long-term benefits.
Second, in order to know the level of one’s own hyperbolic inclination, it becomes necessary to analyze past behavior and to accurately memorize the results.
However, this is not an easy task as one might expect for at least for two reasons.
The first is the difficulty inherent in the analysis. How well your action plan is executed usually depends largely on external factors, in addition to your self- control. For example, when a plan to lose weight falls through, it would be a difficult task to analytically identify whether it was because of your own weak self-control or because of the party you were suddenly invited to by your boss.
Furthermore, the task becomes even more difficult, given that the short-term self who is the executor (agent) will have all kinds of justifications and excuses to blame the boss rather than one’s own weak self-control. To complicate matters, the more intelligent you are, the cleverer the excuse will be, as the short-term self (agent) and the long-term self (client) have identical intellectual capacities. The short-term self’s reasoning, such as “I took a break from dieting because declining to go to the party with my boss could be detrimental to my career. It is a sensible and rational choice to ensure the long-term interest,” may sound like the reasoning of the long-term self who considered the future.
The second reason is that accurately memorizing every single bitter experience of setback is an extremely painful task. Many readers must have the experience of ceasing to record one’s weight or caloric intake when beginning to fail to lose weight. In contrast, people willingly remember successful experiences because they make one feel proud and confident. As a result, there is often a risk of remembering the overrated past performance of self-control and underestimating one’s own hyperbolic inclination versus the actual experience.
The opposite risk is also conceivable. It is possible that one cannot stop testing one’s own willpower when he or she cannot have faith in it for some reason, even
when his or her past self-control performance has been perfect (e.g., successfully abstaining from something for a long time, etc.) and there are many data points indicating that his or her self-control problems are not overly serious. Such indi- viduals are at risk of developing compulsive and neurotic behaviors, such as anorexia and workaholism. It is similar to how some avidly religious believers continue to test their own faith by imposing strict precepts on themselves and begin behaving in a dogmatic and fundamentalist way. The notion that these ascetic behaviors are actually connected, below the surface, to the self-control problem of hyperbolic discounting might seem paradoxical; however, it is understandable if it is viewed as a case of not being able to escape the blind faith that there is a fierce and uncontrollable lion inside of you.
6.2.3 Addressing Willpower Depletion
Even if you understand your self-control problem, you still need to have sophisti- cated cognitive abilities and strong willpower to take this problem into account when making decisions. When you can see with your own eyes the gratification that can be attained just by reaching out, to believe that choosing the gratification will make you lose the long-term benefit—a vague notion that can be seen only in abstract terms—is quite an intellectual process that requires high cognitive power.
It requires a considerable amount of willpower to actually choose the abstract, long- term benefit over the concrete pleasure at hand here.
However, it is well known that willpower can become depleted. For example, it has been reported that when subjects in an experiment were asked to complete tasks that require attention and concentration, both the quality and quantity of work they were told to subsequently perform declined, and the choices they made became impulsive (Baumeister and Vohs 2003; Burger et al. 2011). Once willpower is depleted, making painful choices becomes more difficult until willpower is recov- ered. Those who are faced with self-control problems thus need to take into account the possibilities of willpower depletion if they are to make a painful but sound choice.
To do so, there are two possible measures. One is to choose long-term interests by conserving your willpower and cognitive ability as much as possible. Using a commitment device, as described in the previous section, is a typical method. If one can completely tie one’s own hands in advance, the long-term action plan should be executed automatically regardless of one’s willpower. In addition, dividing time periods for plans and activities into shorter sub-periods will help in reducing the severity of self-control problems and thereby making decision-making somewhat easier. The other method is to make choices in an environment where your willpower can be used efficiently; in other words, make choices in an environment where you are not easily affected by your instincts or impulses. Let us discuss these in order.
6.2.4 Two Types of Commitment Device
As I explained in Chap.4, those who are aware of their own self-control problems are able to protect their long-term interests by using various commitment devices to tie the hands of their present self at a given future moment, namely, the future doer.
There are roughly two types of commitment method, as summarized in Fig.6.1.
One is external commitment, which is enforceable based on external arrangement and rules such as contracts, laws, and institutions. The other, which is not externally enforceable, is called internal commitment or soft commitment.
As discussed in Chap. 4, it is possible to restrict unplanned overconsuming behaviors by turning assets into “the goose that lay the golden eggs” or an illiquid form such as real estate or stock. Since you are subject to constraints that stem from external reasons, such as a contract or the nature of the assets themselves, most of these methods have strong property of external commitment. For the same reason, piggy banks and accounts such as installment savings and pensions that are costly to close are also considered external commitment devices.
Patricia Sourdin studied the relationship between self-control problems and old-age pension enrollment by using data on household expenditures in Australia between 1988 and 1999 (Sourdin 2008). There, she created a proxy variable for the respondents’self-control problems based on their drinking and smoking behavior;
she demonstrated that respondents with serious self-control problems were more likely to be enrolled in an old-age pension. This is an example where old-age pension is used for an external commitment device to deal with self-control problems.
6.2.5 Soft Commitment Devices
In contrast, soft commitment is an act of intentionally placing some sort of psychological cost without using means such as contracts in order to force oneself to make a choice that is in line with long-term interests. Below are some examples.
• Tell others what your dreams and goals are.
• Have your collaborator or assistant work in your office.
