The Unexamined Life

Perhaps there is something about middle age that spurs the urge to examine. At my 25th college reunion a couple of years ago, I had breakfast with a friend I hadn’t seen since graduation. She works for our alma mater, Davidson College, and therefore had attended lots of reunions. She said, “At the 10-year mark, everyone’s kind of comparing notes – who has how many kids, who has graduate degrees, what they did for vacations, etc., but by the 25th, nearly everyone has experienced some kind of life event, and they are a lot more mellow. The other stuff must not seem as important.”

It does seem that there are points in life when we question what is important, and this begins a process of examining our own attitudes and behaviors. One of my first experiences with examined behavior change was through Weight Watchers. I was 35 and about 20 pounds too heavy. I lost 15 and kept it off. Twelve years later, I fluctuate between 5 and 10 pounds over where I want to be. I still call it a successful behavior change. How did I do it? Tracking and accountability. Whenever my clothes get too tight, I go back to the WW method of writing down everything I eat. If that ever fails, I will go back to the accountability of meetings. In the meantime, I have developed much healthier dietary habits.

Lately I have been examining healthier conversational habits. For example, “listening” does not mean “wait until the other person is finished talking so I can say what I want to say.” Listening means to suspend all noise and chatter in my head and simply absorb and reflect on what I am hearing. To eliminate the noise and chatter, I have a rule: anything that I want to say while someone else is talking, I am not allowed to say. Like any other habit change, it has taken conscious effort at first, but now is becoming close to second nature. When I think of something I want to say, I tell myself to let it go, be present, and listen. If it is that important, it will come back up again in its own time. Being completely present with people, when I am able to achieve that listening nirvana, is freeing.

It is easy to underestimate how difficult behavior change can be. We rationally believe, for example, that the next time, we will just tell ourselves to act differently, and we will. We may have every intention to say no to cookies after dinner, to quit interrupting, or to quit worrying about things we cannot change. The more parts of life I examine, the more I realize I could spend the rest of my life developing new habits and undoing old ones. Behavior change is hard, but rewarding. If done in tiny increments, it takes longer, but isn’t as painful. Before we know it, changing one behavior has brought about a little more happiness. Little changes, over a decade or two between reunions, end up making a big difference.

Nudging Time and Money

Many people have a spare change jar, where they accumulate change until the jar fills and then take it to the bank or change machine to turn into bills. For them, this works as a kind of forced savings. Banks’ keep-the-change programs, where debit charges and checks are rounded up to the nearest dollar and the difference is transferred to a savings account, are based on the concept that saving in small increments adds up to big balances over time.

Ricardo Young, a 55 year old assistant grocery store manager I met recently, found the jar works better than a bank account. Every week, he purchases ten-dollar rolls of quarters from his employer, takes them home, and empties them into his change jar. For Ricardo, this works as a way to save an extra forty dollars a month. At today’s interest rates, he is hardly missing out on having the money in the bank. If this kind of discipline is what helps him not spend it, I am all for it.

Many of us have tricks we have used to keep us from doing what we should not do, and to encourage us to do what we should do. Richard Thaler and Cass Sunstein wrote a book on this subject: Nudge.

In the 2000s, a bank in the Philippines offered a quit-smoking nudge. Smokers who wanted to quit would open an account with a dollar, then for six months would deposit the money they would otherwise have spent on cigarettes. At the end of six months, the account holders were given a urine test. If the test was negative, the smoker got the money back with interest. If the test was positive, the money was donated to charity. A study by MIT’s Poverty Action Lab showed those who wanted to quit were 53 percent more likely to achieve their goal using the bank’s program.

A simple but powerful example for me was a time management nudge suggested by my husband, Skip. I used to have a big long To-Do list that I carried with me everywhere I went, like luggage. One day I was complaining about how long it was and how I never seemed to get everything done. He took one look and said, “Well no wonder – you have a year’s worth of work there.”

He suggested I calendar each task, and schedule more time for each item than I think it will take. I had more than 120 items and started trying to put them on my calendar. I found out I could realistically only put 3 to 5 per day. This forced me to prioritize, but also to recognize that many of the tasks were not that important. My time was my limiting factor.

Now when a calendared task is staring me in the face, I am more likely to do it. I think his exercise helped me recognize I have to choose my tasks wisely, because I don’t have forever. Funny how all my life I have recognized money is finite, but often failed to remember that time is, too. In fact, we can find ways to make more money, but we can never make more time. We can only make more life with the time we have.

