Leveraging Fresh Start Moments for Consequential Behavior Change

Key Quotes

"what we found in our research is that when there is what we perceive as a chapter break in our life story and and we really actually see our lives as if we're characters in a novel with these chapters if you think about you know the college years the years working at company x the years living in boston whatever it is we put these brackets around time and we don't experience it continuously as a result and whenever there is a chapter break and we enter a new era that feels like a new beginning to us we're more motivated to pursue our goals we feel disconnected from our past self we can say that was the old me this is the new me the new me will be different and those chapter breaks arise at predictable moments on the calendar as well as at times when we make a meaningful change like a move to a new job or becoming a parent"

Katy Milkman explains that people are more motivated to pursue goals when they perceive a "chapter break" in their life story, which creates a sense of a new beginning. This psychological phenomenon, where individuals see their lives as a narrative with distinct sections, makes them feel disconnected from their past selves and more inclined to embrace change. Milkman highlights that these chapter breaks occur at predictable times, such as New Year's, but also during significant life events like starting a new job or becoming a parent.

"and so from the economics perspective there are many things that we have in our lives whether it be our retirement savings whether it be you know the investments that we want to make whatever it is that come up over the course of the year and probably align with some of these dates where it's probably a good thing to kind of do a rethink on some aspect of our financial life absolutely so um there are many decisions that we make where it would be great if we were more focused on the long run in fact there's a very well known behavioral bias called present bias that leads us to focus too much on now and not enough on uh our long term outcomes and it leads to all sorts of problems for us like undersaving for retirement it contributes to that i should say policy decisions contribute too but it contributes to undersaving for retirement"

Katy Milkman connects the concept of fresh starts to financial decision-making, suggesting that these moments align with opportunities to re-evaluate financial habits. She identifies "present bias," a well-known behavioral bias, as a key reason why individuals often prioritize immediate gratification over long-term financial well-being, leading to issues like undersaving for retirement. Milkman implies that fresh start moments can provide a temporary boost in motivation to counteract this bias.

"the fresh start effect though gives us at least temporarily a little extra motivation to focus on the future and our future goals and what we want to do with that extra motivation is ideally um put in front of people and put in front of ourselves opportunities to make small changes in the moment that will have big long term effects and one of those would be for instance saving um for retirement starting to set up um automatic deductions to a 401k for instance if you work for an employer that offers one of these tax advantage savings plans"

Katy Milkman proposes that the "fresh start effect" provides a temporary increase in motivation to focus on future goals. She suggests leveraging this motivation by implementing small changes that can lead to significant long-term benefits, such as setting up automatic retirement savings deductions into a 401(k) plan. Milkman emphasizes that these opportunities should be presented to individuals when they are most receptive to making such changes.

"so you want to seize that feeling that you have at the beginning of a new year that this is a good time to make a change and try to think of what's something consequential i can change once that will have big benefits savings decisions are often such a choice you can think about um you know signing up for life insurance if that would really be a good decision for your family you could think about you know if there's an important screening test that could have a big impact on in the long run whether it's you know a colonoscopy i know that's a weird thing to talk about in new year's but yeah so they're important or maybe even putting off yeah some of these like big one time you don't have to do it that frequently but if you use that motivation to make a big one time change that could be particularly helpful"

Katy Milkman advises individuals to capitalize on the motivation experienced during fresh start moments, like the beginning of a new year, to implement consequential, one-time changes with significant long-term benefits. She provides examples such as signing up for life insurance or scheduling important health screenings like colonoscopies. Milkman suggests that using this temporary motivation for a substantial, infrequent change can be particularly effective.

"so i would be remiss if i didn't mention the the buzzword that's in every hallway at the wharton school which is ai right so we're thinking a lot about how llms can be supportive in this journey how can they best be harnessed to help people achieve their goals like what are the what are the ways you know that we can design llms that help people set up plans that help people follow through on all the best behavioral science advice that that we know can create greater success rates when it comes to goal pursuit"

Katy Milkman highlights artificial intelligence (AI), specifically large language models (LLMs), as a significant area of current research interest at the Wharton School. She explains that her team is exploring how LLMs can be utilized to support individuals in achieving their goals. Milkman suggests designing LLMs to assist with planning and reinforce behavioral science advice, thereby increasing the likelihood of success in goal pursuit.