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TEDSalon NY2011

Barry Schwartz: Using our practical wisdom

Filmed:

In an intimate talk, Barry Schwartz dives into the question "How do we do the right thing?" With help from collaborator Kenneth Sharpe, he shares stories that illustrate the difference between following the rules and truly choosing wisely.

- Psychologist
Barry Schwartz studies the link between economics and psychology, offering startling insights into modern life. Lately, working with Ken Sharpe, he's studying wisdom. Full bio

The first thing I want to do is say thank you to all of you.
00:00
The second thing I want to do is introduce my co-author
00:03
and dear friend and co-teacher.
00:06
Ken and I have been working together
00:08
for almost 40 years.
00:10
That's Ken Sharpe over there.
00:12
(Applause)
00:14
So there is among many people --
00:16
certainly me and most of the people I talk to --
00:19
a kind of collective dissatisfaction
00:21
with the way things are working,
00:24
with the way our institutions run.
00:26
Our kids' teachers seem to be failing them.
00:29
Our doctors don't know who the hell we are,
00:33
and they don't have enough time for us.
00:36
We certainly can't trust the bankers,
00:38
and we certainly can't trust the brokers.
00:40
They almost brought the entire financial system down.
00:43
And even as we do our own work,
00:46
all too often,
00:49
we find ourselves having to choose
00:51
between doing what we think is the right thing
00:54
and doing the expected thing,
00:57
or the required thing,
00:59
or the profitable thing.
01:01
So everywhere we look,
01:03
pretty much across the board,
01:05
we worry that the people we depend on
01:07
don't really have our interests at heart.
01:10
Or if they do have our interests at heart,
01:14
we worry that they don't know us well enough
01:17
to figure out what they need to do
01:19
in order to allow us
01:21
to secure those interests.
01:23
They don't understand us.
01:25
They don't have the time to get to know us.
01:27
There are two kinds of responses
01:29
that we make
01:31
to this sort of general dissatisfaction.
01:33
If things aren't going right,
01:37
the first response is:
01:39
let's make more rules,
01:41
let's set up a set
01:43
of detailed procedures
01:45
to make sure that people will do the right thing.
01:47
Give teachers scripts
01:50
to follow in the classroom,
01:52
so even if they don't know what they're doing
01:54
and don't care about the welfare of our kids,
01:56
as long as they follow the scripts,
01:59
our kids will get educated.
02:01
Give judges a list of mandatory sentences
02:03
to impose for crimes,
02:06
so that you don't need to rely
02:08
on judges using their judgment.
02:10
Instead, all they have to do
02:13
is look up on the list
02:15
what kind of sentence goes with what kind of crime.
02:17
Impose limits
02:20
on what credit card companies can charge in interest
02:22
and on what they can charge in fees.
02:25
More and more rules
02:27
to protect us
02:29
against an indifferent, uncaring
02:31
set of institutions we have to deal with.
02:33
Or -- or maybe and --
02:36
in addition to rules,
02:38
let's see if we can come up
02:40
with some really clever incentives
02:42
so that, even if the people we deal with
02:44
don't particularly want to serve our interests,
02:46
it is in their interest
02:49
to serve our interest --
02:51
the magic incentives
02:53
that will get people to do the right thing
02:55
even out of pure selfishness.
02:57
So we offer teachers bonuses
03:00
if the kids they teach
03:02
score passing grades on these big test scores
03:04
that are used to evaluate
03:07
the quality of school systems.
03:09
Rules and incentives --
03:12
"sticks" and "carrots."
03:14
We passed a bunch of rules
03:16
to regulate the financial industry
03:18
in response to the recent collapse.
03:20
There's the Dodd-Frank Act,
03:22
there's the new Consumer Financial Protection Agency
03:24
that is temporarily being headed through the backdoor
03:27
by Elizabeth Warren.
03:30
Maybe these rules
03:32
will actually improve
03:34
the way these financial services companies behave.
03:37
We'll see.
03:41
In addition, we are struggling
03:43
to find some way to create incentives
03:45
for people in the financial services industry
03:48
that will have them more interested
03:51
in serving the long-term interests
03:53
even of their own companies,
03:55
rather than securing short-term profits.
03:57
So if we find just the right incentives,
04:01
they'll do the right thing -- as I said -- selfishly,
04:03
and if we come up with the right rules and regulations,
