How Can You Escape Binary Thinking?

DUBNER: You are blowing my tiny mind right now. 

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DUCKWORTH: I’m Angela Duckworth.

DUBNER: I’m Stephen Dubner.

DUCKWORTH + DUBNER: And you’re listening to No Stupid Questions.

Today on the show: How can you become less of a binary thinker? 

DUBNER: My way is the right way. 

Also: why does bargain hunting bring people so much joy?

DUCKWORTH: I was, as a young woman, a great coupon clipper. 

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DUBNER: Angie, I want to be less of a binary thinker, and I wonder if you can help me. 

DUCKWORTH: Well, Stephen, you know, there are two kinds of people; people who like binary thinking — just kidding, I couldn’t resist!

DUBNER: Here’s my problem. I’m not sure whether this is me personally, whether this is the human condition, or whether it’s the human condition in the modern era — you know, society, and politics, and media being what they are in this early 21st century. I guess it is. But I feel that the confluence of all these forces is constantly herding me into yes-or-no, black-or-white, all-or-nothing choices. You know, you can’t belong to political movement “X “unless you subscribe to all 20 of its tenets, and precisely zero of the other movement’s 20 tenets, for example. Now, my brain — and even my soul — know that the world should not work that way, that there’s so much more nuance and variation to how life should unfold. But it’s hard to not veer toward binary thinking. So, how can I, and everyone, get better at that? 

DUCKWORTH: Well, you’re not alone. It’s salient with politics these days, especially in the United States, that you’re, you know — all the way on one side, all the way on the other, and there don’t seem to be a lot of people in the middle ground; not a lot of room or permission, even, to be a moderate. But it’s actually much more fundamental. Cognitive scientists have been documenting just how systematic the distortion is when we try to summarize evidence and we binarize — we create categories of what is effectively continuous data. 

DUBNER: Oh, that’s so interesting. Can you give an example? 

DUCKWORTH: There was a study in Psych Science. And the title of this paper is “The Binary Bias.” 

DUBNER: Oh! It’s a thing! 

DUCKWORTH: Yeah. Plus alliteration. “Binary Bias: A Systematic Distortion in the Integration of Information.” And these scientists run a variety of paradigms that essentially say that when people are looking at data and visualizations of data, etc, that they tend to be biased toward this extremity that’s in their own minds, but it’s not really in the data. So, we tend to make categories of continuous data. And there are other studies documenting this tendency. When I thought about this without being a scientist who studies this directly, I thought there must be a functional purpose to binarizing, like so many biases. 

DUBNER: Right. That animal will kill me and that one won’t. 

DUCKWORTH: Well, exactly! Life is about action, and action is either/or. 

DUBNER: But I feel like you’re telling me now that we take in information only for the purpose of acting upon it in some kind of finite, irreversible way. 

DUCKWORTH: Yeah! 

DUBNER: No!

DUCKWORTH: True! 

DUBNER: No!

DUCKWORTH: Come on! All information processing is so that you can make decisions to act in one way or another. I mean, you could make the argument that there is learning for learning’s sake, but then if you just keep asking the question, “Why is it important to learn that? And then why is that important?” You do, I think, eventually get to the fundamental truth of existence, which is that you have to survive, and you have to make decisions — to act in one way or act in another. 

DUBNER: You are blowing my tiny mind right now. You know how I like to make fun of the evolutionary-biology argument that comes up probably in one out of every four conversations we have, which is: everything we do can, of course, be explained by some evolutionary condition. The classic example is you’re walking across the savannah, Angie, and you hear a rustle in the grass. Do you run? Do you not run? The answer is: of course you run because that rustle could be the wind, but if it’s a saber-tooth tiger, then Angie exists no more. That’s the classic all-or-nothing. But I feel like we’re kind of running that old software on much better hardware — or that our hardware should be much better. But you’re telling me that we have this binary bias, because life is all about action. And if you choose the wrong action, you die. And that just feels a little harsh. 

