Carrots and Sticks: Takeaways and Key Points Book Summary

Does using consequences always work? Do imposed fines, for example, always deter bad behavior? Not really. Take littering for example, despite city governments handing out fines to people who are caught littering, people still throw their trash in the street. So, if consequences don’t always work, what does?

The problem is that us humans will forgo long-term benefits to get immediate rewards but by understanding human psychology and how rewards and punishments (aka carrots and sticks) truly motivate people, we can fix our bad habits once and for all whether you’re reading this as an individual trying to kick smoking or as a person in authority trying to get people to do as you say. The trick is in selecting the right stick (punishment) and in making commitment contracts with yourself.

In his book “Carrots and Sticks”, the economist and lawyer Ian Ayres shows how we can unlock the power of incentives to get things done and become more effective. Read on to learn how you can swap out unhealthy habits with rewards, penalties, and accountability.

Key Takeaways from Carrots and Sticks by Ian Ayres:

Takeaway #1: Instant Vs. Delayed Gratification

As humans, we prefer small rewards that are immediate over larger long-term rewards. You’ll know this to be true if you think about the times you’ve pigged out on fattening foods when you were meant to be watching your weight.. Smoking is another bad habit that has many people reaching for the cigarette - the instant reward - rather than looking to the larger long-term reward of better health by saying no to that nicotine stick. Our need for instant gratification is why unhealthy habits are so difficult to break.

Research shows us that we are more likely to go after smaller certain rewards over larger less certain ones, especially when making decisions that affect the near future. For example, when people taking part in a study were asked to decide if they would choose to take 1 apple the same day or wait until the next day and get 2 apples, most people opted for instant gratification, taking 1 apple the same day. This goes to show that when we are faced with a smaller immediate reward we will often forget about the larger (often better!) reward that awaits us in the future because we’re uncertain how likely we are to get it - We think that it’s better to have something now than wait and possibly never get anything.

Takeaway #2: Our Self-Control Is Easily Depleted

Our self-control, otherwise known as our willpower, is weakened each time we abstain from temptation. One research study showed how people gave up much more quickly on a difficult puzzle after they’d already been tempted by candy before the test started. The same people were tempted with candy after giving up on the puzzle and again, had a much harder time saying no since their self-discipline levels were already depleted. Therefore, we must keep willpower in reserve for when we will need it the most.

Remember this when you try to change too much too fast (i.e setting yourself multiple 30-day challenges instead of focusing on 1). If you try to use your willpower to change too many things at once (for example, lose weight, quit smoking, exercise daily) you won’t have enough self-control to achieve everything and are setting yourself up for potential failure however, it is possible to improve your self-control by exercising it…

Takeaway #3: Why Sticks Work Better Than Carrots

You know the saying about using a carrot to entice a donkey to keep working and a stick to punish it, well carrots (rewards) and sticks (punishments) work for humans too but the strange thing is that though both rewards and punishments can motivate people, punishments work better at getting people to put their long-term goal before their short-term satisfaction.

Because we dislike losing more than we hate winning, fines scare people into complying more than rebates motivate them hence why the government dishes out more fines than it does rebates. Punishments also have the advantage of not costing anything - think about punishing versus rewarding your child, a punishment might be taking away their games console for a certain amount of time which costs the parent nothing, but a reward might be a new game. The government knows this too hence why it fines people for lighting up in public rather than rewarding people for not smoking.

As a rule of thumb, we humans dislike losing something much more than we enjoy gaining something. Take money for example, people not investing for retirement is a common problem because people consider themselves to be losing money each month rather than gaining money for their future. Economist Richard Thaler recognized this problem in people and came up with the ‘Save More Tomorrow’ solution which gets people to put the extra money they receive when given a pay rise away for retirement rather than the money they already receive in the bank each month. This is because we don’t feel the same loss when we are ‘spending’ something that we are not already acclimatized to having.

Takeaway #4: Bigger Sticks Are Needed

A tiny stick aka a tiny punishment isn’t daunting enough to deter people hence governments needing big punishments that make people think twice about law-breaking such as a $1,000 fine or a prison sentence. Think about it, if the fine for dropping litter was $10 you might take your chances as it’s a sum that most people can afford to lose but having to pay up $1,000 is on a whole different level.

Similarly, a study was carried out on parents who were late picking their kids up from kindergarten, they were fined $3 each time they were late but rather than the fine being effective in making parents show up on time, it had the opposite effect with parents no longer feeling bad about showing up late so long as they paid the fine. Had the fine been sufficient enough, set at a price point that hurt i.e $300, it’s safe to say that the majority of parents would have been sure to arrive on time to collect their kids!