• Keep the door to your office/study room open.
• Study/work at a library or public facilities.
• Do not bring home work.
• Pool coins and convert them into a large bill.
• Do not apply for a credit card/do not carry a credit card/lower the line of credit.
• Purchase smaller packages of snacks and potato chips/do not keep any snack at home.
• Choose a color such as white and black for the new car so that it is easy to notice when the car gets dirty.
• Do not wear loose clothing
• Brush your teeth immediately after a meal.
• Do not watch the first episode of a drama series.
When you profess your dream or goal, it reinforces your precommitment to achieve that goal, although it involves the risk of the cost that your credibility and honor could be damaged if you were to fail. Having a collaborator in your office will remove your freedom to work whenever you want and in whatever outfit you want; however, it will at least tie you to the word processor screen when you are tempted to escape your work and surf the Internet. The same effect is expected when you leave your office door open or use the library. Deciding not to bring any work home will put greater pressure on you to finish your work before the end of work hours. By purchasing potato chips in smaller packages, you can impose guilt on yourself whenever you open a new bag. The same is true when you use a smaller dinner plate. Although you will lose some convenience—in terms of not being able to use a vending machine—when coins are converted into a large bill, you would be hesitant to spend it because it is unpleasant to break a large bill.
Because soft commitments are voluntary in nature and do not depend on a contract, external commitments that are enforceable are often more useful from the perspective of self-restraining, which is the original purpose of precommitment.
However, with external commitments, self-signaling does not work well. As described earlier in this chapter, we need to accurately understand our own self- control problems by receiving information on our choices and the subsequent outcomes as feedback. The benefit of an external commitment lies in the fact that it can firmly settle the choice, regardless of willpower. However, because of that benefit, the chosen behavior and its outcome do not contain information that can help gauge one’s own willpower. In that sense, a soft commitment device, whose efficacy somewhat depends on one’s own initiative and willpower, has the benefit of allowing self-signaling to function and, if successful, increasing one’s confidence in one’s own willpower.
6.2.6 Personal Rules
Many people discipline themselves by creating their own rules such as “I do not keep any sweets at home” and “I do not gamble at all.” Here, following George Ainslie’s terminology (Ainslie 2001), let us call those rules “personal rules.” A version of the soft commitment is to identify a behavior that protects the long-term interests as a principle, turn it into a personal rule, and follow it. Let us summarize again what happens in our minds and discuss the benefit of the personal rules.
Both the short-term self (devil) who is tempted by the immediate gain and the long-term self (angel) who thinks of benefits in the distant future are competing with each other in our minds. The self as angel is the planner, and the self as devil is the doer. Now, let us say you are about to go on a diet from today. With a feast in front of you, the devil whispers, “Why do not you wait until tomorrow to start your
diet?” This proposal may be a good idea because having a feast today and starting a diet tomorrow will give you gratification today and good health in the future.
However, the sophisticated angel would realize that this is actually a proposal with no prospect of success because the credibility of the dieting plan is largely compromised once it is scrapped. The next time the same situation occurs, the angel will be defeated much more easily.
A point being made here is that it is not appropriate just to compare the benefit of two choices (eat today versus restrain myself today) when making an intertemporal choice such as whether to go on a diet or whether to continue with the diet; such comparison leads the devil to win under hyperbolic discounting. Instead, it is essential to make a decision on whether to eat as if choosing from a series of choices of “continue eating” or “continue restraining myself,” based on the under- standing that choosing to “eat today” would be the same as choosing to “keep eating after today.” In other words, you take the similar choices that will be repeated in the future over a long period of time and make a choice for all of them at once. George Ainslie describes such a creative way of decision-making as “bundling” or “sum- ming” the long-term outcomes of repetitive choices and evaluating them all at once (p. 84, Ainslie 2001). Perseverance increases as one takes future interests more into account because of the nature of hyperbolic discounting; therefore, we should be able to avoid self-destructive choices and ensure long-term interests by bundling together the future benefits of a given choice. Even those who question themselves about whether or not to have a snack now and choose to have a snack would decide not to have a snack if it were a choice between “continue snacking from now on”
and “continue not snacking from now on.”
Now, establishing a personal rule is regarded as an act of understanding repet- itive and agonizing choices as a bundle of choices and turning the choice into a principle to protect long-term interests. For example, setting a personal rule of
“never snack” means that when deciding whether or not to snack, one would always view it as a series of choices of “whether or not to continue snacking from now on”
and turn it into the principle of “never snack,” which will result in a great gain as a bundle. Ainslie discusses in detail, including discussions from the perspective of psychiatry, about the pros and cons of turning choices into personal rules (Ainslie 2001). Based on economic theory, Be´nabou and Tirole (2004) derive the use of internal (soft) commitments, including personal rules, as an optimal strategy for sophisticated decision-makers.
There are two important points in setting these personal rules. First, a personal rule must be clear enough that cheating is not possible. “I do not eat sweets” is better than “I do not snack,” “I will not have a credit card” is better than “I will not use installment payments with a credit card,” “I will not drink beer at all” is better than “I will not drink more than one bottle of beer,” and so on. To borrow Ainslie’s expression, you define the boundary of the rule by using a “bright line” that anyone can understand because, in response to the angel’s strategy of setting a personal rule, the short-term self—the devil—will use justification and exceptionalization in order to make you break the rule.