This is a summary review of Carrots & Sticks containing key details about the book.

What is Carrots & Sticks About?

Carrots and Sticks by Ian Ayres explores the power of incentives and how they can be used to motivate people to make better decisions for themselves and society as a whole, with practical applications in various fields. (Full Summary…)

Carrots and Sticks Summary Review

“Carrots and Sticks: Unlock the Power of Incentives to Get Things Done” by Ian Ayres is an illuminating foray into the realm of behavioral economics, specifically examining the role of incentives in shaping human behavior and achieving objectives. Ayres, whose credentials include the acclaimed work “Super Crunchers,” delves into the concept of commitment contracts with a keen eye, merging academic insight with practical application.

The book’s central thesis posits that commitment contracts are a formidable tool in goal realization, drawing on the tenets of behavioral economics. Ayres presents a compelling case for the use of rewards and penalties as motivators, demonstrating how these can be strategically implemented to drive behavior in desired directions. A particularly striking example is the notion of wagering financial stakes against personal goals, such as losing weight for a significant monetary reward. This exploration into the dynamics of incentives is both innovative and thought-provoking.

Ayres enhances the narrative with real-life instances, primarily drawing from his experiences as the co-founder of stickK.com. This platform, where individuals commit money towards achieving their goals, epitomizes the practical implementation of Ayres’ theories. The author’s personal journey, including his own commitment to lose weight, adds a layer of authenticity to the discussion, bridging the gap between theory and practice.

A notable aspect of “Carrots and Sticks” is its versatility. Ayres extends the application of commitment contracts beyond personal goals to a wide array of life scenarios. The book offers insights into improving employee motivation, budgeting, deadline management, dietary habits, skill acquisition, and combating procrastination. This broad scope is underpinned by a range of engaging anecdotes, from a person penalized for sneezing to a columnist’s financial commitment to quit smoking. These stories are not just illustrative but also imbue the narrative with a relatable and human touch.

Ayres’ narrative is marked by its accessibility. He has a unique ability to distill complex economic theories into understandable and engaging prose, making the book suitable for a wide audience. This ease of comprehension does not detract from the depth of the content, but rather enhances the reader’s engagement and understanding.

However, “Carrots and Sticks” is not without its criticisms. At times, the book appears to lean towards promoting stickK.com, which might be perceived as diminishing its academic rigor. This focus on the website occasionally overshadows the broader and more nuanced discussion of human motivation and behavior modification.

Despite these critiques, the book is generally well-received for its foundational overview of incentives and commitment contracts. Ayres’ emphasis on tailoring solutions to individual challenges is particularly praised, highlighting the uniqueness of personal development journeys.

In summary, “Carrots and Sticks” stands as a significant contribution to the understanding of behavioral economics in practical life. Ian Ayres succeeds in weaving together theoretical insights with real-world applications, making a persuasive case for the power of incentives and commitment contracts. While the book may slightly veer towards the promotional at times, its strengths in presenting an accessible, engaging, and broadly applicable exploration of behavioral economics are undeniable. For those interested in personal or professional growth, Ayres offers a treasure trove of insights and practical strategies to harness the power of incentives effectively.

Who is the Author of Carrots & Sticks?

Ian Ayres is a bestselling author. He is the William K. Townsend Professor at Yale Law School and the Yale School of Management and is the editor of the Journal of Law, Economics and Organization. He is the author of fifty scholarly articles and has been an associate editor of five academic journals.

How long is Carrots & Sticks?

• Print length: 218 pages
• Audiobook: 9 hrs and 16 mins

What genre is Carrots & Sticks?

Nonfiction, Psychology, Self Help

What are key takeaways from Carrots and Sticks?

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, Wikipedia