The Behavioral Economics of New Year’s Resolutions

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Whether it is to become healthier, to save more and spend less, or to finally get your life organized, now is the time that those New Year’s resolutions are put to the test. If you are one among the 91% of us, you may not have had to look far because you can just recycle a failed resolution from past years. Luckily this time, that resolution can stick with some determination and a couple of lessons from behavioral economics.

Behavioral economics is a marriage of the fields of economics and psychology that works to explain the behavioral variables involved in the decisions of consumers. Most mainstream economic work is done based on the rational choice theory: the assumption that individuals actively make decisions based on rational calculations to maximize their subjective utility. Although this assumption can be a powerful tool to simplify economic models, it does not take a long time to realize that humans are not completely rational beings— just spend the holidays with your family. This is where behavioral economics comes in to help explain and work against those irrational and self-destructive tendencies, so that this year those New Year’s resolutions will stick.

Willpower is the first and foremost obstacle standing between you and your goal. One obvious example of the irrationality of individuals is our inability to resist short-term gratification in pursuit of our long-term objectives. In fact, in the Psychological Association’s annual Stress in America™ survey, participants cited a lack of willpower as the first reason that they do not follow through with healthy lifestyle changes or resolutions. An individual’s willpower impacts a wide range of consumer behavior, from food intake to substance use and abuse, and purchasing behavior. Fortunately for us all, a mindful approach to willpower can increase an individual’s ability over time. When we are looking at the immediate New Year’s resolutions you have already committed to, you don’t have the ability to profit immediately from strengthening your willpower over time and so the best approach is to find effective ways to work with what you have. A study from the American Psychological Association suggests a focused approach for a successful application and continuation of lifestyle changes. The depletion of willpower in one area reduces the willpower an individual is able to exert on other spheres of their lives. Shortening your resolution list increases the chances of anyone of the resolutions actually being seen through to the end. Further, focus should be kept on a specific aspect of your goal and its real-life implications. For example, if you plan to read more, set aside half an hour every night before bed to read the next chapter of your book. If you plan to be more organized, finally use the planner you bought but never used. Do not leave resolutions in the abstract; concrete and focused actions planned ahead are essential to success. Due to the constraints of an individual’s willpower, how an individual tackles their resolution can play a part in their chance for success. If the resolution is to get fit, the initial course of action that demands less self-control to start is dieting rather than to exercise. Instead of grabbing those running shoes at the back of your closet and getting out in the cold for a run, all you need to do is to give up that cookie. While this is true to start the resolution, during the maintenance of the resolution, dieting is much harder in the long run due to the continual nature of the action compared to the repetitive and punctual nature of exercise. Willpower works in much of the same way that our muscles do. If we are constantly depleting our willpower, it has no chance to recover for the next day and we will ultimately give into temptation. Another approach to working strategically within the constraints of your willpower is to actually enjoy what you are doing. It seems obvious enough but if you enjoy the activity you do to achieve your resolution, it will not require the same degree of willpower it otherwise would have. Experiment to find what activity you enjoy the most to achieve your goal. For fitness, change up your routine, whether it be yoga, running, or spending some time at the gym, to keep the process you use to achieve your resolution satisfying. Beyond an individual’s willpower, the power of habit is also an important factor for whether or not you can maintain a resolution. Gary Charness and Uri Gneezy ran a study where they manipulated incentives of students by paying them a trivial amount of money every time they visited the gym for the duration of a month. As one might expect, the group of students who had the increased incentive visited the gym more frequently than those who did not. Further, once the additional incentive was removed after the end of the month, those who received the additional incentive were still more likely to frequent the gym. A habit had been formed and so the participants were more likely to continue. This concludes that there is a benefit to the formation of a habit when the initial activity may seem out of routine. Once the habit has been formed the continuation of the routine will not require the same degree of willpower. Resolutions as healthy lifestyle changes are our rational choice to maximize our subjective utilities. Taking a calculated approach towards our long-term goals can often be derailed by our human and irrational tendencies to favor short-term gratification. Being aware of innate human responses to incentives can be a tool we can use to overcome these obstacles. If all else fails, remember that working towards our resolutions is a process and there is absolutely no reason that every day cannot be a fresh start.