Episode 015:

Temptation Bundling and Behavior Change

with Dr. Katy Milkman

April 27th, 2022

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Episode description

How can we beat procrastination by doing more of the things we love? Dr. Katy Milkman, Professor at The Wharton School of the University of Pennsylvania, celebrated author, host of the Choiceology podcast, and Alliance Advisory Council Member, joins your host, Dr. Joe Sweeney, Executive Director of the Alliance for Decision Education, to talk about the power of nudges, the distorting lens of the present bias, and how she used a behavioral science hack to get herself to crave trips to the gym. Katy and Joe discuss the peculiarities of mental accounting, how she trains her students to critically examine scientific claims, and the power of rituals to help us unwind. Katy also shares a surprisingly easy strategy to guarantee that you’ll choose the healthy option at a restaurant, not the unhealthy one you crave!

Dr. Katy Milkman is widely recognized as a leading expert on behavioral change and the decisions that impact change.

Author of a national best-seller, How to Change: The Science of Getting from Where You Are to Where You Want to Be, and host of a top-rated podcast, Choiceology, Katy is widely published and interviewed on topics related to what drives behavior. Her 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 serves as the James G. Dinan Endowed Professor and Professor of Operations, Information and Decisions at The Wharton School of the University of Pennsylvania and holds a secondary appointment at Penn’s Perelman School of Medicine.  She is the Co-Founder and Co-Director of the Behavior Change for Good Initiative, a research center with the mission of advancing the science of lasting behavior change. She has worked with or advised organizations including Google, the U.S. Department of Defense, the American Red Cross, and Walmart on how to spur positive change. Katy writes about behavioral science for outlets, such as The Washington Post, The New York Times, USA Today, and Scientific American. Katy is also the former president of The Society for Judgment and Decision Making.

Katy received her Bachelor’s Degree from Princeton University, and her Ph.D. from Harvard University.

Katy is also a member of the Advisory Council at the Alliance for Decision Education.

Photo Credit: Peter Murphy

Joe: I’m excited to welcome our guest today, Dr. Katy Milkman. Dr. Milkman is the James Dinan professor at The Wharton School of the University of Pennsylvania, host of Charles Schwab’s popular behavioral economics podcast, Choiceology, and the co-founder and co-director of the Behavior Change for Good Initiative. Her research explores ways that insights from economics and psychology can be harnessed to change consequential behaviors for good, such as savings, diet, exercise, impulsivity, procrastination, laziness, and forgetfulness.

Katy is also the former president of the international Society for Judgment and Decision Making. Over the course of her career, she has worked with or advised dozens of organizations on how to spur positive change, including Google, the US Department of Defense, the American Red Cross, and Walmart. Katy is the author of a national bestseller, How to Change: The Science of Getting from Where You Are to Where You Want to Be, which was recently named one of the New York Times best books for healthy living in 2021. Katy is also on our Advisory Council here at the Alliance for Decision Education. Welcome, Katy. I am so happy to have you here today. I’ve been looking forward to this conversation for a while. How are you?

Katy: I’m great. Thank you so much for having me, Joe, and for the lovely introduction.

Joe: Well, [laughs], you’re very welcome. You certainly have earned it. But for our audience: could you summarize what you do?

Katy: Yeah, absolutely. On a daily basis, I spend a lot of time just thinking about how we can improve decision making and then studying that, developing hypotheses, working with doctoral students, with academic collaborators across disciplines. I work with economists, psychologists, computer scientists, marketing folks, management experts, and doctors.

We run big experiments, A/B tests, to figure out what interventions actually work to improve people’s decisions. And I’m particularly interested in decisions about health, decisions about finance, decisions about education. So, how can we get kids to study harder in school? How can we get people to get vaccinated, exercise more regularly, to when it’s time to get a colonoscopy, is something I’ve studied. And how can we encourage people to save more for retirement? So, it’s really those forward looking choices that sometimes we don’t make even though they’re in our long term best interest. That’s, that’s what I’m particularly interested in finding ways to motivate.

Joe: I’m curious for your take: why decisions? Of all the things to study and pay attention to and try to do something about, what drew you to decision-making?

Katy: Oh, that’s a great question. I think it’s just true intrinsic interest because it took me a while to end up here. I should say, my background is as an engineer. I studied operations research and financial engineering as an undergraduate. I went to my PhD program thinking I was interested in computer science and business, and understanding how the internet was changing people’s choices.