Are you as good at saving your time as you are at saving your money, or could you use a nudge in one direction or the other? What time or money nudges have worked for you? Comment here or drop me a line at holly@hollypthomas.com.

It Won’t Happen To Me

Optimism bias. I would not label myself as “optimistic.” But I am not pessimistic, either. To me, “optimism” conjures up the chorus from the R.E.M. song: “Shiny, happy people holding hands.” Not the image of how I approach life. No, I do not believe things will get better and better, but I do not believe they will get worse and worse. I believe, like most human beings, that they will stay the same. This is one version of what behavior experts call “optimism bias.”

If it was sunny yesterday, it will be sunny today. If I am healthy today, I will be healthy tomorrow. In fact, I will be healthy forever. Ok, not forever, but for the foreseeable future. Well, ok, maybe not. But probably nothing will go wrong. I am 47 years old and in good shape.

In December I had my checkup. Everything was sailing along as the doctor checked my blood work. Normal, normal, normal. (Yeah, yeah, yeah, why do I even get physicals? I am normal and have been all my life. Things will stay the same.)

Then she paused. “Ok, Holly, so what we have here is an elevated….” (What? Wait, this sounds permanent. As in chronic, but not life-shortening. Great, I have to take a pill now.) Things will stay the same. Until they don’t.

At a symposium last Monday, I heard Dr. Lisa D’Ambrosio from MIT’s AgeLab describe her research on aging and driving. Imagine you live 200 miles away from your 81-year-old father. When you visit, a few things seem a little off. Maybe he shouldn’t be driving that clunker he loves so much. But you have to get back home. Surely things won’t get worse. And you won’t have to confront him. Things will stay the same.

Lately the Dow Jones Industrials have climbed to record highs. People are piling in. Stocks went up yesterday. They will go up tomorrow, right? Things will stay the same.

It is not possible to hedge against every unforeseen event. However, we can look at the stats on what events are more likely than others. You live in Florida on the water, you are more likely to have wind and flood damage. Both of your parents and their parents had cancer, you are more likely to have cancer. Afraid of flying? You are more likely to be killed on the way to the airport than on the flight. Have longevity in your family? Dementia is more likely to be part of your future.

One of the areas I receive the most resistance from is long term care insurance. I do not sell long term care insurance. I just try to get people over 50 to buy it if a $500,000 – $900,000 dent in their future net worth might impoverish them. It is difficult, though, to plunk down premiums of $4000-$6000 now for some unknown so far in the future. This is optimism bias at its worst. Once you begin to show small symptoms, it is too late. You cannot get coverage. Got a parent or spouse with optimism bias? Insurance coverage may not be the prettiest gift, but it may bring the most gratitude later.

For the middle stages of Alzheimer’s, when we can dress and bathe ourselves, but cannot be left alone, there is no caregiving coverage from Medicare nor Medicaid. Asking a family member to serve in this role is asking a lot.

Long term care insurers are the only outside source available for covering in-home caregivers, who will be in high demand by 2030. At $15 per hour, even twenty hours a week in the early stages adds up to $1200/month (in today’s dollars). The average life expectancy from diagnosis is eight to ten years. (See the website of the Alzheimer’s association: http://www.alz.org/alzheimers_disease_stages_of_alzheimers.asp for the seven stages of dementia). And insurers are getting more picky.

If you can’t imagine yourself needing a caregiver, a wheelchair, or even a daily pill, that’s human and that’s ok. Just think about the statistics, though, for those you love. Might it make sense to spend something now to avoid regret later? One thing I know: things stay the same, for a while, until they don’t.

You Have the Right to Ask the Doctor to Wash His Hands

According to David Lazenby, Ph. D., the rate of medical professionals’ hand-washing in one hospital rose to nearly 100% when the following sign was posted in waiting areas and patient rooms: “You Have the Right to Ask Any Medical Professional to Wash His or Her Hands Before Treating You.”

When I heard this from Dr. Lazenby at a conference recently, I thought about a sign that could be posted in any financial professional’s office: “You Have the Right to Ask Any Financial Professional to Understand Who You Are Before Making Recommendations.”

One reason doctors need to wash their hands is to protect you, and them, from the last patient’s potential problems. Part of practicing a profession is crafting diagnoses, prescriptions, and advice that is unique to each presenting patient or client. Yet the financial industry has chosen largely to mass produce diagnoses, prescriptions, and advice.

