Friday, January 24, 2014

Do You Overearn?

In the 1980s, there was a bumper sticker that made the rounds that said, “He who dies with the most toys wins.”  That phrase always made me pause.  On the one hand, toys are fun, and so if you work hard to accumulate lots of fun things to do and to enjoy, then perhaps that is true.  But, what if you die with a lot of toys that you never play with?  Is it possible to get so caught up in accumulating stuff that you work too much and play too little?

It is hard to answer that question in the real world.  Many people (like me) enjoy their jobs, and so work is part of what makes life fulfilling.  There is also uncertainty about the future, so making money when you can allows you to handle unexpected negative events that may happen.  Finally, because we can pass along any wealth we don’t use to our loved ones (or to our favorite charities), someone will get a benefit from our hard work, even if we don’t.  And that can create some incentive to keep working.

Still, it is an interesting question that was explored in a paper in the June, 2013 issue of Psychological Science by Christopher Hsee, Jiao Zhang, Cindy Cai, and Shirley Zhang.  They created a laboratory analog to overearning to see whether people would mindlessly earn what they could regardless of what they were able to enjoy later.

The first study in this paper had two parts.  In Phase 1, participants listened to pleasant classical music for 5 minutes.  They could press a button to interrupt the music with 200 milliseconds of unpleasant noise.  Every 20 times that they pressed the button, they would receive a bite-sized candy bar.  In Phase 2, they listened to another five-minutes of music, and they could eat as many of the candy bars that they earned as they wanted.  They were told at the beginning that any candy they earned but did not eat had to be left behind.  A second group of participants did exactly the same study, except that they had to put in more effort to get each candy.  They had to press the noise button 120 times for each candy bar.

Unsurprisingly, the people who had to put in more effort earned fewer candy bars overall than those who had to put in less effort.  After all, the first phase of the study only lasted 5 minutes.  The people who had to press the noise button 120 times to get each candy bar only earned about 2.5 candy bars on average, and in Phase 2 they ate most of the candy they earned.  The surprising result was that the people who had to put in only a little effort ended up earning about twice as many candy bars as they actually consumed. So, they listened to about twice as much noise as they had to.  In short—they overearned.   

This overearning seems to reflect a lack of planning.  In a second study, some participants were asked to predict how much they would want at the start of the study.  (The prize in this study was jokes rather than candy, but the basic design was similar.)  People who could predict how much they would want made pretty good predictions, and they stopped listening to noise as soon as they earned wha they wanted.  Those who did not make a prediction in advance overearned.  They earned more jokes than they could listen to later.  Finally, all participants rated how happy they were during the first phase of the study.  Those who made predictions in advance were happier than those who did not.

In a third study, participants had to press a noise bar 10 times for each candy.  One group could earn as many candies as they wanted.  A second group was limited to earning as maximum of 12 candies.  The group that could earn as many as they wanted ultimately earned about 14 candies each.  They only ate about 5 candies apiece, and so they overearned.  The group that was limited earned only 10 candies apiece and ate about 6 of them.  So, they overearned a bit, but not as much as the unlimited group.  The group that was limited rated themselves as happier overall in each phase of the study than those who were not limited.  Presumably, they were happier both because they got to listen to more of the music in the first phase, and they felt like they wasted fewer candies in the second phase.

Obviously, this result is far removed from the real world.  But, it does have some interesting life implications.  It is possible that many of us spend too much time at jobs we don’t like just to earn toys that we never get to use.  It is worth being more strategic about what we want and what we need to do to get it rather than just mindlessly earning without thinking about what we need those earnings for.  At a minimum, we should stop every once in a while to play.