04:06
they won't drive us all over a cliff.
04:09
And Ken [Sharpe] and I certainly know
04:12
that you need to reign in the bankers.
04:15
If there is a lesson to be learned from the financial collapse
04:18
it is that.
04:21
But what we believe,
04:23
and what we argue in the book,
04:25
is that there is no set of rules,
04:27
no matter how detailed,
04:30
no matter how specific,
04:32
no matter how carefully monitored
04:34
and enforced,
04:36
there is no set of rules
04:38
that will get us what we need.
04:40
Why? Because bankers are smart people.
04:42
And, like water,
04:46
they will find cracks
04:48
in any set of rules.
04:50
You design a set of rules that will make sure
04:53
that the particular reason
04:56
why the financial system "almost-collapse"
04:58
can't happen again.
05:00
It is naive beyond description
05:02
to think that having blocked
05:04
this source of financial collapse,
05:06
you have blocked all possible sources of financial collapse.
05:08
So it's just a question of waiting for the next one
05:11
and then marveling at how we could have been so stupid
05:14
as not to protect ourselves against that.
05:17
What we desperately need,
05:20
beyond, or along with, better rules
05:22
and reasonably smart incentives,
05:25
is we need virtue.
05:27
We need character.
05:30
We need people who want to do the right thing.
05:32
And in particular,
05:35
the virtue that we need most of all
05:37
is the virtue that Aristotle called
05:40
"practical wisdom."
05:42
Practical wisdom
05:45
is the moral will
05:47
to do the right thing
05:49
and the moral skill
05:51
to figure out what the right thing is.
05:53
So Aristotle was very interested in watching
05:56
how the craftsmen around him worked.
05:59
And he was impressed
06:02
at how they would improvise
06:04
novel solutions to novel problems --
06:06
problems that they hadn't anticipated.
06:08
So one example is he sees these stonemasons
06:10
working on the Isle of Lesbos,
06:12
and they need to measure out
06:15
round columns.
06:17
Well if you think about it,
06:19
it's really hard to measure out round columns using a ruler.
06:21
So what do they do?
06:24
They fashion a novel solution to the problem.
06:26
They created a ruler that bends,
06:29
what we would call these days a tape measure --
06:32
a flexible rule,
06:35
a rule that bends.
06:37
And Aristotle said,
06:39
"Hah, they appreciated that sometimes
06:41
to design rounded columns,
06:44
you need to bend the rule."
06:47
And Aristotle said
06:50
often in dealing with other people,
06:52
we need to bend the rules.
06:55
Dealing with other people
06:58
demands a kind of flexibility
07:00
that no set of rules can encompass.
07:03
Wise people know when and how
07:06
to bend the rules.
07:08
Wise people know how to improvise.
07:10
The way my co-author , Ken, and I talk about it,
07:13
they are kind of like jazz musicians.
07:16
The rules are like the notes on the page,
07:18
and that gets you started,
07:20
but then you dance around the notes on the page,
07:22
coming up with just the right combination
07:25
for this particular moment
07:27
with this particular set of fellow players.
07:29
So for Aristotle,
07:32
the kind
07:34
of rule-bending,
07:37
rule exception-finding and improvisation
07:40
that you see in skilled craftsmen
07:43
is exactly what you need
07:45
to be a skilled moral craftsman.
07:47
And in interactions with people,
07:50
almost all the time,
07:52
it is this kind of flexibility that is required.
07:54
A wise person knows when to bend the rules.
07:56
A wise person knows when to improvise.
07:59
And most important,
08:01
a wise person does this improvising and rule-bending
08:03
in the service of the right aims.
08:06
If you are a rule-bender and an improviser
08:10
mostly to serve yourself,
08:13
what you get is ruthless manipulation of other people.
08:15
So it matters that you do this wise practice
08:18
in the service of others
08:20
and not in the service of yourself.
08:22
And so the will to do the right thing
08:24
is just as important as the moral skill
08:27
of improvisation
08:29
and exception-finding.
08:31
Together they comprise practical wisdom,
08:33
which Aristotle thought
08:36
was the master virtue.
08:38
So I'll give you an example
08:40
of wise practice in action.
08:42
It's the case of Michael.
08:44
Michael's a young guy.
08:47
He had a pretty low-wage job.
08:49
He was supporting his wife and a child,
08:51
and the child was going to parochial school.
08:54
Then he lost his job.
08:56
He panicked
08:59
about being able to support his family.
09:01
One night, he drank a little too much,
09:04
and he robbed a cab driver --