I ended up being required to take a microeconomics sequence in graduate school, where some of the material from this new field of judgment and decision making, or behavioral economics, was actually incorporated into the class, and I fell in love, as soon as I started hearing about the systematic crazy things we do, right? Because they resonated with my life. Everything from the fact that we’re impulsive and we overweigh the instant gratification we’ll get from our choices, which can explain everything from why people smoke cigarettes to why they accumulate so much credit card debt and don’t save for retirement. That clicked, I was like, “Oh, yes, it makes sense. Everything about me that’s wrong makes sense once I understood that.” And there, there were other factors of that sort, too, that were being quantified in the behavioral economics field that drew me to it, but it was really an intrinsic interest and a seeing myself in the data and wanting to understand how once I knew about these systematic mistakes that we make, there might be an opportunity to improve because I, again, I think like an engineer, but I was thinking, “Oh wait, could I use those engineering skills not just to optimize a line of code, but our actually optimize people’s decisions so they can have better life outcomes?”


“We’re impulsive and we overweigh the instant gratification we’ll get from our choices, which can explain everything from why people smoke cigarettes to why they accumulate so much credit card debt and don’t save for retirement.”  — Dr. Katy Milkman


Joe: So, I’ve forgotten that we had that shared history. It’s been more than a year, I think, since we spoke last. But I was a physics undergrad, and then along the way, I got into AI and programming and eventually studied mathematics and all of a similar vein. And then did a degree in economics. Even in economics, even in the micro theory courses, it was still not being taught with a behavioral lens. It was still being done through a normative approach, or, you know, the rational decision maker approach.

Katy: I think it still is, by the way, in most places. It was at graduate level where it was being brought in, and it was an unusual thing. And I hated my undergraduate microeconomics experience because it didn’t… It was this normative lens that didn’t resonate at all. In fact, I hated it so much that I switched out of the Bachelor of Arts program I had entered college in, and took summer school classes, so I could become an engineer because I wanted to do something with applied math that was practical. And I hated economics so much that I just, I thought it was bogus. [laughs]. I switched.

Joe: Right. The simplifying assumptions… it was like when somebody cooked to the point where the flavor had just gone.

Katy: Exactly.

Joe: The humanity was just gone.

Katy: There was nothing I recognized of humans in the economic models, and it seemed absurd to waste time with that. I feel differently about economics now. I have much more appreciation for the sort of standard normative models now that I’ve gone really deep into the field. But it’s hard as an 18 year old or 19 year old when you first see it to wrap your arms around that, and appreciate why those simplifying assumptions add value, I found.

Joe: Oh I mean, they’re beautiful. The math of some of it is absolutely beautiful. And it’s, they’re impressive models. But when you get down to the individual, they stop being particularly useful.

Katy: Right.

Joe: So, if I can ask, what are some of the things that jumped out to you as not being in the models that you felt like were important as you began to learn more about behavioral economics?

Katy: Yeah, it’s a great question. I mean, probably the biggest one that jumped out to me, the thing that first caught my attention was this idea of impulsivity or present bias: the tendency to care much more about what we’ll get right now, and dramatically underweight or undervalue the long term consequences of our decisions. That resonated with me immediately as explaining my own procrastination and bad decisions throughout life, and those of many people I cared about. That was the biggest. And then I’d say it was later that I got interested in a host of related topics including mental accounting, which is just absolutely fascinating. [It’s] this tendency we have to not think about time and money as completely fungible, but rather to put it in categories or buckets and, and treat it as if those categories are special.


“The thing that first caught my attention was this idea of impulsivity or present bias: the tendency to care much more about what we’ll get right now, and dramatically underweight or undervalue the long term consequences of our decisions. That resonated with me immediately as explaining my own procrastination and bad decisions throughout life, and those of many people I cared about.”
— Dr. Katy Milkman


So, to give you an example, you have your budget for your monthly rent and a separate budget for shopping and entertainment. And you act like inflows or outflows into one of those accounts can’t be touched. So, somebody gives you a gift certificate to Starbucks, and you think, “well, I have more money to spend on food and beverages this month,” but you don’t act like you have more money overall. Of course, if you’re going to Starbucks regularly, you don’t have to spend any more on Starbucks, but you could go spend more now on entertainment, or you just put more in your savings account. But that’s just not the way we think.

Joe: No.


“Mental accounting… is absolutely fascinating. [It’s] this tendency we have to not think about time and money as completely fungible, but rather to put it in categories or buckets and, and treat it as if those categories are special. So, to give you an example: you have your budget for your monthly rent and a separate budget for shopping and entertainment. And you act like inflows or outflows into one of those accounts can’t be touched.So, somebody gives you a gift certificate to Starbucks, and you think, ‘well, I have more money to spend on food and beverages this month,’ but you don’t act like you have more money overall. Of course, if you’re going to Starbucks regularly, you don’t have to spend any more on Starbucks, but you could go spend more now on entertainment, or you just put more in your savings account. But that’s just not the way we think.” — Dr. Katy Milkman


Katy: And so I thought that was really fascinating as well. And I’ve been intrigued by what its implications are in terms of the way we think about time, and manage our time, thinking about months and years as these really important units with important boundaries that might shape the way we pursue goals. There was just so much I loved in behavioral economics.