It’s not just the size of the fine that makes it effective but also how the money is used - Think about it, if you were fined for speeding but all of the money went to help a good cause you wouldn’t be inclined to stop speeding. If however, the money went to a department or organization that was already cash-rich and that you didn’t agree with funding, you would be more likely to stick to the speed limit simply so that your hard earned cash didn’t go to that organization you so despise.

Takeaway #5: Multiple Small Sticks Are Less Effective

We face many small temptations throughout the day whether we’re trying to lose weight, quit smoking, or be a law-abiding citizen but it’s no good handing out small punishments for each small temptation that we’ve given in to, the punishment has to be big enough to outweigh the temptation in the first place.

Take smoking for example, the government imposed cigarette taxes in an effort to stop people smoking but the added cost to smokers hasn’t been enough to make people quit - It’s just not an effective punishment for smoking. It has been suggested that smokers should have to apply for a smoking permit costing $5,000 which allows them to buy/smoke 2,500 cigarettes - This ‘big stick’ would probably be enough of a deterrent to make most people quit instantly!

Takeaway #6: Make a Commitment Contract and Get a Referee

“Carrots and sticks” can curb our bad behavior to a certain extent but to be truly effective in overcoming your addiction to getting an instant reward you want to create a commitment contract, which is simply a formal agreement you make with yourself to quit your undesirable behavior. By now you’ll realize that saying ‘I want to stop smoking as I know it’s terrible for my health’ is quite useless as you’ll crumble when under pressure so you have to set yourself severe punishments for not following through.

Furthermore, another effective strategy is to subject yourself to a little public exposure as friends and colleagues' views of us will often drive our behavior and no one likes to be ridiculed. If your goal is to lose weight, you might set yourself the severe punishment of posting a photo of yourself in a swimsuit on social media if you don’t meet your target weight in a certain time.

Holding yourself accountable is another no-go as you’ll talk yourself out of the punishment. Find yourself an impartial “referee” to keep you accountable, someone who won’t be inclined to let you off the hook because they know how hard you tried or what a difficult week you had!

Takeaway #7: Setting Long-Term Commitment Contracts

Permanent, drastic change does not come quickly nor easily therefore, to achieve permanent change you may want to be less extreme with your goals — that is, unless you hold a strong conviction about them. A goal of losing 10% of your current weight, for example, may be too much, causing you to yo-yo diet or fail completely, therefore setting yourself the target of losing 5% of your weight and keeping it off may be more effective.

A long-term commitment contract is also required for the long-term goal - It’s not enough to have 1 contract based solely on losing X% of your weight within a certain time period, you also need a contract about keeping the weight off. Allow yourself a safe weight range and commit to weighing yourself every week or month but set a punishment of paying a $500 fine to an organization you strongly disagree with, for example, if you exceed a certain weight so that you’re accountable for keeping the weight off once you’ve lost it.

It’s only by making long-term commitment contracts like this that you’ll be able to not only reach your goals, but stick to them too.

* Key Sources: Amazon, Carrots and Sticks: Summary Review

***

expert_advice

On average, 90% of what we read is forgotten within the first hours after reading... Which is why it’s so important to apply what you read.

Click Below to get a free workbook of one of my top recommended books of all times, filled with in-depth insights, action points and self exploration exercises.

***

Get my Start With Why Workbook For Free
Apply What You Read

expert_advice
On average, 90% of what we read is forgotten within the first hours after reading... Which is why it’s so important to apply what you read.

Click Below to get a free workbook of one of my top recommended books of all times, filled with in-depth insights, action points and self exploration exercises.
Align With Your Why

Founder

Tal Gur is a location independent entrepreneur, author, and impact investor. After trading his daily grind for a life of his own daring design, he spent a decade pursuing 100 major life goals around the globe. His most recent book and bestseller, The Art of Fully Living - 1 Man, 10 Years, 100 Life Goals Around the World, has set the stage for his new mission: elevating society to its abundance potential.

 

Read The Art of Fully Living

There's no going back-once you embark on the journey you're meant to live, it's impossible to settle for anything less than your dreams.

Click here to learn more

This book just may change your life

Guess what? I wrote another book. It's a 500-page roadmap for living life on your own terms and it just might change your life.

Click here to learn more

Founder

Tal Gur is a location independent entrepreneur, author, and impact investor. After trading his daily grind for a life of his own daring design, he spent a decade pursuing 100 major life goals around the globe. His most recent book and bestseller, The Art of Fully Living - 1 Man, 10 Years, 100 Life Goals Around the World, has set the stage for his new mission: elevating society to its abundance potential.

How Abundant Are You? How Abundant
Are You?