09:07
stole 50 dollars.
09:09
He robbed him at gunpoint.
09:11
It was a toy gun.
09:13
He got caught. He got tried.
09:16
He got convicted.
09:19
The Pennsylvania sentencing guidelines
09:21
required a minimum sentence for a crime like this
09:24
of two years, 24 months.
09:27
The judge on the case, Judge Lois Forer
09:29
thought that this made no sense.
09:32
He had never committed a crime before.
09:35
He was a responsible husband and father.
09:38
He had been faced with desperate circumstances.
09:41
All this would do is wreck a family.
09:43
And so she improvised a sentence -- 11 months,
09:46
and not only that,
09:49
but release every day to go to work.
09:51
Spend your night in jail, spend your day holding down a job.
09:53
He did. He served out his sentence.
09:56
He made restitution
09:59
and found himself a new job.
10:01
And the family was united.
10:03
And it seemed on the road
10:06
to some sort of a decent life --
10:08
a happy ending to a story
10:11
involving wise improvisation
10:14
from a wise judge.
10:16
But it turned out
10:19
the prosecutor was not happy
10:22
that Judge Forer ignored the sentencing guidelines
10:25
and sort of invented her own,
10:28
and so he appealed.
10:30
And he asked for the mandatory minimum sentence
10:33
for armed robbery.
10:36
He did after all have a toy gun.
10:38
The mandatory minimum sentence for armed robbery
10:41
is five years.
10:43
He won the appeal.
10:46
Michael was sentenced to five years in prison.
10:48
Judge Forer had to follow the law.
10:52
And by the way, this appeal went through
10:56
after he had finished serving his sentence,
10:58
so he was out and working at a job
11:00
and taking care of his family
11:03
and he had to go back into jail.
11:05
Judge Forer did what she was required to do,
11:07
and then she quit the bench.
11:10
And Michael disappeared.
11:14
So that is an example,
11:18
both of wisdom in practice
11:20
and the subversion of wisdom
11:22
by rules that are meant, of course, to make things better.
11:24
Now consider Ms. Dewey.
11:27
Ms. Dewey's a teacher in a Texas elementary school.
11:29
She found herself listening to a consultant one day
11:32
who was trying to help teachers
11:35
boost the test scores of the kids,
11:37
so that the school
11:39
would reach the elite category
11:41
in percentage of kids passing big tests.
11:44
All these schools in Texas compete with one another
11:46
to achieve these milestones,
11:48
and there are bonuses and various other treats
11:50
that come if you beat the other schools.
11:53
So here was the consultant's advice:
11:56
first, don't waste your time on kids
11:59
who are going to pass the test no matter what you do.
12:02
Second, don't waste your time
12:06
on kids who can't pass the test
12:08
no matter what you do.
12:11
Third, don't waste your time
12:13
on kids who moved into the district
12:15
too late for their scores to be counted.
12:18
Focus all of your time and attention
12:21
on the kids who are on the bubble,
12:24
the so-called "bubble kids" --
12:27
kids where your intervention
12:29
can get them just maybe over the line
12:31
from failing to passing.
12:33
So Ms. Dewey heard this,
12:35
and she shook her head in despair
12:37
while fellow teachers were sort of cheering each other on
12:40
and nodding approvingly.
12:43
It's like they were about to go play a football game.
12:45
For Ms. Dewey,
12:47
this isn't why she became a teacher.
12:49
Now Ken and I are not naive,
12:52
and we understand that you need to have rules.
12:54
You need to have incentives.
12:57
People have to make a living.
12:59
But the problem
13:01
with relying on rules and incentives
13:03
is that they demoralize
13:05
professional activity,
13:08
and they demoralize professional activity
13:10
in two senses.
13:12
First, they demoralize the people
13:14
who are engaged in the activity.
13:16
Judge Forer quits,
13:18
and Ms. Dewey in completely disheartened.
13:20
And second,
13:22
they demoralize the activity itself.
13:24
The very practice is demoralized,
13:26
and the practitioners are demoralized.
13:29
It creates people --
13:31
when you manipulate incentives to get people to do the right thing --
13:33
it creates people
13:36
who are addicted to incentives.
13:38
That is to say, it creates people
13:40
who only do things for incentives.
13:42
Now the striking thing about this
13:44
is that psychologists have known this
13:46
for 30 years.
13:48
Psychologists have known
13:50
about the negative consequences of incentivizing everything
13:52
for 30 years.
13:55
We know that if you reward kids for drawing pictures,
13:57
they stop caring about the drawing