DUCKWORTH: I want to highlight that I am not one of these cognitive scientists who studies categorical thinking. It just occurred to me that one of the reasons why — maybe “the reason” why — we might do this is because action is binary. I mean, let’s take the example of going to the doctor’s office. Doctors are going to put you in a category of: either you need this medication or not, you need to do physical therapy or not, when the underlying statistic — your blood pressure, your lipid levels, whatever it is — must be continuous. And if you read medical journals, there is a lot of categorizing. Like, “What can we say about people who are insulin-dependent?” And I always thought, “Well, there’s a continuum. There are people who are a lot insulin-dependent, people who are pretty insulin-dependent, people who are a little insulin- dependent.” So, I think if you go to the question of why doctors categorize, it’s because they have to either prescribe you something or not. They have to give you directions. And so, that just illustrates how much of life is about making decisions to take actions. And the actions themselves are categorical. You don’t make a 40 percent right turn and a 60 percent left turn. You either turn right or you turn left. 

DUBNER: Okay, point taken. Especially on the medical example. But, let me offer a slightly nuanced version, which is: there’s the “wait and see” option. There’s the “this and that” option. There’s the low-dose option. In other words: yes, I get that categorization, but I think that most medical doctors that I know — and I’m thinking now especially of Bapu Jena, who is an M.D. and economist, which makes him a double threat.

DUCKWORTH: Oh! Isn’t he the host of your new podcast?

DUBNER: He is! Good plug for the network. Freakonomics M.D., it’s called. So, one of the kinds of things that Bapu wrestles with is: how much treatment is good treatment? And what is excess treatment all about? And what’s the difference between the false positive and the false negative? I would argue that most of the best doctors who are taking this question seriously would say that they probably are forced to do too much binary — or even categorical — thinking, because diagnosing is hard. Even at this late date, there’s a lot of science, but there’s a lot of art to it, and there’s a lot of uncertainty to it. I understand that you’re saying binary thinking and binary action are often the most obvious — and maybe the most pressing — choice, but I would like to live in a world where there was more consideration of the spectrum of choices. That’s all I’m saying. And you’re telling me I’m mostly wrong. 

DUCKWORTH: No! I am not telling you you’re mostly wrong. One of my life goals is to help people not binarize so much. Here is something from my own field, psychology. When you take psychopathology — this is the first graduate course if you’re going to become a clinical psychologist. A real psychologist, as I like to say — you know, somebody who does therapy. We’ve all heard of mental illnesses like schizophrenia, manic depression. And when I started out in this course, I thought, “Well, I’ll learn about these categories of mental illness and what puts somebody in that category.” And it never occurred to me that, for example, schizophrenia could be really just a continuum, that you could be severely schizophrenic, moderately schizophrenic, and then not at all. It turns out that for almost everything that psychologists study, including these things that seem categorical, that they really are continuous. And you do have to, at the end of the day, either allocate a therapist to this person or not, based on a diagnosis. But if we all knew that the underlying phenomena were continuous for most things in psychology — and maybe most things in life — that would be, I think, an advance. 

DUBNER: Okay, so you don’t disagree with me as much as I was saying that you disagree with me. Let me agree with you a little bit more than I sounded like I was agreeing with you before, which is to say: plainly there is value in binary thinking. I mean, literally the fundamental building block, as far as I understand it, of computing is the bit which is short for “binary digit,” which is either a zero or one. And the reason that’s useful for computers is it makes it easier to do huge computation, which means you require less circuitry, less cooling. Things can be smaller, things can be cheaper. 

DUCKWORTH: It’s a massive data compression. 

DUBNER: Yeah. So, it is a heuristic for computers. But, you know, I’d like to think, maybe this is one way we can be better than computers — is not having to compress. On the other hand, I am a fan of what I believe is called, generally, categorical thinking. I just want more categories than two. I was reading — there’s a piece here, I see from the Harvard Business Review called “The Dangers of Categorical Thinking.” “Categorical thinking,” it says, “can be dangerous in four important ways. Number one, it can lead you to compress the members of a category, treating them as if they were more alike than they are. Number two, it can amplify differences between members of different categories. Number three, you can discriminate, favoring certain categories over others. And number four, you can fossilize, treating the categorical structure you’ve imposed as if it were static.” That’s the one that really gets me. And so, when I read that, I think, “You know what? Yeah, they’ve got my number.” The authors, I should say, are Bart de Langhe and Phillip Fernbach. And I feel what they’re expressing is in acknowledging that there is a danger — or at least some kind of downside — to categorical thinking, it encourages us to think more fluidly across categories and to consider every person — every encounter, every interaction, every choice — one that is, as you’ve said, on a spectrum. At the end of the day, when we make the decision, it’s not a one or a zero. It’s not a yes or no. The decision could be: I’m going to try this for a little while, and keep a really close eye on it, and see if it seems to be working. And if it’s not, I’m going to try something different. That’s all I’m talking about in wanting to be less binary. Does that make any sense? 

