Economic Growth

This well-known economist asked people to flip a coin on important life decisions

A pile of one pound coins is seen, in central London June 17, 2008. British inflation rose in May to its highest since the Labour government took power in 1997, but expectations of higher interest rates ahead fell sharply because the Bank of England said the rate outlook was uncertain.

The deal was this: Everyone promised to obey whatever the coin told them to do. Image: REUTERS/Toby Melvill

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A few years ago, economist Steve Levitt embarked on one of the strangest, and arguably most megalomaniacal, experiments in history.

The University of Chicago professor and "Freakonomics" author wondered if people were actually good at making choices for themselves. Laboratory studies have shown that humans suffer from numerous decision-making biases. We’re overconfident, we’re impatient, we overestimate our abilities. Our brains latch on to recent events and blow them out of proportion. But many of these experiments took place in contrived settings, where the stakes were small.

Levitt sought to go bigger. He wanted to meddle in people's major life decisions. And he came up with an ingenious way to do it.

When confronted with a serious dilemma, some pray for divine guidance, some convene a jury of their friends and some just go with their gut. But in 2013, tens of thousands of people did something a little crazy. They logged onto Levitt’s website and flipped a virtual coin.

The deal was this: Everyone promised to obey whatever the coin told them to do.

Before tossing the coin, people filled out a survey registering the decision they faced, whether it was leaving a job, leaving a spouse, having a child -- or proposing marriage. They left their contact information for researchers to follow up on them. They also left contact information for a close friend, so the researchers could independently verify the responses. This week, the National Bureau of Economic Research released a draft of Levitt’s paper, which details the fascinating outcome of the experiment.

Most of the dilemmas involved making a life change or sticking with the status quo. To move or not to move? To start a business or not? Depending on the outcome of the coin toss, participants were either encouraged to go ahead, or asked hold off for at least two months.

Two months later, Levitt checked in with people. Here came the first surprise: Some of them kept their word. They actually followed the advice of a random animated Internet coin.

Getting the green light from the coin toss made people 26 percentage points more likely to go through with their life change.

Of course, most people had made up their minds, and would have done the same thing regardless of what the coin said. But Levitt estimates that 13 percent of people were actually swayed by the coin one way or the other. These were the people Levitt sought to study: What effect did that random nudge have on their lives?

Some faced important decisions, such as whether to go back to school; some had more frivolous quandaries, such as whether to dye their hair. This chart shows the most popular questions and how Levitt categorized them. A smaller fraction of participants were willing to let a coin decide their most serious life questions, but there was still a significant slice of them.

 Percentage following the coin toss, two-month survey
Image: Levitt

Six months after the initial coin tosses, Levitt checked in one more time. He asked subjects to rate their personal happiness again on a scale of one to 10. He compared these answers to their happiness scores from the beginning of the experiment. The differences were significant and surprising.

Those who were convinced by the coin to change their lives became happier compared with those who were convinced by the coin to hold off.

This was true only for the weightiest decisions. Other choices, like whether to join a gym or an online dating site, had little measurable impact on people’s happiness. But taking the plunge on a breakup or a new job made people significantly happier, six months later.

How much happier? On a scale of one to 10, those who were convinced by the coin to change their lives saw an increase in happiness of about two points compared to their counterparts who were convinced not to do anything. This is a pretty massive difference. Two common life choices stood out for making people particularly happy — the decision to quit a job, and the decision to break up with a significant other.

One problem here is that people tend to rationalize. Maybe you’re not truly happier after you quit your job or after you marry someone — but you convince yourself you’re happier because you can’t bear to face the possibility that you made a huge mistake. Levitt doesn’t think the subjects were delusional, because he also asked their close friends to independently rate their happiness. The scores more or less aligned. But then again, if someone can trick themselves into thinking that they’re happy, they can easily trick the people around them as well. So it’s an open question whether people really were honest with themselves.

Another major caveat is that these measurements come from a peculiar slice of the population. We are not even talking about all of the people who came to Levitt’s website to flip a coin. We are talking about changes in happiness among the 13 percent of subjects who actually allowed the random coin flip to determine their decision.

So, practically speaking, the advice from this experiment seems to be this: If you are so unhappy with your job or your relationship that you are willing to break up on the advice of a coin flip — you should probably just go ahead and do it. You’ll be a lot happier.

The larger lesson, Levitt argues, is that perhaps we are all more tentative than we should be. Here’s another chart from the paper showing people’s decisions at the six-month mark.

Before the coin flip, Levitt asked everyone how likely they would be to make the change they were considering — quitting their job or going back to school or leaving their partner. Some people said that there was a 100 percent certainty that they would go through with the life change, regardless of what the coin said.

 Likelihood of taking action as a function of ex ante stated probabilities, six-month survey
Image: Levitt

Why did these people come to the site, then, if they said their minds were already made up? It’s strange. But on the far right end of this chart, you can see that only about 75 percent of these people actually did anything by the six month mark. Furthermore, the chart shows that the coin toss had a motivating effect. Of those who were encouraged by the coin, 80 percent ended up making the change. Of those who were discouraged by the coin, only about 65 percent made the change.

It seems that even when we think we're certain we're going to do something, we often chicken out. Maybe this study should convince us to have a little more backbone. It's scary to break off from the status quo, but if you're already contemplating changing your life, just take the plunge. Chances are you won't regret it.

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