New Year Resolutions: How to keep 'em for good!

Time passes by quickly and rapidly, and it's another new year again. It's the time when (almost) everyone starts worrying about new year resolutions: some of us might be thinking of reducing waistline, others might plan to kick their smoking habit (actually, many do it and they do it very often), some might want to save more money this year, others would like to become a better human being (usually in case they could not come up with any concrete new year resolutions)! All said and done, majority of us may admit that our new year resolutions fizzle out by the end of January, or may be in many instances, by the end of the first week of the year itself. This is a problem we face almost every year (by the way, why bother about new year resolution, it happens with almost all goals we set, for that matter). So, let's talk about how to deal with this problem of ours: How to stick to our new year resolutions?

Well, I am not gonna give you any short-cuts to help you make and subsequently stick to your new year goals. Rather, in this blog post, I try to summarize some five simple ideas that I might use to make sure that I don't deviate from my new year resolutions, if I make any.

Image source: Getty Images

First and foremost, following what all preachers suggest, I would also go for making a plan, or say list of goals. The list should not be a virtual one, but in black-and-white. Writing down my goals and plans implies that I commit myself to those goals. And it is scientifically proven that committing yourself firmly by explicitly writing down your intentions increases preventing screening rate. In an earlier post, I reviewed an article published in Nature, that talks about how predetermined shopping list helps people stick to a healthy shopping habit. In a similar fashion, when we have our resolutions written, the chances of getting it through are higher than otherwise. So, let's write down our resolutions, right now (only if you have any)!

Of course, one important aspect of setting goals or making new year resolutions is: it should be specific and achievable. We all know our strengths and weaknesses, as well as how much we can take on. On our list should include the most important things that we want to accomplish this year. Be precise; don't generalize. For example, if I want to loose weight, I cannot vaguely write my goal as "To loose weight". It would be more effective if I plan as to how much weight I want to loose in how much time frame and in what ways such as jogging 2 extra kilometers or hitting the gym thrice a week, and so on. Also, it should be within our capabilities. I cannot set a goal of saving half of my salary (if presently I end up borrowing from friends and relatives to survive). Be rational in setting up goals.

Thirdly, reward yourself for avoiding any temptation while sticking on to the task. This is something what noted psychologist and behavioral economist Duke Professor Dan Ariely calls reward substitution in his book The Upside of Irrationality. It may also be referred to in the context of bundling of temptations. What it essentially means is we tend to motivate ourselves to do some otherwise difficult-to-take-up tasks by way of rewarding ourselves. For example, I love to listen to music, but due to some reasons or the other, I didn't get to enjoy music very often. Also, like most of lazy asses, I also prefer resting on the couch to jogging. To overcome this problem of duality, I adopted this strategy of bundling the temptations of listening to music with hitting the road for jogging. Now I can enjoy my favorite music for at least forty five minutes straight while I jog in the evening. Well, this strategy serves the purpose for most of our otherwise-difficult-to-start tasks, and that is for sure. The once catch is that you need to look for the right temptation.

Image source: Getty Images

Like rewarding ourselves keeps us on track towards working for our goals, punishment does do its bit. This punishment need not be literal one. As Richard Wiseman from University of Bristol suggests, it is completely natural to revert back to our old habits from time to time, hence treat any failure as a temporary setback, but don't make them as an excuse to give up altogether. At the same time, think of some punishment, even virtual, for your every failure. This fear, even small, of punishment might keep you focused on your goals. As some behavioral economists founded a website called stickK.com, where you can link your bank account and set your goals. You can arrange to forfeit money if you don't achieve your goals. This money can go to a charity you hate most, or to your friend's account, and so forth. This strategy of financial (dis-)incentives can make your plan effectively on track. You can improvise this strategy by giving a sum of money to your friend/spouse saying that if you fail to achieve a certain goal within a given time frame, (s)he can keep the money that you gave, thereby making sure you still work for your goals.

