Mechanisms of temptation and procrastination
If you plan to cut sugar from your diet, will you? Business models make predictions about when people will or will not take certain actions, and when procrastination and temptation will get the best of us. In general, models indicate that your actions are consistent with your plans; if you plan to cut back on sugar for the next month, you will.
New Caltech Professor of Economics Charlie sprenger made holes in these models. He designs experiments to test people’s behavior in the face of a variety of decisions, ranging from food choices to implementing immunization programs and more. His experiments have shown that standard economic models of behavior are inconsistent with the way people behave in real life, and these results suggest the need for new public policy strategies. For example, what are the best ways to encourage people to make healthy food choices for themselves?
Sprenger says he didn’t start wanting to become an economics professor. He came to teach economics while working with the Peace Corps after college, but it wasn’t until he worked as a research assistant at the Federal Reserve that he felt inspired to pursue research in economics as a career.
Sprenger received his BA in Economics from Stanford University in 2002 and an MA from University College London in 2005. He received his PhD in Economics from UC San Diego in 2011 and then went on to the Faculties of economics from Stanford (2011-2014) and UC San Diego (2015-2020) before joining Caltech faculty last year.
We caught up with Sprenger on Zoom to learn more about the choices we make and how economic research can influence the decision-making process.
How did you finally decide you wanted to become an economist?
I grew up near Santa Cruz, California, in a small town called Felton, and I never dreamed of being an economist. I graduated from university in 2002 and there were no jobs. It was a difficult time. So, I entered the Peace Corps, and it may seem like I had a plan because I taught microeconomics, macroeconomics, and finance at the National University of Benin for two years, but it was just the job they gave me. I liked it, but I wouldn’t say it sparked my passion for teaching. Later, while I was working at the Federal Reserve as a research assistant, I got my first idea of what a career in economics might look like. I was very lucky that one of my mentors said, “just read,” so my job for a few weeks was just reading articles and producing literature reviews. Reading a few days a week for two years really gives you an idea of what research in economics is like, and that’s when I realized that it can actually be a pretty fun career.
What types of projects were you working on at the time?
I took part in a project that involved experimental work, which I am doing today. That moment when you collect data, develop models to analyze that data, and design corresponding tracking experiments, that was really exciting for me. You ask relevant and interesting research questions. You design the empirical environment that allows you to answer this research question, and then you implement the experiment. Being an experimental economist is a nice combination of activities because you have pure theory work, you have logistics work, which is always fun – defining and running experiments – and then you have empirical work, which is doing statistical analyzes on the data sets you collect. It’s a variety. You will not be bored as an experimental economist.
What type of economic research are you currently focusing on?
I do behavioral and experimental economics, and my topics are primarily time and risk preferences, or how people make decisions over long periods of time and how they make decisions under uncertainty. As a behavioral economist, my mission is to provide a critique of the Standard Economic Model by posing plausible non-standard choice patterns that deviate from the Standard Model. Then, I propose new rationalizations for these differences.
What does the Standard Model say about behavior?
The neoclassical or basic economic model, when it comes to decisions over long periods, really boils down to a demand for consistency. He says your actions are consistent with your plans. Let’s say we’re talking about filing your taxes. You wake up every day and ask yourself, “Should I file my taxes today or should I not?” It comes at a cost. You have to get all your paperwork, you have to get it, but it has some advantages because it is not on your plate. The standard economic model, at a first approximation, says, more or less, that you are going to get things done when you have planned. You may be planning to do this at the end of the tax filing period, or you may be planning to do it early, but you will be doing it more or less when scheduled.
The problem is, there really is no room in the standard business model for procrastination. Part of my research over the past 10 years has been studying procrastination and trying to design experiments to accurately estimate the parameters of the patterns that allow procrastination. And then I think of the incentives for procrastinators. One of the projects on this topic concerns polio vaccine delivery programs in Pakistan. The workers who distribute the vaccines can procrastinate, so we are working to tailor the incentives to these workers.
Can you tell us about another example from one of your experiences?
I can tell you about a study published in the Review of economic studies in 2020, which has to do with food choices. Basically, we ran a food delivery service in Chicago and Los Angeles, where we provided groceries to individuals. We gave them a budget of $ 10 and let them choose from 20 foods to deliver at a later date. Ten of these foods are considered healthy, such as fruits and vegetables, and 10 are unhealthy, such as candy and packaged items. But when we showed up to their place, we arrived with additional items that they could exchange for the ones they had previously chosen.
What we found wasn’t all that surprising: people regularly traded something like an apple for a Snickers bar. It sounds like a simple experiment, but there actually hasn’t been a lot of credible empirical evidence for this type of tempting preference behavior before. What we found is not in line with the Standard Model, which says if you were planning on eating healthy foods, you would. There is a natural political angle to this, which is to take advantage of the fact that people know they will not stick to their plan. This is called an engagement device. You might say, “Hey Charlie, don’t bring me those extra foods and bring the Snickers bar to my house.”
However, one question we are exploring is whether people really recognize that they are procrastinators or that they fall prey to temptation. We suspect that the people who have the biggest problems with this don’t think they have a problem. Therefore, engagement devices may not work. There may be other strategies to keep the future self on track.
What made you come to Caltech?
Caltech is one of the best places in the world for the type of work I do. There is a formidable body of experimental and behavioral researchers. You have people who were here from the start of the pitch, like Charlie Plott [William D. Hacker Professor of Economics and Political Science]; and you have the next generation of researchers, people like Tom Palfrey [PhD ’81, Flintridge Foundation Professor of Economics and Political Science], Antonio Rangel [BS ’93, Bing Professor of Neuroscience, Behavioral Biology, and Economics]and Colin Camerer [Robert Kirby Professor of Behavioral Economics]. And then you have awesome junior teachers. Additionally, I am very interested in the theories underlying decision making, and at Caltech there is such a talented group of theorists who complement the experimental and behavioral economists. I am fortunate to be part of this community and to help grow the tradition.