Kathy and Kyle walked into a brokerage office with questions about a seven-figure inheritance from her father. Not knowing where to turn, they chose the national firm that already held her father’s account. The representative asked some questions, then produced a laminated pie chart suggesting how to allocate the cash. Kathy and Kyle asked a few questions of the broker. He answered them. They were going to consider his proposal. As they stood to leave, Kyle reached for the chart. The broker, panicked, grabbed it back, and said, “Oh, no, you can’t take that. I need it for my next client.”

When a financial representative shows the same laminated pie chart to every client, they are not selling professional advice. They are selling a professionally assembled financial widget disguised as advice.

Why, as a society, do we tolerate medical staff who don’t wash their hands and financial staff who assume all clients look alike? Why do we expect professional service but tolerate something less? The next time someone offers you advice but has not clearly understood you and your issues first, then demand better, or find someone else.

What’s Your Closet Velocity?

On a visit to Ghana, a west African country, in 2004, I noticed how many people wore second hand Western clothes. While others donned beautiful traditional fabrics and garments of their country, it was equally common to see t-shirts, Gap khakis and Levi’s that looked like cast-off Goodwill donations for sale at the market. My hosts told me these were referred to as obruni waawu, which, literally translated, means, “dead white people’s clothes.”
“Why dead?” I wondered. Before long, an answer dawned on me. Maybe to Ghanians, many of whom don’t have closets, the only reason you would give up your perfectly good clothes would be because you are dead. To them, clothes are something you use until they are no longer useable.
This led me to the idea of how often we, especially Americans, buy new clothes. In planning for cash flow needs, I always ask for a range of annual spending on clothes – an “acceptable” amount, and an ” ideal” amount. I have received answers for both ends ranging from $2,000 to $50,000.
What I have not asked is, how often are they throwing out old clothes? If we throw out old ones when we buy new ones, I would say we have a high “closet velocity.” Correspondingly, the amount of clothes we have on hand at any point in time might be called our “clothing supply.” I am borrowing these terms recklessly from economics concepts of money velocity (the rate at which money changes hands in an economy), and money supply (the amount in circulation at any time).
If you have a low clothing supply and low closet velocity, you are like a Ghanian wearing your small number of clothes until they have holes or stains or are unuseable. If you have a high clothing supply and high closet velocity, you started with lots of clothes, are buying lots of new clothes, but are also giving or throwing away “old,” or more likely, never-worn ones. You may be the Imelda Marcos of clothes.
If you have a low clothing supply and high closet velocity, you have a small, actively-traded closet. New clothes are entering constantly, but getting worn, and old clothes are going out. You have a high clothing budget, and you always look good. If you have a high clothing supply and low closet velocity, you have a large closet of seldom-worn items, with plenty to choose from, but that might be a bit dated.
In her work with Money Habitudes(TM), Dr. Syble Solomon identified six primary attitudes toward money. One of those six is “status.” Anyone with an American puritanical upbringing might see this as a nasty word. Status is something we crave but are supposed to pretend not to. Rather than take such a negative extreme view, Solomon recognizes that money, through status purchases like clothing, can help us make a good impression. It is not prudent to spend lavishly on clothes we will never wear, or to spend more than we can afford for the sake of trendiness, but it also is important to “suit up and show up;” to care about our appearance, looking fresh, not stale.
With her more balanced view in mind, I am going to take a second look at my closet. I don’t plan on being a dead white person anytime soon, but I may find potential obruni waawu destined for Ghana next year.

Parenting: Let’s Talk About Sex and Money

Which topic do parents talk the least about with their kids? Sex, drugs, or money? I wondered the answer to this question after hearing a bright young woman who works with teenagers appeal to her middle-aged audience to talk to their kids about sex. Some in the room began to get uncomfortable when she said the s-word. But then, she cited some frightening statistics about pregnancies and STD’s that crossed lines of race, age, class, and school district in my hometown. It seems even 12-year-olds from upper middle class neighborhoods have curiosity, compunction, and dare I say, cravings, we would like to think are reserved for adulthood.

Money and kids have frightening statistics, too, although they may not show up in children until they are adults. The average college freshman still receives too many credit card offers upon matriculation. Who is more likely to have money troubles as an adult: a child who grows up in a household of plenty, or a child who grows up in a household of scarcity? Statistics show it does not matter. What does matter are the spoken, and unspoken, messages the child receives about money.

