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  • Do you remember the story

  • of Odysseus and the Sirens

  • from high school or junior high school?

  • There was this hero, Odysseus, who's heading back home

  • after the Trojan War.

  • And he's standing on the deck of his ship,

  • he's talking to his first mate,

  • and he's saying,

  • "Tomorrow, we will sail past those rocks,

  • and on those rocks sit some beautiful women

  • called Sirens.

  • And these women sing an enchanting song,

  • a song so alluring

  • that all sailors who hear it

  • crash into the rocks and die."

  • Now you would expect, given that,

  • that they would choose an alternate route around the Sirens,

  • but instead Odysseus says,

  • "I want to hear that song.

  • And so what I'm going to do

  • is I'm going to pour wax in the ears

  • of you and all the men --

  • stay with me --

  • so that you can't hear the song,

  • and then I'm going to have you tie me to the mast

  • so that I can listen

  • and we can all sail by unaffected."

  • So this is a captain

  • putting the life of every single person on the ship at risk

  • so that he can hear a song.

  • And I'd like to think if this was the case,

  • they probably would have rehearsed it a few times.

  • Odysseus would have said, "Okay, let's do a dry run.

  • You tie me to the mast, and I'm going to beg and plead.

  • And no matter what I say, you cannot untie me from the mast.

  • All right, so tie me to the mast."

  • And the first mate takes a rope

  • and ties Odysseus to the mast in a nice knot.

  • And Odysseus does his best job playacting

  • and says, "Untie me. Untie me.

  • I want to hear that song. Untie me."

  • And the first mate wisely resists

  • and doesn't untie Odysseus.

  • And then Odysseus says, "I see that you can get it.

  • All right, untie me now and we'll get some dinner."

  • And the first mate hesitates.

  • He's like, "Is this still the rehearsal,

  • or should I untie him?"

  • And the first mate thinks,

  • "Well, I guess at some point the rehearsal has to end."

  • So he unties Odysseus, and Odysseus flips out.

  • He's like, "You idiot. You moron.

  • If you do that tomorrow, I'll be dead, you'll be dead,

  • every single one of the men will be dead.

  • Now just don't untie me no matter what."

  • He throws the first mate to the ground.

  • This repeats itself through the night --

  • rehearsal, tying to the mast,

  • conning his way out of it,

  • beating the poor first mate up mercilessly.

  • Hilarity ensues.

  • Tying yourself to a mast

  • is perhaps the oldest written example

  • of what psychologists call a commitment device.

  • A commitment device is a decision that you make

  • with a cool head to bind yourself

  • so that you don't do something regrettable

  • when you have a hot head.

  • Because there's two heads inside one person

  • when you think about it.

  • Scholars have long invoked this metaphor of two selves

  • when it comes to questions of temptation.

  • There is first, the present self.

  • This is like Odysseus when he's hearing the song.

  • He just wants to get to the front row.

  • He just thinks about the here and now and the immediate gratification.

  • But then there's this other self, the future self.

  • This is Odysseus as an old man

  • who wants nothing more than to retire in a sunny villa

  • with his wife Penelope

  • outside of Ithaca -- the other one.

  • So why do we need commitment devices?

  • Well resisting temptation is hard,

  • as the 19th century English economist

  • Nassau William Senior said,

  • "To abstain from the enjoyment which is in our power,

  • or to seek distant rather than immediate results,

  • are among the most painful exertions

  • of the human will."

  • If you set goals for yourself and you're like a lot of other people,

  • you probably realize

  • it's not that your goals are physically impossible

  • that's keeping you from achieving them,

  • it's that you lack the self-discipline to stick to them.

  • It's physically possible to lose weight.

  • It's physically possible to exercise more.

  • But resisting temptation

  • is hard.

  • The other reason

  • that it's difficult to resist temptation

  • is because it's an unequal battle

  • between the present self and the future self.

  • I mean, let's face it, the present self is present.

  • It's in control. It's in power right now.

  • It has these strong, heroic arms

  • that can lift doughnuts into your mouth.

  • And the future self is not even around.

  • It's off in the future. It's weak.

  • It doesn't even have a lawyer present.

  • There's nobody to stick up for the future self.

  • And so the present self can trounce

  • all over its dreams.

  • So there's this battle between the two selves that's being fought,

  • and we need commitment devices

  • to level the playing field between the two.

  • Now I'm a big fan of commitment devices actually.

  • Tying yourself to the mast is the oldest one, but there are other ones

  • such as locking a credit card away with a key

  • or not bringing junk food into the house so you won't eat it

  • or unplugging your Internet connection

  • so you can use your computer.

  • I was creating commitment devices of my own

  • long before I knew what they were.

  • So when I was a starving post-doc

  • at Columbia University,

  • I was deep in a publish-or-perish phase of my career.

  • I had to write five pages a day

  • towards papers

  • or I would have to give up five dollars.

