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 --