No matter the wealth status of the household, parents must teach kids to use money responsibly.
Unlike alcohol, drugs, and sex, use of money is not optional. We are forced to use something, every day, which can cause great harm, or great benefit. Small choices we make consistently about money add up, so the habits we develop are critical to success with it. Big choices about money make a big difference, too, so being educated about its power and how to handle it are equally significant.

Sex, drugs, and money talks become easier with time in some families, but in others, even grown children and older parents avoid the topics. Over time, it may be the grown kids approaching the parents about their ability to handle money, and having difficulty. Fifty percent of adults over the age of 80 have some form of mild cognitive impairment. One of the first mental skills to go is how to manage and make decisions about money. Mom or Dad either stops paying the bills, or hands a check to anyone who asks for it. (Loss of sales resistance is another early sign of dementia.) If the family has not established a comfortable conversation about money ahead of time, everyone can be surprised how much damage can be done in a short period. Why not be the parent who tells the kids early on what to do, what to say, and/or who to call if signs of cognitive impairment start to show up? Why not be the adult child who asks for these instructions before it is too late?

The holidays are a time of family gathering, sometimes the only time during the year when families get together. It is a great time to have a family meeting about money. Year-round, though, talk to your kids, or your parents, about the tough stuff that makes children wonder, and adults squirm.

The National Association of Really Ethical Dentists?

I am a behavioral economist. That means I study how monetary incentives drive decision making and behavior. Until I changed dentists about three years ago (due to a move), the dentist usually spent a few minutes looking around my mouth during my semiannual cleaning and then said, “Nice teeth!”

Now I am on my second dental office where I am told I need a rinse solution, or have three cavities (that I don’t feel yet, when I have only had one cavity before), or, the latest, I need gum grafts so my teeth don’t fall out. (The periodontist just joined the office, and he is the dentist’s dad. You do not have to be a behavioral economist to wonder if there are skewed incentives here.)

I am 46 years old. I walk every day, brush twice a day, floss and take my calcium citrate about three times a week (now I will every day, and I just bought an electric toothbrush). I like something sweet after dinner, but I am not overweight, don’t smoke, don’t drink alcohol or soda, am not chronically ill, and have no family history of periodontal disease. For over 30 years I was told I have “nice teeth,” and now all of a sudden, I don’t?

In the financial industry, as you may be aware, there are powerful incentives for professionals to recommend and upsell products that are not always in the best interest of the consumer. For example, variable annuities tend to pay the highest commission of any financial product, therefore I am not surprised I get asked a lot of questions about them. People are hearing about their many benefits from those who are paid not to understand their downsides.

In response to conflicts of interest like this, an association of financial advisors who choose to be legally bound to “do the right thing” was formed in the 1980s. It is called NAPFA (www.napfa.org). I am a member. We all agree to submit our own work for peer review, to sign a fiduciary oath, and to only accept compensation from clients, never from product vendors. There are approximately 1,000,000 people who call themselves “financial advisors” nationwide, and NAPFA membership is a whopping 2,500. With the amount of product compensation at stake, I am not surprised our group is so small.

My question, though, is, does the dental industry have an association of dental professionals who pledge to really, always, put the best interests of their patients ahead of their own? Who will actually tell a patient they have nice teeth? If that kind of dentist says I need rinses, crowns, grafts, or a lobotomy, fine. I will accept that my carefree dental visit days are over.

I guess with city water fluoridation and better dental habits, dentists don’t get as much routine work anymore, so it’s harder to make a living just filling cavities and doing root canals. One understandable result of this trend is the explosion in cosmetic dentistry. That’s fine by me. “Cosmetic” implies, “not necessary.” But, another result of this trend is the economic incentive for dentists and hygienists (their best sales agents, according to the dental practice blogs I found) to make mountains out of molehills in your mouth. To make the unnecessary seem more necessary. That’s not fine by me. In my research to find the ethical dentists, I found many blogs explaining how to upsell patients. There is even a firm called, “Big Case Marketing” which will help you, Dr. Dentist, sell more “big cases.”

As an uneducated dental services consumer, I have no reliable way to judge who the good guys and gals are. I thought there might be a group of dentists, like NAPFA financial advisers, who decided to band together and promise to keep the patient’s best interests first. If you know of such a group, I would like to know about them. Just in case I have a real cavity.