It [the economic approach] relies on data, rather than hunch or ideology, to understand how the world works, tolearn how incentives succeeed (or fail), how resources get allocated, and what sort of obstacles prevent people from getting those resources, wheter they are concrete (like food and transportation) or more aspirational (like education and love).
Think Like a Freak is a funny and interesting book. Here some key insights:
– Violating conventions: conventional beliefs are often wrong.
– Admit when you do not know something, and never blindly trust experts.
– To solve a problem, redefine it.
– Think outside the box to identify the root cause of problems.
– Think like a child: kids are curious and more difficult to deceive.
– Pay attention to the way in which incentives drive human behavior.
– If you understand what drives people you can set strategic traps that reveal their bad sides.
– Before you can persuade someone, you have to make her listen.
– Letting go of conventional wisdom can make you happier with your life.
Let’s now focus on the last chapter of the book.
The Upside of Quitting
One popular mantra that is actually bad advice: a winner never quits, and a quitter never wins. Why is this bad advice? Because there are already enough forces which bias us against quitting. Even when quitting is clearly the better choice, we often hesitate to do it. There are several reasons for this.
- social pressure: we have been taught that quitting is a weak thing to do;
- sunk costs: the more we invest in something, the more reluctant we are to quit.
- we tend to forget the opportunity costs: We often overlook the fact that, by engaging in one thing, we also forgo the opportunity to do something else.
To investigate how certain decisions affect happiness, Levitt set up a website on which people faced with a difficult decision could flip a virtual coin. After some months, the participants were asked whether they’d acted upon the coin flip and to gauge their happiness level.
Surprisingly, two major decisions to quit left people happier: breaking up with one’s partner and quitting one’s job.
Read Levitt, S. D. (2020). Heads or Tails: The Impact of a Coin Toss on Major Life Decisions and Subsequent Happiness. The Review of Economic Studies.