Finally, find someone who can kinda mentor you through the odds of achieving the goals. This becomes more important if the goal requires some specific pedigree. In an article published in the Annals of Internal Medicine, it was found that achieving goals become easier with the help of a mentor. So, seek social support to achieve your goals. Richard Wiseman also suggests that we should share our goals with our friends and family. By doing so, we feel the fear of failure and consequently working more sincerely for our goals, but at the same time, it gives us motivation in terms of eliciting support from them in case we are able to achieve our goals. Another reward... huh!

These are some of the ideas that I feel might keep us stick to our new year goals. Well, obviously there could be lot more, and you can find articles written on this subject here, here, here, and here.

If you haven't happened to chalk out your new year resolutions yet, fearing that your last year's new year resolutions got burst right after you overcame the hangover of new year party, then it's time to write down and share your new new year resolutions. Cheers!

[Review] Nudge Yourself with a Pre-committed Shopping List and Stay Healthier

Behavioral economists have for long been studying about how to exploit people's behavioral tendencies to nudge them take such decisions which are in best of their interest, even if not in short term, definitely in long term. Health economics is one of such areas that researchers in behavioral economics are exploring in terms of practically relevant issues with great curiosity. I recently happened to read a paper titled "The cost-effectiveness of shopping to a predetermined grocery list to reduce overweight and obesity" authored by Nicole Au, G. Marsden, D. Mortimer, and P. K. Lorgelly, published in Nature's Nutrition & Diabetes journal. In this post, I am reviewing the same article with my personal observations and comments. Hope you find it interesting to read.

The study examines whether pre-commitment strategies such as shopping according to a shopping/grocery list (prepared in advance) is likely to be cost-effective and result in benefits such as facilitating healthier diets, weight loss, and ultimately better health among those who are over-weighted and suffering from obesity. The issue has been a serious one especially among the urban population irrespective of geographical boundaries, and the researchers at the Centre for Health Economics at Monash University, Melbourne (Australia) have investigated the issue from the perspective of behavioral economics which seeks to answer why and how people behave in a certain way and how their behavior can be modeled using their own behavioral tendencies and habits as nudge. These nudging strategies can be used to help people make choices that are healthier and more beneficial to their lifestyle.

The researchers say, "And the good thing is some of these behavioral economic strategies can often be carried out at very low costs. Encouraging these strategies in the community could also be a cost-effective policy option for the governments."

Image source: bbc.co.uk

When we commit to a shopping list (prepared in advance) to buy only the stuff we actually need, it help us avoid the temptations of purchasing unhealthy food items, apart from spending money on (sort of) unnecessary purchases. The experimental evidence suggests that such habits lead the individual bring out meaningful impact on weight loss and long-term health, particularly among overweight and obese individuals.

The authors say that the advance planning of shopping list is a really cost-effective tool to lose weight when compared to the alternative of 'doing nothing', and moreover it does improve quality of life, both in terms of irrational habits leading to unhealthier decisions and unwarranted monetary loss.

Dr. Nicole Au also adds that diet is just one side of energy equation and that "there is a great potential for behavioral economic strategies to improve physical activity as well as diet, and future work is needed to investigate whether such strategies are cost-effective."

It is unarguably acceptable proposition that pre-commitment strategies can be effective interventions for facilitating healthier diets and also for promoting weight loss among overweight and obese individuals.  However, the issue whether the incremental weight loss arising from shopping to a pre-commitment intervention tool is small yet significant. We all may agree that the long-term effects of such decision habits are definitely significantly large in various contexts, including health and financial aspects.

Image source: Literacy Revelation (Blog)

According to the study, a pre-commitment strategy to alter the home food environment is a cost-effective means for maintaining healthier life style. For instance, in Indian context, people tend to drop in to shopping malls and superstores without any pre-commitment intervention tool (i.e. shopping/grocery list) and end up buying unnecessary food items (many time other stuff too that they later regret buying of)  involving financial implications and health implications (just a little later when they will have to consume those unhealthy purchases in order to derive utility from the money they spent on buying those things).

It is very much oblivious that many consumers understand all too well of those unhealthier purchases but they suffer from impulsiveness (which the marketers prefer to to call strategies to generate impulsive buying) and poor self-control that they behave in a manner that depart from a rational (or even, quasi rational) decisions that are in their good intentions.