Joe: The mental accounting one is really interesting because it’s treated so differently. So, for example you imagine folks that are teaching about personal finance. Whether it’s the Rich Dad Poor Dad approach, or it’s using envelopes to pay for bills and save. And there you’re being told, “don’t treat your money as fungible and as in one large bucket – really do use mental accounting to improve your behaviors.” And then there’s another whole area from economics that’s saying, “hey, money is fungible. It shouldn’t change. It’s not rational that you now go and spend 10 more dollars because you got a gift card. You should spend the gift card at that place and then let those $10 flow to the rest of your overall budgeting.” I’m struck by that tension that the idea that there’s this normative approach that’s being told over in this rational kind of an economic modeling. And then there’s this other approach that’s being taught that’s all about using our natural built-in biases and behaviors, our instinctive ones, and hacking those.

Katy: Yeah.

Joe: And it seems to me like you, you’ve been blending the two of them, in your understanding?

Katy: Absolutely. I think that is a really interesting point. And I completely agree with your observation. One of the things that I find most fascinating about behavioral economics is that many of these, I’ll call them biases, right? They’re not all biases, of course.

Joe: Right.

Katy: But many of these biases, or these deviations from the optimal decision making model that economics provides, are useful, and they exist for a reason. And mental accounting is absolutely one of them. I think, when I teach about it, there’s a bunch of reasons we probably create these rules in our minds, and one of them is to budget better because it’s really hard to restrain yourself from, for instance, blowing your bank account if you have a limited budget each month, if you have a limited amount of money total in your bank account, and you’re impulsive.

If you didn’t create these boundaries and limits and say “I only have x dollars to spend on shoes this month” you would go wild because of present bias when you went shoe shopping. And so, these rules that you create, they exist for a reason. And then we prescribe them for the same reason, right? When you tell someone “Create envelopes, label your money, or create jars, or create bank accounts, and label them, and set that aside, and forget about the money.” It’s violating the standard normative model, but it’s doing so in service of defeating another behavioral bias that will lead to worse outcomes, which is the tendency to be impulsive.

So, it’s all fascinating. Human behavior is fascinating.

Joe: It’s totally fascinating. So, you mentioned time as being another dimension on which we use mental accounting. Can you talk a little bit about how we do that?

Katy: Yeah, this is actually something that I have studied extensively, in the last decade, after my graduate years when I fell in love with the field and thought mental accounting was so fascinating. I got to it in a sort of backwards way, which is that I went and gave a presentation at Google about a decade ago about some tools that I had been studying to help people make better decisions around things like savings and educational opportunities, and also exercise nudges, right? Nudges being little tweaks we could make to the environment or the way an option is presented to encourage people to make better choices. So, I presented this work. And there was an HR manager from Google in the audience. And he said, “Katy, this is super interesting. But I’m wondering if there’s any ideal time when we could offer these tools to our employees? When we could offer out programs or nudge them or encourage them to sign up for a 401K and start saving for retirement, or to start going to the gym, do these things that are good for them in the long run. Is there some ideal moment?”

Joe: Mm-hmm.

Katy: And that actually brought me back to mental accounting. So, thinking about time and thinking about the fact that we don’t treat time as a continuum, but instead create these buckets, and you know, February feels different from March, even though they blend into each other. And 2022 feels different than 2021. What I realized, and this is research I’ve done with Hengchen Dai at UCLA, and Jason Riis who’s a Senior Fellow at Wharton, we found that there are moments that feel like fresh starts in our lives, or new beginnings, because they bracket the end of a mental accounting period, because we think about our lives in these sort of chapters. Those basically are mental accounts, right? Those were “the Boston years,” “the college years,” the end of 2021. I’m putting a bracket around that. That mental account closes, 2022 opens. And now I have this sense of a clean slate and a fresh start and a new beginning, and I can say, “my past failings are behind me. That was the old me who didn’t quit smoking last year. This new me is going to do it.” And we see this spike in people’s motivation and willingness to set goals at those fresh start moments or at the close of those mental accounting periods.

So that’s one of my favorite things that I have studied. We found this in all different datasets from looking at when people go to the gym to when they set goals about everything from their health, to their finances, to their education on a popular goal setting website to when they search for the term diet on Google. We see these natural rises at fresh start moments, the start of a new week, a new month, a new year, sort of a semester, following birthdays. And we also have seen that we can actually highlight fresh start dates to people and change their decisions. So, that’s a key way that I have studied mental accounting and time.