  • And when you try to execute these commitment devices,

  • you realize the devil is really in the details.

  • Because it's not that easy to get rid of five dollars.

  • I mean, you can't burn it; that's illegal.

  • And I thought, well I could give it to a charity

  • or give it to my wife or something like that.

  • But then I thought, oh, I'm sending myself mixed messages.

  • Because not writing is bad, but giving to charity is good.

  • So then I would kind of justify not writing

  • by giving a gift.

  • And then I kind of flipped that around and thought,

  • well I could give it to the neo-Nazis.

  • But then I was like, that's more bad than writing is good,

  • and so that wouldn't work.

  • So ultimately, I just decided

  • I would leave it in an envelope on the subway.

  • Sometimes a good person would find it,

  • sometimes a bad person would find it.

  • On average, it was just a completely pointless exchange of money

  • that I would regret.

  • (Laughter)

  • Such it is with commitment devices.

  • But despite my like for them,

  • there's two nagging concerns

  • that I've always had about commitment devices,

  • and you might feel this if you use them yourself.

  • So the first is,

  • when you've got one of these devices going,

  • such as this contract to write everyday or pay,

  • it's just a constant reminder

  • that you have no self-control.

  • You're just telling yourself, "Without you, commitment device,

  • I am nothing, I have no self-discipline."

  • And then when you're ever in a situation

  • where you don't have a commitment device in place --

  • like, "Oh my God, that person's offering me a doughnut,

  • and I have no defense mechanism," --

  • you just eat it.

  • So I don't like the way that they take the power away from you.

  • I think self-discipline is something, it's like a muscle.

  • The more you exercise it, the stronger it gets.

  • The other problem with commitment devices

  • is that you can always weasel your way out of them.

  • You say, "Well, of course I can't write today,

  • because I'm giving a TEDTalk and I have five media interviews,

  • and then I'm going to a cocktail party and then I'll be drunk after that.

  • And so there's no way that this is going to work."

  • So in effect, you are like Odysseus and the first mate

  • in one person.

  • You're putting yourself, you're binding yourself,

  • and you're weaseling your way out of it,

  • and then you're beating yourself up afterwards.

  • So I've been working

  • for about a decade now

  • on finding other ways

  • to change people's relationship to the future self

  • without using commitment devices.

  • In particular, I'm interested in the relationship

  • to the future financial self.

  • And this is a timely issue.

  • I'm talking about the topic of saving.

  • Now saving is a classic two selves problem.

  • The present self does not want to save at all.

  • It wants to consume.

  • Whereas the future self wants the present self to save.

  • So this is a timely problem.

  • We look at the savings rate

  • and it has been declining since the 1950s.

  • At the same time, the Retirement Risk Index,

  • the chance of not being able to meet your needs in retirement,

  • has been increasing.

  • And we're at a situation now

  • where for every three baby boomers,

  • the McKinsey Global Institute predicts

  • that two will not be able to meet their pre-retirement needs

  • while they're in retirement.

  • So what can we do about this?

  • There's a philosopher, Derek Parfit,

  • who said some words that were inspiring to my coauthors and I.

  • He said that, "We might neglect our future selves

  • because of some failure of belief or imagination."

  • That is to say,

  • we somehow might not believe that we're going to get old,

  • or we might not be able to imagine

  • that we're going to get old some day.

  • On the one hand, it sounds ridiculous.

  • Of course, we know that we're going to get old.

  • But aren't there things that we believe and don't believe at the same time?

  • So my coauthors and I have used computers,

  • the greatest tool of our time,

  • to assist people's imagination

  • and help them imagine what it might be like

  • to go into the future.

  • And I'll show you some of these tools right here.

  • The first is called the distribution builder.

  • It shows people what the future might be like

  • by showing them a hundred equally probable outcomes

  • that might be obtained in the future.

  • Each outcome is shown by one of these markers,

  • and each sits on a row

  • that represents a level of wealth and retirement.

  • Being up at the top

  • means that you're enjoying a high income in retirement.

  • Being down at the bottom

  • means that you're struggling to make ends meet.

  • When you make an investment,

  • what you're really saying is, "I accept

  • that any one of these 100 things

  • could happen to me and determine my wealth."

  • Now you can try to move your outcomes around.

  • You can try to manipulate your fate, like this person is doing,

  • but it costs you something to do it.

  • It means that you have to save more today.

  • Once you find an investment that you're happy with,

  • what people do is they click "done"

  • and the markers begin to disappear,

  • slowly, one by one.

  • It simulates what it is like to invest in something

  • and to watch that investment pan out.

  • At the end, there will only be one marker left standing

  • and it will determine our wealth in retirement.

  • Yes, this person retired

  • at 150 percent of their working income in retirement.

  • They're making more money while retired

  • than they were making while they were working.

  • If you're like most people,

  • just seeing that gave you a small sense of elation and joy --