14:00
and care only about the reward.
14:02
If you reward kids for reading books,
14:04
they stop caring about what's in the books
14:06
and only care about how long they are.
14:09
If you reward teachers for kids' test scores,
14:11
they stop caring about educating
14:14
and only care about test preparation.
14:16
If you were to reward doctors
14:18
for doing more procedures --
14:20
which is the current system -- they would do more.
14:22
If instead you reward doctors for doing fewer procedures,
14:24
they will do fewer.
14:27
What we want, of course,
14:29
is doctors who do just the right amount of procedures
14:31
and do the right amount for the right reason --
14:33
namely, to serve the welfare of their patients.
14:36
Psychologists have known this for decades,
14:39
and it's time for policymakers
14:41
to start paying attention
14:44
and listen to psychologists a little bit,
14:46
instead of economists.
14:49
And it doesn't have to be this way.
14:52
We think, Ken and I, that there are real sources of hope.
14:54
We identify one set of people
14:57
in all of these practices
14:59
who we call canny outlaws.
15:01
These are people
15:03
who, being forced to operate
15:05
in a system that demands rule-following
15:08
and creates incentives,
15:10
find away around the rules,
15:12
find a way to subvert the rules.
15:14
So there are teachers who have these scripts to follow,
15:17
and they know that if they follow these scripts, the kids will learn nothing.
15:19
And so what they do is they follow the scripts,
15:22
but they follow the scripts at double-time
15:25
and squirrel away little bits of extra time
15:28
during which they teach in the way
15:31
that they actually know is effective.
15:33
So these are little ordinary, everyday heroes,
15:36
and they're incredibly admirable,
15:39
but there's no way that they can sustain this kind of activity
15:41
in the face of a system
15:44
that either roots them out
15:46
or grinds them down.
15:48
So canny outlaws are better than nothing,
15:50
but it's hard to imagine any canny outlaw
15:52
sustaining that for an indefinite period of time.
15:54
More hopeful
15:57
are people we call system-changers.
15:59
These are people who are looking
16:01
not to dodge the system's rules and regulations,
16:03
but to transform the system,
16:06
and we talk about several.
16:08
One in particular
16:10
is a judge named Robert Russell.
16:12
And one day he was faced
16:15
with the case of Gary Pettengill.
16:17
Pettengill was a 23-year-old vet
16:20
who had planned to make the army a career,
16:23
but then he got a severe back injury in Iraq,
16:25
and that forced him to take a medical discharge.
16:27
He was married, he had a third kid on the way,
16:30
he suffered from PTSD, in addition to the bad back,
16:33
and recurrent nightmares,
16:36
and he had started using marijuana
16:38
to ease some of the symptoms.
16:40
He was only able to get part-time work because of his back,
16:43
and so he was unable to earn enough to put food on the table
16:46
and take care of his family.
16:49
So he started selling marijuana.
16:51
He was busted in a drug sweep.
16:53
His family was kicked out of their apartment,
16:56
and the welfare system
16:58
was threatening to take away his kids.
17:00
Under normal sentencing procedures,
17:02
Judge Russell would have had little choice
17:04
but to sentence Pettengill to serious jail-time
17:07
as a drug felon.
17:09
But Judge Russell did have an alternative.
17:12
And that's because he was in a special court.
17:15
He was in a court called the Veterans' Court.
17:18
In the Veterans' Court --
17:21
this was the first of its kind in the United States.
17:23
Judge Russell created the Veterans' Court.
17:26
It was a court only for veterans
17:28
who had broken the law.
17:30
And he had created it exactly because
17:33
mandatory sentencing laws
17:35
were taking the judgment out of judging.
17:37
No one wanted non-violent offenders --
17:40
and especially non-violent offenders who were veterans to boot --
17:43
to be thrown into prison.
17:46
They wanted to do something about what we all know,
17:48
namely the revolving door of the criminal justice system.
17:51
And what the Veterans' Court did,
17:54
was it treated each criminal as an individual,
17:56
tried to get inside their problems,
17:59
tried to fashion responses to their crimes
18:02
that helped them to rehabilitate themselves,
18:05
and didn't forget about them once the judgment was made.
18:07
Stayed with them, followed up on them,
18:10
made sure that they were sticking to whatever plan
18:13
had been jointly developed
18:15
to get them over the hump.