“We see this spike in people’s motivation and willingness to set goals at those fresh start moments… We found this in all different datasets from looking at when people go to the gym to when they set goals about everything from their health, to their finances, to their education… We see these natural rises at fresh start moments, the start of a new week, a new month, a new year, sort of a semester, following birthdays… We can actually highlight fresh start dates to people and change their decisions.”  — Dr. Katy Milkman


Joe: I heard you talk about this on your podcast, Choiceology, which is fantastic, and we’ll link to it, about a fresh start, a really dramatic story about a smoker. And I think you probably know which one I’m talking about. Do you want to share with our audience that story?

Katy: Yeah, Ray Zahab. Yes, I would love to. So this is a story and I tell it in my book as well. I learned about it through the podcast. It’s one of my favorite stories. So Ray Zahab was a perennial smoker, not in good shape, he kept trying to quit. He knew this lifestyle was making him unhappy, and he just wasn’t able to do it. And then he saw the millennium coming up, and he felt like that was a really big transition moment, New Year’s Eve 1999. That’s a moment I can pin my hopes to, and I can say, “when that boundary is crossed into the new millennium, I’m not going to smoke again.” And he took his last smoke that evening, and he managed to quit by using that huge shift. He got the motivation he needed, and what’s more amazing is it changed his life.

It wasn’t just that he stopped smoking. He was able to get in incredible shape and started running ultra marathons and became a champion ultra marathon runner. And we tell the dramatic story of some of his wins in the podcast and in the book, but it was that extra motivation that came from seeing this binary opportunity, right? The on-off switch at the new millennium, that gave him the fresh start he needed, and, and he could avoid the cravings and say, “no, it’s 2000, I’m a new man, it’s a new time, I’m not going back.”

Joe: I want to tap in on the idea of the “I’m a new man, I’ve got a new identity.” At the Alliance [for Decision Education] we build a free video program for middle school students around habits called HabitWise. It’s mostly based on Charles Duhigg‘s work, who I’m excited [to say] will be on the podcast sometime soon. But after that I came across James Clear’s work Atomic Habits. And I was really struck by how identity is part of this. That if I have a new self image I’m going to start behaving in ways that are consistent with that self image. I’m seeing a bunch of things where it says [that] no, it’s your behaviors that help tell you who you are. That you infer your identity from what you’re doing. I was wondering: has that been showing up, in any of the work that you’re doing? Which drives which? Are your behaviors and decisions driving your identity and your mental accounting? Or is it really that once you have a sense of who you want to be and what your goals are that you see more effect on the decisions people are making?

Katy: Yeah, it’s a really great question. I think James Clear’s a great writer. He’s a journalist, so he’s just synthesizing other people’s research. But there’s really great work on identity that does show I think that it can go either direction: that you look at your own actions, and that can shape your identity, right? You notice, or somebody points out, “you’ve been giving a lot to charity, and you’re volunteering a lot, you’re a really charitable person.” That starts to become an identity because you look back and you see the match between the behaviors and this label. And you say, “yeah, that is me.”

And then there’s evidence that it can also go the other way. Someone starts changing the labels they use to describe you, and that can reshape your behaviors. I’m thinking of work I like a lot, by Chris Bryan, and Todd Rogers, and others, showing, for instance, if you tell someone, “you’re a voter” if you use that language as opposed to encouraging them “to vote”, that using that identity label can shape their decisions about going to the ballot box. And the same is true of other labels you can give people around their eating habits and so on. So, it goes both ways. My take on identities, I think, actually, there’s a lot we don’t know. I think it’s an underexplored area and I think there will be more and more research on it in the years ahead.

Joe: So I’m looking for the small improvements, the places where we can do something practical that will start improving our decision making. Whether it’s our decision making skills, or the actual decisions that we’re making, and I noticed in your book, and again, in your podcast: you happen to have mentioned a topic that is one I’m currently wrestling with, which is [about] how am I going to get myself to the gym? And I imagine a lot of people are thinking about that, especially after we’ve been home and maybe cooped up a bit for longer than we all wanted. So can you talk with us about that? How did you come to temptation bundling, and where have you found it to be effective?

Katy: Yeah, I love this topic, and I would say this is the canonical example from my career of “me search”

Joe: [laughs].

Katy: … as opposed to just research.

Joe: Right.

Katy: [For] all of us, some of our work is more based on navel gazing and some is less, and this is navel gazing work. So the reason I started studying it is [because] I was doing it as a graduate student. I really struggled at the end of a long day to motivate myself to exercise even though I knew it was critically important to my mental health and productivity. At the end of a long day of classes, I just wanted to curl up on the couch and binge watch TV.

And on the flip side, I had all this homework, all these problems piling up, and I was procrastinating on doing those, too. And what I ended up trying is something I now call temptation bundling. I started a rule where I would only allow myself to indulge in that kind of entertainment that made me feel better when I was actually exercising at the gym. So, some people do it with TV shows. I actually found it ended up working better for me with audiobooks. So, I listened to all the Harry Potter books, all the Hunger Games books, all the Alex Cross, James Patterson books while at the gym.