DUCKWORTH: It makes total sense. And I think it’s quite reasonable to say that, whatever these tendencies are, we can understand why we have them and how in some sense, or in certain context, they could be good, useful, adaptive — but even just understanding that helps you move ahead and say, “Okay, well, where are the circumstances where that’s not helpful?” And I absolutely think that we should — in 2021, 2022, and beyond — be able to say, “Look, we have enough bandwidth that we can accommodate more than two categories for a given issue.” And understand that even when we have to make decisions, what we’re doing is making those decisions that are binary on continuous data. 

DUBNER: Let me back up, because we did talk a little bit about the political divide. It may be that the political system — in our country especially — is what exhibits this binary thinking and executes it so fully that it has spilled over into the broader culture. 

DUCKWORTH: You mean, getting us to be even more binary? 

DUBNER: Yeah. It’s pretty easy to look at the way someone dresses these days, or to look at the kind of car they drive, and feel you know a lot about their beliefs. And that’s remarkable that we have allowed ourselves to be so binarily-divided. On the other hand, I did find one piece of encouraging news. Gallup found that 62 percent of Americans currently say a third political party is needed. Now, I don’t know if that’s historically high, but that strikes me as high in the moment. Separately, there was a recent survey of about 2,500 young Americans, 18 to 29 years old. This was a survey by the Institute of Politics at Harvard, and it found that 76 percent of them agreed with the following statement, quote: “We need more open-mindedness in politics.” And only four percent of the respondents disagreed with that statement. 

DUCKWORTH: And then the other people were what? 

DUBNER: Eh, somewhere in the middle. 

DUCKWORTH: It’s a continuum after all.

DUBNER: It is a continuum after all. Now, when I read the numbers from the young people, I think, “Wow, that’s a really good sign in that most young people — 83 percent of the young Democrats and 70 percent of the young Republicans — agreed that we should be more open-minded in politics.” On the other hand, I thought maybe it’s just that younger people tend to be a little bit more interested in being open-minded, whereas, when we get older, we get calcified, and sclerotic, and cranky and say, “My way is the right way.” So, I don’t know just how hopeful to be about that data. 

DUCKWORTH: Well, we should study this — whether binary thinking has led to, or at least contributed massively to, the polarization of politics. That’s certainly possible. Does the direction of causality go the other way? And also: what to do about it? Because I think young people despair a little bit at the kind of false polarization that’s going on. I mean, I’m not that young, but I count myself among them. 

DUBNER: Speaking of what to do about it, I’m curious if you can tell me anything about what I’ve seen called dialectical behavior therapy. 

DUCKWORTH: Dialectical behavior therapy is an adaptation of cognitive behavioral therapy. And cognitive behavioral therapy is the dominant form of psychotherapy over the last 50 years. And that’s all about arguing yourself out of the irrational thoughts that lead to dysfunctional levels of emotion — like severe anxiety or depression. And then dialectical behavior therapy grew out of the treatment approach for people with borderline personality disorder. And actually, if you look under the hood of dialectical behavioral therapy, a lot of it looks like cognitive behavioral therapy. But I believe that the term “dialectical” comes from the idea that there are these apparent paradoxes that you have to live with. Like, you have to understand that you’re going to suffer, but you also have to not just give into your suffering and wallow in it. But the point of most of therapy, including dialectical behavior therapy, but also cognitive behavioral therapy, is for many, many people to get out of black-and-white thinking. It’s not just people who have borderline personality disorder. So many students take a test and they get, like, a C-minus and it’s like, “Oh, the world is over. I’m an idiot.” You know, “My husband forgot to call me back; he doesn’t love me.” 

DUBNER: Now, that could be true. Just to say, that should be considered in the spectrum. 

