What Are Behavioral Economics? Or Why Johnny Lingo Paid Eight Cows for His Wife

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From a Human Resources standpoint, Behavioral Economics occurs when an employer pays its workers more than what the current market demands, on the premise that the more valued the workers feel, the better they will perform.

Patricia McGrerr‘s  famous short story “Johnny Lingo’s Eight-Cow Wife” (Women’s Day, November 1965) is a good example of this principal. On the Pacific island where Johnny Lingo lived, a man could purchase a decent wife for two to three cows. A highly satisfactory wife could be had for four to five cows.  Sarita, the woman Johnny wanted to marry, was plain and skinny and, in the opinion of most islanders, worth only two cows, three at most.  To everyone’s amazement, Johnny paid eight cows for her.

After Johnny and Sarita wed, she became a beautiful, charming woman, one of the finest in the village. Johnny attributed her transformation to the price he had paid for her.

“Do you ever think,” he asked, “what it must mean to a woman to know that her husband has settled on the lowest price for which she can be bought? … I wanted Sarita to be happy, yes. But I wanted more than that. … Many things can change a woman. Things happen inside, things happen outside. But the thing that matters most is what she thinks of herself. In Kiniwata, Sarita believed she was worth nothing. Now she knows she is worth more than any other woman in the islands.”  

In theory, the more valued your employees feel (as reflected by their salaries), the more they will value themselves and their skills and the more likely they are to live up to your high expectations.

This is just one aspect of Behavioral Economics, the main gist of which is that humans do not always behave in an economically rational way.  Johnny Lingo’s decision to pay eight cows for a wife who was originally worth no more than two or three was anything but rational.

The sometimes irrational and, therefore, unpredictable decisions people make in regards to finances and economics can be a force for good (the transformation of Johnny’s wife) or for evil. Many economists blame the crash of 2008 on the irrational decisions made by banks and other organizations.

This theory of Behavior Economics plays an important role in Janet Yellen, our newly appointed Chairman of the Federal Reserve’s, approach to economics.

If this post is the first time you’ve heard of Behavioral Economics, it’s not likely to be the last, as Ms. Yellen takes over our nation’s economic reigns.

Only time will tell how many cows she is truly worth.

What Does Your Desk Say About You?

desk

On the radio, today, I heard a mini-broadcast about how the neatness of a worker’s desk affects his behavior. According to a study conducted at the University of Minnesota, workers seated at neatly organized desks tend to behave better (follow the rules) and make wiser choices (an apple as a snack instead of a candy bar) than those working at cluttered desks.

I looked up the study and found it on the  Association for Psychological Science (APS) website.

Turns out the radio blurb left something out. Workers seated at the cluttered desks were more creative and more innovative than workers with neatly organized workspaces.  Hopefully my daughter doesn’t read that or she’ll have one more excuse not to clean her room!

Is Social Media Blitzkrieg Hindering Innovation?

The Three B’s

Bubble BathThere is a common consensus among scientists that the world’s greatest discoveries occur in the Three B’s: the bed, the bath, and the bus. Why? Because it’s not when you’re running actual experiments, performing mathematical calculations, or analyzing data  that the mind makes its quantum leaps. It’s during the downtime between those activities, when your mind is at rest, that it intuits the pattern or the breakthrough discovery spawned by those hours of work, study, and experimentation.

 The Social Media Blitzkrieg

 What happens when there is no downtime? How many bus and train riders today spend their entire commute texting, tweeting, or surfing the web on palm-size electronics? How many people sleep with their cell phones next to their beds or even nestled beside them in bed?  You don’t have to be Theodore Twombly to fall in love with your Personal Device.  And Personal Devices can be among the most jealous and possessive of lovers.  When surveyed half of workers age twenty-one to thirty-one, say they would circumvent any company policy banning the use of personal devices at work or for work purposes

Even those employees who don’t live on their Personal Devices find themselves buried under avalanche after avalanche of plain old-fashioned e-mail.  We are in a state of constant sensory overload.  How can we have an inventive, work-  or life-changing thought when we can’t even hear ourselves think?

Playrooms

Ping Pong at Google It’s ironic that the very industry that landed us in this midst of this constant e-noise is the one that has recognized it must carve out a time and a place for its employees to play or to chill or to simply be. High Tech companies are creating spaces which encourage employees to rest their overworked brains, so that they can logoff, shutdown, and reboot.

Most Silicon Valley companies feature ping pong and foosball tables in their offices. The most popular way to get around Google’s block-size New York office is by scooter. And see those bookcases along the wall? They’re secret passages:  doorways which open onto reflection rooms.

This trend of creative spaces has already made its way across the pond. Mind Candy in London has a Wooden Tree House Room and a Gingerbread House for holding meetings.  Its offices also include a “coloring wall and quiet areas that look like Hobbit holes.” Ticketmaster’s London office sports “ a metal slide that staff can take to reach the bar area, where table football, a jukebox and pinball machines await.

Touchdown!

 The nights Germany carpet bombed London, the city’s citizens  shut off every last light. Maybe what we need to do is forge a daily social media blackout of, say, thirty minutes in our workplaces. During those thirty minutes all employees will take a furlough from all forms of social media. They can get up and walk around, talk to each other face to face, get a cup of coffee, or even work (imagine how much work you could get done in thirty uninterrupted minutes!). And imagine, just imagine, if  some employees took  a few deep breaths and stared  into space, or opened their blinds and looked out the window, or constructed a goal post out of pencils and rubber bands and thumb-kicked a triangular folded-paper football over it, what creative breakthroughs they might have?  Fresh products. Cutting edge services. New and improved ways to reach their customers.

Me? I’d kill for an office with bath. One of those deep Victorian tubs with bear claw feet and a bar of French milled soap and some bubbles.  Logoff. Shutdown. Reboot.