So, I find myself at the end of this long day, everything changed. I start craving trips to the gym to find out what’s going to happen to my favorite characters, time flies while I’m there, and then I would get home. I had my entertainment fix. I was ready to dive into the work, and my grades improved, my mood improved, my physical fitness, and body image improved.

Joe: Oh, my gosh.

Katy: It was like magic. And once I started studying behavioral economics and understanding present bias, and there’s this whole literature on commitment devices, or tools we can use to sort of constrain our behaviors in order to get better outcomes.

I was like, “wait a minute, this is, this is sort of a behavioral science hack that has some sophistication about all these things.” By linking a chore with something that’s tempting, I get the best of both worlds. Now, the chore becomes enjoyable enough that I actually want to do it. and I don’t do as much of the tempting thing that’s kind of a waste of time. So, I started finding other ways to, to do temptation bundling in life from only letting myself get a pedicure while I was catching up on reading I was behind on for work, or only letting myself go to a favorite burger restaurant while spending time with a difficult mentee who I should see more of. You know, podcasts while doing household chores. So, it has revolutionized my life. And then I started studying. So you’ve run a couple of big experiments showing that it’s not just Katy [laughs] who benefits from this tool, but lots of people can benefit. We’ve shown that it can help people exercise more and have access to or even just the hint to use these kinds of tools.


“By linking a chore with something that’s tempting, I get the best of both worlds. Now, the chore becomes enjoyable enough that I actually want to do it, and I don’t do as much of the tempting thing… [temptation bundling] has revolutionized my life.” — Dr. Katy Milkman


Joe: Besides the exercise one—which I think is fantastic and I’m absolutely going to try it—is there another one that jumps out from the large studies that seems to have been effective for a lot of people or has that been the singular one?

Katy: I have another favorite which is actually from work by Ayelet Fishbach, and Kaitlin Woolley of Ayelet’s at the University of Chicago and Kaitlin is at Cornell. They ran this experiment with students doing math worksheets.

And you would think that that’s not great, maybe, for temptation bundling. In fact, I think there was a lot of skepticism that if we bundle fun things like music and snacks and giving kids markers while they’re working, it may be distracting, and they’re going to do worse. But their strong intuition based on research they had been doing is that people underestimate the importance of making things more fun to persistence. And what they found is that when they added these accouterments to the environment where the students were doing their math worksheets, the kids persisted longer. So that’s, that’s another one of my favorites.

We think the right way to get our work done is in this draconian “just push through” and bear the isolation and spartan environment, but it can actually enhance our persistence when we’re having the snacks, we’re playing the nice music, we’re using the nice markers.


“At the University of Chicago… they ran this experiment with students doing math worksheets. We think the right way to get our work done is in this draconian ‘just push through’… and spartan environment, but it can actually enhance [the kids’] persistence when we’re having the snacks, we’re playing the nice music, we’re using the nice markers.” — Dr. Katy Milkman


I have someone who told me that she temptation bundled her way through dissertation writing with scented candles she loved that she only allowed herself to burn while [writing].

Joe: [laughs]

Katy: I was like, “That wouldn’t work for me because I’m not that into scented candles.” But I like the idea of it. You know: how do you make the environment and the experience more fun?

Joe: Have you found for yourself, Katy, that you can fool yourself into thinking that you really do care about or value some temptation? I’m thinking about: I have this very silly thing called “fancy Coke.” So when I’m really stressed out, and I’m going to tell myself that I want to relax, and that “I’m relaxing now, I’m not stressed” I make a fancy Coke, which is a Coke with ice, in a short glass with a piece of lime. [laughs] It could be the lamest thing in the world. But that’s the only time I drink it, and it’s a special treat, and it’s a fancy Coke for when I’m really stressed out. And I don’t actually care about Coke. I’m fine with it. But I don’t drink it normally. I’m not that tempted by it, but I’ve told myself that I am. Have you found that that’s something that you use? Or is that just a crazy Joe-ism?

Katy: I really like that. It feels like some sort of blend of temptation bundling with the importance of rituals.

Joe: Yes.

Katy: There’s this whole line of research, I think Mike Norton at HBS has done the most work on this on just how powerful it is to create these traditions and rituals to give us grounding and motivation. One thing that’s been hard, for those of us who’ve had it easy during the pandemic who are able to work from home, for instance, is the loss of some of the rituals around commuting and transitions. And I think what you’re describing there is like creating a little ritual that gives you what you need in a moment to reset or to re energize. And, I think some of the research suggests that, that when we create those kinds of rituals they can have a lot of positive benefits for our motivation and productivity because they help us refocus and reenergize.