Okay! Enough of Gyan! Now I better go prepare my shopping list for this weekend. You too think about the same or else you may continue reading some more blog posts of mine. ;)

Happy Rational Learning!

The study, recently published in Nutrition and Diabetes, looked at whether pre-commitment strategies such as shopping according to a grocery list were likely to be cost-effective in facilitating healthier diets, weight loss, and ultimately better health among overweight and obese individuals. - See more at: http://www.thefiscaltimes.com/Articles/2013/09/12/Hidden-Power-Grocery-List#sthash.8bozXie7.dpuf

The study, recently published in Nutrition and Diabetes, looked at whether pre-commitment strategies such as shopping according to a grocery list were likely to be cost-effective in facilitating healthier diets, weight loss, and ultimately better health among overweight and obese individuals. - See more at: http://www.thefiscaltimes.com/Articles/2013/09/12/Hidden-Power-Grocery-List#sthash.8bozXie7.dpuf

The study, recently published in Nutrition and Diabetes, looked at whether pre-commitment strategies such as shopping according to a grocery list were likely to be cost-effective in facilitating healthier diets, weight loss, and ultimately better health among overweight and obese individuals. - See more at: http://www.thefiscaltimes.com/Articles/2013/09/12/Hidden-Power-Grocery-List#sthash.8bozXie7.dpuf

[Interesting Readings] Dr. Raghuram Rajan Takes Charge of RBI, India's Central Bank

When Indian economy is struggling to achieve a growth of 4.5%-5% for this fiscal year (please note that it was 8% to 9% a few years ago), its foreign currency reserve (predominantly measured in terms of USD) is just enough to manage its foreign trades for about six months or so ($247, 402 Million as on 30 August, 2013; Source: Database on Indian Economy, RBI), its domestic currency Rupee (₹) is depreciating against US Dollar, including other hard currencies such as Pound Sterling and Euro, very swiftly (Rs.66.04/US$ as on 5 September, 2013), and foreign capital flows into its stock market is staggering (FIIs have been net sellers for past few weeks in a row, however, at the time of writing this article, some positive signs were observed, FIIs being net buyers with ₹800.71 Crore as on 6 September, 2013; I'll come to this point a li'l later), a University of Chicago's Booth School of Business Professor Dr. Raghuram Rajan has taken charge as the new Governor of the Reserve Bank of India (RBI), India's central bank. There has been positive news and reactions from all the corners about the suitability of the IIT Delhi-IIM Ahmedabad-MIT educated economist Dr. Rajan for this post in these tough times that India is witnessing. Dr. Rajan holds a rockstar appeal and has attracted lot of media attraction. Through this post of mine, I am trying to summarize what has been written about him across media reports (of course the list of articles/coverage is limited to what I could get access to; there could be several reports that I might have missed meanwhile).

Image courtesy: TheHinduBusinessLine.com

Dr. Rajan, who is the Eric J. Gleacher Distinguished Service Professor of Finance at the University of Chicago's Booth School of Business has been a proven track record as an economist. NDTV Profit crisply talks about 10 things to know about the new RBI Governor. It says about the economist-turned-banker that:

"This will be Mr. (sic.) Rajan's second assignment in the country. He was appointed the Chief Economic Adviser to the Finance Ministry last year... [He] was the Chief Economic Counselor and Director of Research (simply put, the Chief Economist) at the International Monetary Fund from September 2003 till January 2007."

His 2005 paper titled "Has Financial Development Made the World Riskier?" presented at the Fed conference at Jackson Hole, Wyoming, had attracted ire of the equals of (Alen) Greenspan and (Lawrence) Summers. This paper also used as a base for the 2010-documentary titled Inside Job which shows the Global Financial Meltdown. In his book, Fault Lines: How Hidden Fractures Still Threaten the World Economy, he talks about the hard choices that all economies must make to ensure greater stability and lasting prosperity. With respect to India's recent growth stories and successes, he argues that the country must act decisively to maintain its people-oriented growth. This unique development path, he outlines, will be a compelling role model for developing economies - a triumph of rapid growth in a flourishing democracy.