18:17
There are now 22 cities
18:19
that have Veterans' Courts like this.
18:21
Why has the idea spread?
18:23
Well, one reason is
18:26
that Judge Russell
18:28
has now seen 108 vets
18:30
in his Veterans' Court
18:32
as of February of this year,
18:34
and out of 108,
18:36
guess how many have gone back through
18:38
the revolving door of justice
18:40
into prison.
18:42
None. None.
18:44
Anyone would glom onto
18:46
a criminal justice system
18:49
that has this kind of a record.
18:51
So here's is a system-changer, and it seems to be catching.
18:53
There's a banker
18:56
who created a for-profit community bank
18:58
that encouraged bankers -- I know this is hard to believe --
19:00
encouraged bankers who worked there to do well
19:03
by doing good for their low-income clients.
19:06
The bank helped finance the rebuilding
19:09
of what was otherwise a dying community.
19:12
Though their loan recipients were high-risk by ordinary standards,
19:15
the default rate was extremely low.
19:18
The bank was profitable.
19:21
The bankers stayed with their loan recipients.
19:24
They didn't make loans and then sell the loans.
19:26
They serviced the loans.
19:28
They made sure that their loan recipients
19:30
were staying up with their payments.
19:32
Banking hasn't always been
19:35
the way we read about it now in the newspapers.
19:38
Even Goldman Sachs
19:42
once used to serve clients,
19:44
before it turned into an institution
19:47
that serves only itself.
19:50
Banking wasn't always this way,
19:52
and it doesn't have to be this way.
19:54
So there are examples like this in medicine --
19:59
doctors at Harvard
20:02
who are trying to transform medical education,
20:04
so that you don't get a kind of ethical erosion
20:06
and loss of empathy,
20:08
which characterizes most medical students
20:10
in the course of their medical training.
20:12
And the way they do it is to give third-year medical students
20:14
patients who they follow for an entire year.
20:17
So the patients are not organ systems,
20:19
and they're not diseases;
20:21
they're people, people with lives.
20:23
And in order to be an effective doctor,
20:25
you need to treat people who have lives and not just disease.
20:27
In addition to which there's an enormous amount of back and forth,
20:30
mentoring of one student by another,
20:33
of all the students by the doctors,
20:35
and the result is a generation -- we hope -- of doctors
20:38
who do have time for the people they treat.
20:41
We'll see.
20:43
So there are lots of examples like this that we talk about.
20:45
Each of them shows that it is possible
20:48
to build on and nurture character
20:50
and keep a profession
20:53
true to its proper mission --
20:55
what Aristotle would have called its proper telos.
20:57
And Ken and I believe
21:01
that this is what practitioners actually want.
21:03
People want to be allowed
21:06
to be virtuous.
21:08
They want to have permission to do the right thing.
21:10
They don't want to feel
21:13
like they need to take a shower
21:15
to get the moral grime off their bodies everyday
21:17
when they come home from work.
21:20
Aristotle thought that practical wisdom
21:23
was the key to happiness,
21:25
and he was right.
21:27
There's now a lot of research being done in psychology
21:30
on what makes people happy,
21:33
and the two things that jump out in study after study --
21:35
I know this will come as a shock to all of you --
21:38
the two things that matter most to happiness
21:40
are love and work.
21:43
Love: managing successfully
21:46
relations with the people who are close to you
21:49
and with the communities of which you are a part.
21:51
Work: engaging in activities
21:54
that are meaningful and satisfying.
21:57
If you have that, good close relations with other people,
22:00
work that's meaningful and fulfilling,
22:03
you don't much need anything else.
22:06
Well, to love well and to work well,
22:09
you need wisdom.
22:12
Rules and incentives don't tell you
22:14
how to be a good friend, how to be a good parent,
22:16
how to be a good spouse,
22:19
or how to be a good doctor or a good lawyer
22:21
or a good teacher.
22:23
Rules and incentives
22:25
are no substitutes for wisdom.
22:27
Indeed, we argue,
22:29
there is no substitute for wisdom.
22:31
And so practical wisdom
22:34
does not require
22:36
heroic acts of self-sacrifice
22:38
on the part of practitioners.
22:41
In giving us the will and the skill
22:44
to do the right thing -- to do right by others --
22:46
practical wisdom also gives us
22:49
the will and the skill
22:51
to do right by ourselves.
22:53
Thanks.
22:56
(Applause)
22:58