“When we create… rituals, they can have a lot of positive benefits for our motivation and productivity because they help us refocus and reenergize.” — Dr. Katy Milkman


Joe: It won’t surprise me if evolution has been very efficient by utilizing the same regions for more than one thing and the same tricks in more than one place. And then so none of them quite work the way we would optimally want them to work. But they work really well for several things, and that’s a pretty elegant solution.

Katy: Well, that’s certainly the story of many of the biases, right, that have been documented about the way we think about things like probabilities and risks. So, I would not be surprised either. [laughs]

Joe: Speaking of probabilities, it’s a pretty big topic for us at the Alliance [for Decision Education] with trying to bring that into education. Have you gone after that in your own work? Have you thought about that just for Katy purposes? I’m wondering how much probabilistic thinking shows up for you as an important skill or disposition that you’re trying to apply regularly?

Katy: Oh, gosh. [laughs]. I mean, actually, as a scientist, being able to think probabilistically might be the most important skill you can develop. Because every science experiment you run, and every hypothesis you test, is a gamble, right? And then every conclusion you draw is also at some level… well, it’s a probabilistic conclusion. You’re like, “I’m 95% sure.” “I’m 99% sure” that this is true. So I do a lot of really big experiments. Lately my team at the Behavior Change for Good Initiative has been pioneering a new way of doing science on behavior change through what we call a mega study, which is instead of testing a single hypothesis in isolation we’ll test dozens of them simultaneously. Not an A/B test. We flip a coin, and some people are randomly assigned to see one set of stimuli and some see another. We do an A through Z test.

Joe: Wow.

Katy: We’re testing all sorts of different ideas at once. And to do that properly, you have to really understand probabilities and do all sorts of statistical analyses to make sure you have adequate sample size for the kinds of conclusions you want to draw. So, probabilistic thinking is everywhere. And then, of course, life choices: choosing the right marriage partner; will you have a kid, how many, at what age? Probabilistic thinking comes in everywhere. Will you take on this graduate student? How’s that gonna work out? [laughs]. Everything’s probabilistic.

Joe: There’s so much in this topic around decision-making that sometimes it’s really hard for us to figure out which are the most important things to make sure that every young person learns, and where are the natural connections to bring them into the K-12 system. And it’s a probabilistic challenge in that we’re placing bets not only about which one of these two we think is the most impactful, but also, which is the most likely to actually get traction and get picked up and be able to make it into the system. I’m curious, I always ask this kind of thing toward the end, but I’m curious generally, which, which skills about decision making you’d most like to see the next generation have? What are the obvious ones you’d be like, “All right, let’s get these in right away.”

Katy: Yeah, this one’s actually pretty easy for me because I teach Managerial Decision-Making at Wharton to MBAs. I used to also teach it to undergrads. And in doing so I get to sift through all of the research on decision biases, and think about how much time I want to spend on each one. What are the most critical things? What will I reinforce the most throughout the semester? And there’s no question what my top priority is. It’s to help people understand causal inference better, and the way I try to do that is through teaching them about what an A/B test is, and all of the problems it eliminates that we would normally have if we’re just looking at data correlation only and trying to draw conclusions.

So I think causal inference, causal reasoning. To me that’s so important because to make any judgment in life… somebody presents you with a newspaper article about anything from, “should you breastfeed when you have a kid?” to “should you major in engineering versus history, to maximize your expected happiness and income?” But all of those things require an understanding of causal reasoning. When someone tells you, “oh, look, there’s this study in Australia. It shows that people who watch TV more die younger.” Should you panic and throw your TV out? Or should you recognize that, “well, actually, the kinds of people who watch more TV might be spending more time at home because they’re less mobile, and it’s probably complete garbage. It’s not a causal relationship. That’s probably correlational.” So, I think that’s the number one thing: teaching people to really understand the difference between correlation and causation. And everybody can say to you, “oh, yeah, correlation doesn’t equal causation.” But really understanding it is so critical.

Joe: What are some signs to you as the teacher when an undergraduate student or one of your MBA students seems to actually get it? How can you tell that, okay, now they’re understanding what I’m talking about?

Katy: They started to get it when they start to poke holes in bad evidence themselves.

Joe: Okay.

Katy: So, I actually spent a lot of time in my class, every class starts with a news story that is not based on sound evidence, but makes a claim that sounds like it could be true. And we just start poking holes in it. And at the beginning, the students really struggle. They’re like, “I don’t know, maybe it wasn’t a representative’s population that was in the study of TV watching and longevity, and that’s the reason I shouldn’t believe it.” Because they know they need to be skeptical because I’m like, “what’s wrong with this?” By the end of the semester, every one of them can list 10 reasons why they don’t believe it, 10 problems. And then they can tell me, “here’s how I would design a study I would believe.”

Joe: Okay.

Katy: To me, once people are saying, “here’s what’s wrong. Here are alternative explanations,” and then once they can tell you what evidence they’d need to understand the causal relationship, then they’ve got it.