Well, on the day when the appointment of Dr. Rajan as next RBI Governor was announced, the Economic Times publishes the cover story with the headline "Rajan on a High, Re at a Low", as Rupee was trading against US Dollar at an all-time low level of 61.77. Dr. Rajan has the potential to transform India's fortune, Simon Flint writes in the Economic Times' Opinion  piece. There is no doubt about it, but wait a minute!

There was euphoria all around the proposed appointment of Dr. Rajan, when Swaminathan S. A. Iyer wrote in his column in the Economic Times, "...by trying to do so many things at once (working on inflation, exchange rates, and growth), RBI risks doing none of them well... Will Rajan put this vision into practice as RBI Governor? Not a chance. Indian politics will not permit an inflation-only focus for RBI. After his spell in the finance ministry (as the Chief Economic Adviser), Rajan must be well aware of the limits to the independence of any RBI Governor." Quite true...huh!

Adding to the issue is an opinion by Vivek Kaul that Dr. Rajan is not an instant coffee. He also cautions in First Post article on why Raghuram Rajan is not Amitabh Bacchan whose presence will solve all the problem, precisely there is nothing like "Aaya Toofan, Bhaaga Shaitaan".

On the day of taking charge, the good senses prevail across the market, economy and among the people. Financial Times reports the story as Rajan Enters RBI with a Big Bang, and mentions that, "A big package of financial sector reforms has been launched by India's high-profile new central bank chief as the country battles a currency crisis and slowdown in economic growth... He won a reputation as an economist for having warned of the financial crisis that precipitated the global crisis in 2008, but cautioned this week that there was no magic wand for India."

In the story titled India's New Central Bank Governor Seeks to Calm Investors, the Wall Street Journal writes, "India's new central bank governor announced fresh steps to stabilize the country's beleaguered currency and outlined an ambitious plan to shake up the country's conservative banking system... [He] also sought to reassure investors unnerved by the turmoil in local markets by emphasizing the importance of transparency and consistency in the central bank's actions."

Image courtesy: FinancialExpress.com

The speech (full text of which can be accessed here, here, and here) made by Dr. Rajan on the first day of his appointment does magic to the market sentiments, as the markets showed some signs of recovery, even for short time. Sensex on that day gave a 370-point salute to the new RBI chief. As on 6 September, Rupee comes back at ~65 per US Dollar and the Sensex gained over 1,000 points in last three trading sessions.

Also read: Seven Steps by Rajan that Propelled Sensex above 19000 and Raghuram Rajan's rupee gamble may help lure $30 billion.

In a story, NDTV Profit explains 10 reasons why markets are cheering Raghuram Rajan. To quote from the story, "...Analysts said they had expected the 50-year-old academic and celebrated economist to do his homework, but had not expected him to detail so comprehensive a plan in his first statement. The Reserve Bank of India under Raghuram Rajan has made an impressive start, global brokerage Nomura said."

One of the most interesting stories on Dr. Rajan's appointment as RBI governor is the one by The Economist. The story titled Into The Pressure Cooker, questions his credibility as a banker since he is not a specialist in monetary policy, has worked more on free-market persuasion, including worries about unintended consequences of regulation. As the article goes on to talk, "...[He] knows the ultimate solution for the droopy rupee is government action to address a weak manufacturing base, dodgy fiscal policy and sky-high gold-imports."

The WSJ piece also noted that Dr. Rajan will have to face issues with respect to the RBI's independence. Take the new banking licence issue for instance. Since the government wants the RBI to give bank licence to well-connected tycoons; he, sensibly, opposes this and wants more small banks to be created. Rightly put, India is lucky that Mr. Rajan is in the RBI job. He will be bulwark against populism and an advocate of liberalization. But his hardest task is to avoid being labelled a saviour. The country's economic future is largely in the hands of its government, not its central bank. When a minister next calls, he should remind them of that.

So far so good. All eyes are on the new RBI's governor. What would he take his next call about? As FT story says "[he] will make his first substantial statement on monetary policies in two weeks (on 20 September 2013, when mid-quarter monetary policy review is due.) Let's wait and watch! Meanwhile, let us wish him good luck as Rajan has the pluck, he also needs some luck...