12 Jun 2019
Professor Madan Pillutla explains how to improve good judgement in making financial choices and the importance of removing bias from investment decisions
04 Jan 2017
London Business School behavioural expert talks ‘fresh start’ delusion
A quarter of New Year’s resolutions will be broken in the first week of January, estimates suggest. But according to an organisational behaviour expert from London Business School, scrapping your resolution could be the start to a happier and healthier New Year.
Madan Pillutla, Professor of Organisational Behaviour, London Business School, explains why: “The intriguingly named ‘what the hell effect’, refers to our tendency to over indulge when we overstep a self-set limit.
“By making resolutions, we impose limits on ourselves. If these limits are very strict (for example I will go to the gym five times a week), and we fail them (it is Wednesday already, and I have not gone to the gym), we are likely to over indulge. We think the week is shot anyway (so I will not go at all this week and I resolve to make a fresh start on Sunday).”
The ‘what the hell effect’ is strongest when we make resolutions which are a tall order, Professor Pillutla warns. These resolutions are the most dangerous for three reasons. First, we are more likely to over-indulge as we inevitably over-step, over-ambitious, self-set limits. Second, we are likely to take longer to get back on the wagon, waiting until next week or next month. Third, we are far more likely to give up entirely, because we consider it a failure if we have not stuck to these strict limits from day one. We quickly conclude that the whole year is shot!
“Compare this to a person who has no such resolutions”, says Professor Pillutla.
“Not having been to the gym by the middle of the week might act as a strong motivator to go now. Ironically, the New Year resolution of going to the gym five times a week leads to worse outcomes than if we had never made the resolution in the first place.”
In spite of the high failure rate, many of us will make exactly the same resolution next year, when the vast majority of us will fail again.
“We are generally overly optimistic about our ability to meet goals, and also do not learn from past failures. This means that we are more likely to make grand, rather than realistic resolutions”, Professor Pillutla says.
If you want to make and keep a resolution, Professor Pillutla urges you to examine your failures for situational and personality barriers, set realistic goals and make resolutions that are not difficult to keep on a day to day basis.
“But”, he says, “Beware the delusionary promise of the ‘fresh start’. Remember that not making a resolution might lead to a healthier and happier life than making one that can lead to the ‘what the hell effect’.”