Joe: So, let’s be hopeful for a moment. Let’s say it’s 15, 20 years from now, and in part because of the great Advisory Council we have, [Decision Education] is being taught through K-12. Causal inference is an understood set of skills, and students are thinking this way, they’re being skeptical consumers of information. They’re expecting more. What would look different in our society? What would you expect to see if you came and observed society 20 years from now, and this was truly part of K-12 education? How could you tell without going into the classroom? What would be true in society?

Katy: Oh, gosh, it would be such a great world, wouldn’t it? Well, I think you’d see fewer media outlets getting away with baloney headlines, right? People are constantly lying with data. They’re giving you a statistic that’s not true, and they wouldn’t be able to get away with that so easily. I think there would be more appreciation and less skepticism of some of the big scientific issues that are out there today. So there will probably be more funding for science and education, by the way,  given that it’s the single best investment we can make in the future, as far as I can tell.

So I think all of those things would be different. I think politicians would not be able to get away with misinformation and nor would other outlets, to the same degree that they’re able to now because if we were skeptical consumers, and we could really digest and understand and sort the facts from the fiction because we understood what a good causal argument looks like, and what kind of facts we need to support our claims, I just think it would be a much better world.


“To make any judgment in life [from] ‘should you breastfeed when you have a kid?’ to ‘should you major in engineering versus history, to maximize your expected happiness and income?’ … all of those things require an understanding of causal reasoning. And everybody can say to you, ‘oh, yeah, correlation doesn’t equal causation.’ But really understanding it is so critical. 

…If we were skeptical consumers, and we could… sort the facts from the fiction because we understood what a good causal argument looks like, and what kind of facts we need to support our claims, I just think it would be a much better world.” — Dr. Katy Milkman


Joe: Yeah. So, we often use a little bit of Stanovich’s language around this, that rationality is about answering two repeated questions: what is true and what to do? And that you need [to increase] both the epistemic and the instrumental rationality, for kids. You mentioned Harry Potter earlier. I’m going to go out on a limb here and wonder have you by any chance read or [listened to] the audio version of Yudkowsky’s Harry Potter and the Methods of Rationality?

Katy: No, but now I feel like I need to write that down.

Joe: Oh my gosh you’ll be so happy. Oh, it’s so good. It’s so fun. It’s so much fun. Yeah well, I’ll get you a link.

Katy: Okay, that sounds amazing. I’m very excited. It’s something new to temptation bundle.

Joe: Absolutely. Yeah it works really well for temptation bundling.

Nice. So, causal inference would be number one.

Any skill or disposition at a close second, if we could ensure that it could make its way successfully into K-12 education? And it could just be if there’s a bias that you’re like, “I just wish everyone knew about this bias.”

Katy: I think it would be really valuable if more people appreciated overconfidence. It contributes to so many issues from escalation of commitment—the tendency to stick, you keep doing something even though it’s time to quit. And our mutual friend Annie Duke has a wonderful book coming out about this topic— [to] the planning fallacy, which is [when] you’re like, “oh, yeah, I can finish that. I’m going to finish this home renovation project in three months, no problem. I’m going to write my dissertation in one year, no problem.” But in reality, everything takes two, three times as long as you think it will. So that’s the planning fallacy. All of these things are tied up in overconfidence. And [it also causes] investment in the wrong life opportunities because you think the information you have is more precise than it is and you think your skills are greater than they are in so many walks of life. I should say there’s also issues where we’re under confident, and Don Moore, who wrote a brilliant book, Perfectly Confident is the real expert on all this, but overconfidence is the one that keeps me up a bit more at night.


“I think it would be really valuable if more people [understood the cognitive bias of] overconfidence. It contributes to so many issues from escalation of commitment—the tendency to keep doing something even though it’s time to quit— [to] the planning fallacy, which is when you’re like… ‘I’m going to write my dissertation in one year, no problem.’ But in reality, everything takes two or three times as long as you think it will. And [it also causes] investment in the wrong life opportunities because you think
the information you have is more precise than it is”
— Dr. Katy Milkman


Joe: I do wonder if people were well informed about the planning fallacy and about the overconfidence bias. If when leaders tried to make claims about important decisions, if the public would hold them to stricter standards about those, and, and require more evidence, or I don’t have any way of knowing yet, if that will be the impact. We often say that better decisions lead to better lives and a better society. And I do wonder in a democratic system, if that’s one of the natural consequences if students, and therefore eventually adults are better at this then so is our government.

Katy: I love that vision. It would be wonderful if so. [laughs].

Joe: Right, right.

Katy: I hope it’s true.

Joe: It does seem challenging. I’m curious, we ask everyone who comes to the podcast about the one book that they would recommend.

