At this point in the year, many of us find ourselves struggling to keep our New Year’s resolutions. In fact, more than a quarter of people break their resolutions by the end of the first week.
Why are New Year’s resolutions so hard to keep, and how can we increase our odds of success? The fundamental economic principle of marginal analysis can provide some answers.
Marginal Costs and Benefits
Most New Year’s resolutions are focused on overcoming long-standing habits: Eat healthier. Get more exercise. Quit smoking. Spend less. Save more. These types of lifestyle changes require regular and costly sacrifices in the present, but only offer payoffs that accumulate gradually over a long period of time.
Economists have long recognized that when human beings make choices, they are focused, not on the cumulative costs and benefits of a long-term decision, but instead on the additional costs and benefits of each incremental choice. This type of thinking is referred to as marginal analysis.
In the language of economics, keeping most New Year’s resolutions involves incurring a high marginal cost on a regular basis in exchange for a miniscule marginal benefit.
Exercising more frequently is a goal many people set at the beginning of each year. Even without considering the monetary cost of purchasing a gym membership or new workout gear, you need to exert a lot of effort up front in order to adhere to this resolution. An additional hour of cardio is physically taxing to anyone who is not accustomed to regular exercise, and its benefits to your health are barely observable. You won’t build endurance or lose weight right away; most of the physical benefits you receive from that hour of hard work will go largely unnoticed. It takes months of repeatedly making the “right” marginal choice before the benefits can be recognized.
Similarly, comparing marginal costs and marginal benefits can help us understand why quitting a bad habit, like smoking cigarettes, is such a challenge. To addicted smokers, one additional cigarette provides a lot of pleasure and satisfaction —it activates the dopamine receptors in their brains. And the cost of smoking one additional cigarette, both to their health and wallet, is negligible. People who try to quit smoking must give up the pleasure of smoking and instead incur the pain of dealing with cravings each time they make the marginal decision not to smoke.
The Power of Short-Term Feedback
If high marginal costs relative to marginal benefits prevent us from keeping our New Year’s resolutions, then finding ways to lower the marginal costs should raise our chances of success.
People can lower the cost of exercising by finding physical activities that are fun to them, such as dancing, hiking, or even hula hooping. They can lower the cost of eating healthier by avoiding temptation — keeping junk food out of the house, using grocery pick-up services to avoid impulse purchases, or using online resources to plan healthful meals.
More often than not, these efforts alone are not sufficient. To truly succeed with these long-term goals, we also need ways to increase the marginal benefits.
Insights from behavioral economics indicate that when it comes to increasing the odds that individuals will sufficiently constrain their behavior in order to accomplish a long-term goal, receiving regular feedback about their efforts is key. People are much more likely to continue to work hard when they receive positive affirmations that acknowledge their efforts. Similarly, negative feedback received when individuals slack off imposes a mental cost that many will actively try to avoid.
Entrepreneurs have long recognized the potential to generate value for consumers by providing goods and services tailored to helping people commit to long-term goals by providing this feedback. Weight Watchers and other types of support groups have been around for decades. The success of these programs can be attributed, at least in part, to the regular feedback participants receive.
More recently, there is a flood of new products and phone applications that allow you to track your progress and remind you to work out and log your meals. From Fitbits and Apple Watches to apps like MyFitnessPal and Noom, people who embark on the arduous journey of forming healthier habits have a feedback mechanism literally at their fingertips.
So before you give up on your New Year’s resolutions, it might be worth thinking about how to lower the marginal cost or increase the marginal benefit of sticking to your goal.