A funny thing happened during the Super Bowl. No, not that thing. Yes, the 34-minute power outage brought a lot of issues into focus—issues linked to the “Sandy Studies” Lee proposed in the hurricane’s wake (and is now teaching). But I have a different sense of power in mind—the power of (academic) science in the marketplace.
On Sunday, Prudential aired a thirty-second spot (that could’ve cost up to $4,000,000!) advertising its retirement planning services. The ad featured a “real-life experiment” (their term, from the video’s description) emceed by a real-life academic scientist: social psychologist, bestselling author, and Harvard Professor Daniel T. Gilbert.
Because it’s not an experiment—at least not in the sense it seems to be.
Today’s generation is living seven years longer than the previous one. So how do you get people to start thinking about living longer, and what it means for their retirement? Well, we built an eleven-hundred square foot wall and conducted an experiment. With the help of Professor Daniel Gilbert, and the city of Austin, Texas, we asked people to place a sticker next to the age of the oldest person they’ve known. And they did.
The easy answer is: “No.”
The experiment itself provides no evidence that “we’re living longer than ever,” nor does it furnish the sort of data about average lifespan or life expectancy with which we might reasonably make decisions about our own savings and investments. Would the results of such a survey have been any different a century ago, when the average lifespan was considerably lower? Maybe, maybe not—we have no idea.
Rather than excluding outliers, Gilbert’s setup celebrates them. And that’s the point. Prudential isn’t interested in furnishing data for making informed decisions. As they put it themselves, they just want “people to start thinking about living longer, and what it means for their retirement.” If you think you might live to a hundred, you’ll sock more away (with Prudential) today. And remembering Grandma’s 93rd birthday puts us in that frame of mind.
Temporal discounting is what accounts for our failure to
invest in Prudential save for retirement. It’s something academics like Gilbert know a good deal about—and something companies like Prudential are increasingly interested in. This is where we start to understand how these two parties came together in a Super Bowl ad—to put scientific ideas about discounting to work in a very real sense.
What’s at issue is the fact that we don’t discount the future in the simple, exponential manner that rationality seems to dictate and economists used to assume. Rather, we behave irrationally—and, since the 1970s, economists, decision theorists, and cognitive scientists have been coming together under the banner of “behavioral economics” (and, more recently, “neuroeconomics”) to figure out why. (Here’s a great, recent overview of the field.)
Since Daniel Kahneman and Amos Tversky published the work that eventually won a Nobel Prize, scholars have continued to show that we tend to value (and undervalue) things in ways that are both irrational and—and this is the key—predictable. This is the idea behind behavioral economist Dan Ariely’s bestselling book, Predictably Irrational, and it’s the sort of reasoning that gives the counterintuitive punch to Freakonomics et al.
What does all this have to do with Gilbert and the Super Bowl? Well, this is the world Gilbert lives in. His bestselling book, Stumbling on Happiness, provides similarly fascinating stories about how we so often fail to understand what makes us happy (and behave in ways you wouldn’t expect). And its based on the well-regarded research on “affective forecasting” that got him a job at Harvard.
|Notable Kahneman fans (Source: http://www.edge.org/3rd_culture/kahneman07/kahneman07_index.html)|
*Can anyone think of other examples, either product endorsements or primetime promotions?