Katy: My one book is Nudge, which is by Richard Thaler and Cass Sunstein. And that’s really a book about how we can help people make better decisions by changing the way choices are structured. Once we start to understand what are the structures that underlie poor decisions, and we can shift those, that’s where we really get traction. Nudge changed my life, it changed what I wanted to do with my career, or the trajectory of my research. It’s fabulous. I can’t recommend it enough.

Joe: Well I totally agree. It’s an amazing book. And I’m pretty happy to be able to say now because by the time this podcast gets out it’ll be announced on the website. But Richard just joined the advisory council.

Katy: Yay!

Joe: Which is, yeah, that’s fantastic.

Katy: That’s great.

Joe: Yeah. And that it’s not only just joined, but he said he’s looking to make this happen, to try to make sure that every young person learns about decision-making and how to improve their own.

When you think about nudging and choice architecture, besides the temptation bundling, is there a particular thing that you notice, “ooh, a lot of people if they knew about this for themselves, they could change their decision context pretty easily with this for the better?”

Katy: That’s a really excellent question. I think one really straightforward one that people probably don’t appreciate the value of enough, although some do intuitively, is pre-commitment. That is when we’re thinking about the future, and we’re making a decision for tomorrow or next week or next month, we tend to make really good decisions that benefit us overall, and we’re not short sighted. When we’re making a decision right in the heat of the moment, we make impulsive choices. So, for tomorrow, I’ll have the salad. Today, I want the pizza. You know, tomorrow, yeah, of course, I’ll put that money in a savings account. Today, “ooh, I like that snazzy new piece of technology, please, and I don’t care about the price tag.”

So, when we choose in advance, we make better decisions. And I think that is something that a lot of people could use to help them immensely in life and it, it’s an easy hack to just start to try to avoid those in the heat of the moment decisions and plan ahead and plan ahead. Not like, “oh, I’ll think about the decision in advance.” Make it in advance, right? Order in advance for your meal or…

Joe: Oh, nice.

Katy: …schedule the way you’re going to spend your weekend in advance with your partner as opposed to just falling into it. Make sure that you put the vacation on the calendar so that you will take a break and recharge. Now I’m saying things that might even sound counterintuitive, but because vacation seems like something you’d be impulsively drawn to. But we often when we’re living in the moment, we do things that are not optimal for us overall. But if we make those plans, I think that could really help a lot of people to always try for the big things to plan in advance rather than letting them happen.


“People don’t appreciate the value of… pre-commitment. When we’re thinking about the future…
we tend to make really good decisions that benefit us overall, and we’re not short sighted. But when we’re making a decision right in the heat of the moment, we make impulsive choices. So, for tomorrow, I’ll have the salad. Today, I want the pizza… 

[But] when we choose in advance, we make better decisions. And I think that is something that a lot of people could use to help them immensely in life and it, it’s an easy hack to just start to try to avoid those in the heat of the moment decisions… Order in advance for your meal, or schedule the way you’re going to spend your weekend in advance with your partner as opposed to just falling into it.”
— Dr. Katy Milkman


Joe: Do you set aside a particular time in your routine for that kind of work or do you do it when you remember? How do you approach that yourself?

Katy: Yeah, that’s a great question. Well, I’m a fresh start person. So I do try to do some planning at the beginning of every week. Sometimes it’s on Sunday, looking at the week ahead. Sometimes it’s on Monday morning. Depends on sort of how my schedule shapes up. But every week, I try to take that sort of look forward. Schedule, plan, figure out what needs to be fit in, moved aside. I definitely plan meals in advance and exercise. And, to the extent that I can, I make sure that there will be things coming up over the course of a year that I’m looking forward to, like vacations. So I do some of it, but I probably could get better at it still.

Joe: I really appreciate the advice. It’s great advice. I’ve only ever heard one other person really talk about it. And it does seem to improve their life dramatically. So thank you for that last tip. I also want to just thank you for coming on the show, Katy. This was great.

If listeners want to go online and learn more about your work or follow you on social media, where should they start?

Katy: Yeah, I think the best place is just my website, which is katymilkman.com. And it’s Katy with a Y like Katy Perry. Thank you to her for making my spelling less confusing! You can find out about my book, my podcast. I’m on social media. I have a newsletter called Milkman Delivers where I monthly send out interviews with my favorite scientists about a different behavioral science topic. So, that’s all on my website.

Joe: It’s a great newsletter.

Katy: Thank you!

Joe: Thank you for writing it.

For our audience, any books or articles—including the newsletter—mentioned today, check out the show notes on the Alliance site where you can also find a transcript of today’s conversation. Katy, thank you so much, and thank you for everything you’re doing for the Alliance and for the movement for Decision Education. I really appreciate it. Thanks for coming on today.

Katy: Thanks for having me, and thanks for all you’re doing.

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