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About the Speaker:

Barry Schwartz - Psychologist
Barry Schwartz studies the link between economics and psychology, offering startling insights into modern life. Lately, working with Ken Sharpe, he's studying wisdom.

Why you should listen

In his 2004 book The Paradox of Choice , Barry Schwartz tackles one of the great mysteries of modern life: Why is it that societies of great abundance — where individuals are offered more freedom and choice (personal, professional, material) than ever before — are now witnessing a near-epidemic of depression? Conventional wisdom tells us that greater choice is for the greater good, but Schwartz argues the opposite: He makes a compelling case that the abundance of choice in today's western world is actually making us miserable.

Infinite choice is paralyzing, Schwartz argues, and exhausting to the human psyche. It leads us to set unreasonably high expectations, question our choices before we even make them and blame our failures entirely on ourselves. His relatable examples, from consumer products (jeans, TVs, salad dressings) to lifestyle choices (where to live, what job to take, who and when to marry), underscore this central point: Too much choice undermines happiness.

Schwartz's previous research has addressed morality, decision-making and the varied inter-relationships between science and society. Before Paradox he published The Costs of Living, which traces the impact of free-market thinking on the explosion of consumerism -- and the effect of the new capitalism on social and cultural institutions that once operated above the market, such as medicine, sports, and the law.

Both books level serious criticism of modern western society, illuminating the under-reported psychological plagues of our time. But they also offer concrete ideas on addressing the problems, from a personal and societal level.

More profile about the speaker
Barry Schwartz | Speaker | TED.com