DUCKWORTH: Thank you, Stephen, for footnoting that. 

DUBNER: My pleasure. 

DUCKWORTH: Now, we know why you’re not a therapist. But really, if you’re the sort of nerd who listens to No Stupid Questions, maybe you can take from this: the next time I catch myself doing all-or-none extremist thinking, I’m going to remember that there is this binary bias, and I should try to work against it.

DUBNER: How would this actually work in therapy? 

DUCKWORTH: So, if you come into a therapist’s office and you have some kind of black-and-white exclamation like, “I’m a total failure,” what your therapist might ask you to do is to play out, in pretty vivid detail, first: what it would look like if everything they said was true. Like, just give me the extreme worst-case scenario. And then you ask them, “Okay, now let’s do the opposite. Let’s flip that on its head. And as improbable as you think, like, just give me the best-case scenario.” Then, you’ve got these two extremes. And you say, “Now I want you to paint me the most likely scenario.” And what you’ve done is help the person basically expand their mental set to both extremes, not just the one that they were dwelling on. And you naturally think that the most likely thing is going to be somewhere in between the poles. And that is a series of questions that I’ve actually tried to employ when the rare occasion happens that I slip into this kind of extreme black/white catastrophic thinking. It helps me get out of it. 

DUBNER: What I like about this notion is it would lead me to be more purely curious about the world and do a better job of learning more during my work and during my personal life, and less judging, less knee-jerk binary categorization. That’s what I’m after, because I find that the binary thinkers in my life are, I’ll be honest, the least interesting people. 

DUCKWORTH: And the least happy. 

DUBNER: And the most cranky. And I don’t want to be that. And so, I’m trying to somehow alchemize myself out of my potentially cranky future and into a smooth, slick world where life is a spectrum that’s got all the colors of the rainbow. And I can just flit from yellow to indigo, and back and forth. That’s all I’m asking for. 

DUCKWORTH: It’ll be like the Crayola box. There’s blue-green, but there’s also green-blue. 

DUBNER: Burnt sienna. 

DUCKWORTH: Burnt sienna — always the littlest crayon because it was so good, especially for tree trunks. 

Still to come on No Stupid Questions: Stephen and Angela discuss the true value of a discount.

DUCKWORTH: So what that you saved $45 on a dress that you probably didn’t want anyway?

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DUCKWORTH: Stephen, I got an email the other day from my sister Annette. 

DUBNER: Oh, Annette. She’s a doctor of some sort? 

DUCKWORTH: Not only a doctor, not only my sister, but a huge fan of this very podcast. And I think we’ve actually answered one of her questions before. This is going to be number two. 

DUBNER: So does she get a mug? 

DUCKWORTH: Yeah, she gets a mug. And she gets a hug from her sister. Okay, here’s her email. “Ang, maybe what some people call ‘cheap’ is how much happiness you derive from transactional utility. Like, you found a dress you love, and it was 80 percent off, and you got it for $9.99 — but in the big picture, that amount of money should be inconsequential to you.” And I thought to myself: she’s asking the question of her very identity, because there is no cheaper person on the planet Earth than my sister Annette. 

DUBNER: And she would consider that a compliment coming from her sister, I assume? You’re not insulting her?

DUCKWORTH: She would consider that a compliment, I think, although she obviously wants some vindication here. And I don’t think Annette has ever bought anything for $9.99. I’m not exaggerating. Like, on eBay, if she can’t get a dress for $4.99, she won’t get the dress. So, I want to talk about this. Do you know anything about transactional utility? I wondered, since you have such a long-time friendship with people like Steve Levitt, whether you already know about this. 

