Economics and New Year’s Resolutions

In recent days, we’ve introduced a pair of regular guest bloggers, Ian Ayres and Sudhir Venkatesh. We are happy and proud to now introduce a third, a terrific addition and no stranger to readers of this blog: Justin Wolfers, an economist at Wharton and a great explorer of everything from racial bias in N.B.A. refereeing to the decline in women’s happiness to divorce myths.

With the holidays upon us, it’s hard not to turn the economists’ gaze to the rituals around us. So let me ask, what exactly are New Year’s resolutions about? Here are seven theories, collected around my Christmas Eve table:

1. Aspirations: a statement (to self; to others?) of who and what I want to be. New Year’s Eve is simply a focal point for this statement of aspirations.

2. Commitments to self (or my future self): a statement of what I want to be. And if I don’t achieve it, I will be left with the guilt of not having lived up to a promise to myself. If that is costly enough, then the commitment may be useful.

3. Commitments to others: many of us describe our commitments to our friends. Henceforth, it is their job to hold us to it, or else to make us feel bad. Describing my commitment to my friends is like posting a bond, based on my future good behavior. (And perhaps this is a less costly commitment than betting at Stickk.com).

4. A clean slate: we rarely respect the irrelevance of sunk costs in our behavior. The New Year is a clean slate. If my behavior is history dependent (why not eat the chocolate cake if I’m already overweight?), then the clean slate allows my behavior to escape past poor behavior.

5. A signal: I only get to make a small number of resolutions, and so making a resolution about fitness is credible, relative to the fact that I chose not to make a resolution about tardiness. (In this sense, it is like the A.E.A. signaling system, where aspiring assistant professors can make a New Year’s resolution that they really, really would like to work at two specific universities.) Perhaps related to Nos. 2 or 3.

6. Intertemporal reallocation: diets in January follow gluttony in December. Or hard work in January follows slacker time in December. And this is more efficient than forgoing all that terrific food/all those wonderful celebrations/all that time off in December. By this theory, it isn’t surprising that so many resolutions are about health/diet/fitness, and it isn’t any concern that we rarely respect these resolutions past February.

7. Cheap Talk: New Year’s resolutions are simply hot air, stated at around 11:55 pm, on a night involving plenty of alcohol. They are rarely respected, and there is no way for them to be enforced. They are a ritual, but not more important than kissing a loved one 5 minutes later.

Beyond theory, what about empirics? Let me report the results of an informal poll around our holiday table: none of the men (out of 3) and 2 of the women (out of 4) typically make New Year’s resolutions, and only one person actually expects to keep her resolutions. Is this typical?

Do you make New Year’s resolutions? Why or why not? Comments are open.

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  1. chica says:

    I don’t make New Years resolutions. I just feel if there is something I really want to do I will commit to it any time of the year. Not that I do that either :)

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  2. chica says:

    I don’t make New Years resolutions. I just feel if there is something I really want to do I will commit to it any time of the year. Not that I do that either :)

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  3. dd says:

    You’re combining two issues in one.

    First of all, why make a resolution if there’s no committment. It’s cheap talk.

    Second, why on New Year’s? You can make a resolution anytime.

    I don’t know the answers, but I suspect that the second can be partially explained by time inconsistent preferences (e.g. hyperbolic discounting). I prefer eating chocolate now and dieting tomorrow, but I would prefer not eating chocolate at t=1 to avoid dieting at t=2.

    Thus, I would want to commit to stop eating chocolate at some time in the future, and New Year’s is a convenient time to choose. (There has to be more here since I could always choose any future date. It must be related to some of your ideas – some sort of coordination.) This is related to Benartzi and Thaler’s idea of committing to save in the future.

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  4. dd says:

    You’re combining two issues in one.

    First of all, why make a resolution if there’s no committment. It’s cheap talk.

    Second, why on New Year’s? You can make a resolution anytime.

    I don’t know the answers, but I suspect that the second can be partially explained by time inconsistent preferences (e.g. hyperbolic discounting). I prefer eating chocolate now and dieting tomorrow, but I would prefer not eating chocolate at t=1 to avoid dieting at t=2.

    Thus, I would want to commit to stop eating chocolate at some time in the future, and New Year’s is a convenient time to choose. (There has to be more here since I could always choose any future date. It must be related to some of your ideas – some sort of coordination.) This is related to Benartzi and Thaler’s idea of committing to save in the future.

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  5. Rachael Kvapil says:

    I make my New Year’s resolutions way back in October, the month I was born. Prior to that I spend the previous month evaluating my lifestyle, except this year when a death of one of our friends really hammered me hard and the contemplation was deeper and more severe that in the past. By New Year’s, I’m already working on whatever it is I wanted. Rarely does it have to do with the superficial health/diet/exercise, but more on skill building much of which is physical since I’m a dancer.

    Last year my resolution was to divorce myself from crazy bosses and high-stress jobs.

    Rachael

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  6. Rachael Kvapil says:

    I make my New Year’s resolutions way back in October, the month I was born. Prior to that I spend the previous month evaluating my lifestyle, except this year when a death of one of our friends really hammered me hard and the contemplation was deeper and more severe that in the past. By New Year’s, I’m already working on whatever it is I wanted. Rarely does it have to do with the superficial health/diet/exercise, but more on skill building much of which is physical since I’m a dancer.

    Last year my resolution was to divorce myself from crazy bosses and high-stress jobs.

    Rachael

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  7. htb says:

    I don’t usually make such resolutions, nor does anyone in my family. However, my husband made two this past year, and kept them both. One was to plan, fund, and take a multi-country see-all-the-scattered-relatives trip, and the other was to never click on a headline involving Paris Hilton. I’m not sure how you would categorize these.

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  8. htb says:

    I don’t usually make such resolutions, nor does anyone in my family. However, my husband made two this past year, and kept them both. One was to plan, fund, and take a multi-country see-all-the-scattered-relatives trip, and the other was to never click on a headline involving Paris Hilton. I’m not sure how you would categorize these.

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