DUBNER: I do know about transactional utility. And I do know about it from an economist at the University of Chicago, but not Steve Levitt — from Richard Thaler, who you know as well. Thaler, for those who don’t know, is a kind of special breed of economist in that he considered himself a not very good, or promising, academic economist in the early part of his career. And he said to himself, “Self, if you’re going to have a career in economics, you better find some path less taken.” And he pursued a pair of psychologists whose names are Danny Kahneman and Amos Tversky, who we’ve mentioned many times on the show. And you know Danny Kahneman well. Amos Tversky was Danny’s brilliant partner who died young in the 1990s. And Thaler was the young economist who processed a lot of this decision-making psychological research, and applied his understanding of economics to it, and turned it into what we think of as behavioral economics. So, transactional utility is meant to describe the pleasure you get from the perceived value of what you paid, versus what you expected to pay. I can see that making someone very happy. On the other hand, it could also make you suspicious in a different setting. Right? Like, what’s wrong with this thing? I get utility from knowing that I paid less than someone asked for it, but is there something wrong with it? For instance, you know, not “does this dress make me look fat,” but “does this dress make me look cheap?” That would be, theoretically, the downside. 

DUCKWORTH: Or, like, a rube, right? Did I overpay for this dress? 

DUBNER: Exactly. But I will say this: there’s a fair amount of evidence from Thaler — and many other economists who’ve done experimental research — that this thing that we called transactional utility is real and that it’s fairly large. So, I’ll give you one example. In 2012, the department store chain J.C. Penney announced a new policy. I’m reading here from a TIME magazine article from 2012. “Fake prices inflated big time to make markdowns seem more tempting would disappear from J.C. Penney.” So, basically, J.C. Penney is saying to their customers, “Hey, listen. We do this charade, and you seem to enjoy it enough that you’re supporting our store. We’re successful, but, you know, why do we have a posted list price and then constantly saying, ‘mark down, 40 percent off, da-da-da.’ So, you know what? Let’s just do away with that, ” to be replaced with what they were calling a “fair and square” structure in which original prices started at least 40 percent lower to begin with. So, what do you think happened? 

DUCKWORTH: Well, if I expand upon my sister’s experience, they would sell less with the “fair and square” pricing, even though it was more transparent. And maybe in some ways, you could argue it should be more attractive because people will not have this feeling of being deceived. But I’m guessing that, if people are anything like Annette Lee, that they would have bought fewer things at J.C. Penney. 

DUBNER: You are exactly right. J.C. Penney’s sales plummeted — the stock price plummeted. So, the charade, it turns out, is very attractive. Customers weren’t attracted to J.C. Penney simply because of low prices; they were attracted to bargains that they got through markdowns and coupons. And then, if you go looking at the research on coupon use, for instance — I’m looking at something from a market research firm called eMarketer. This is from just a few years ago, 2018, and they were trying to find out how important coupons and discounts are for different age groups. And these are digital purchases. They found that for the age group 18 to 29, around 82 percent of the respondents said that it was very important or important to use a coupon or discount. And that number gradually falls as you get older. People who are 60 and older, only 65 percent say it’s very important. 

DUCKWORTH: But still, two out of three, right? 

DUBNER:  Yeah, and also, we should say — this, I’m guessing, does not factor in, at all, price sensitivity. 

DUCKWORTH: I was going to say, we just have more money. I remember not having any money. Now I have money. 

DUBNER: But, that said, it may suggest that if, indeed, these younger people are more expectant of being able to tag on that coupon — I mean, look, there’s a massive digital industry built around this very concept — it may suggest that, over time, as people who are digital natives get older, that they’re going to expect a discount. So, the world will be turning into Annette Lee, in other words. But, I think this whole notion of what your sister is talking about speaks to something beyond just cognitive biases. I think it says a lot about different cultures, different families, and different home economics within families. So, tell me this: was bargain shopping part of the family system in the Lee family growing up? 

DUCKWORTH: I cannot fully account for my sister’s cheapness. I can partially account for her pathological frugality. I mean, she takes it to Olympic-sport levels. I can only offer this: my parents had immigrated from China, and they were never really, really poor, but they were really, really frugal. Just the other day, my sister and I were remembering how we would go to the movie theater, and after the movie was over, we would just try to make it seem like we were there for the second showing, and then we would go for even a third. And she reminded me that we did that, in part, because my dad never turned the air conditioning on. And when you live in southern New Jersey, and it’s July, and your house is 95 degrees, it’s a lot better to be in a movie theater, even if you’re breaking the rules to do it. My dad, in particular, was really cheap. When we went to restaurants — you know, we rarely did — but when we did go out to eat, it was a given that we would just be ordering the cheapest entree. So, she grew up like that, and I grew up like that. But I think the amount of joy that my sister gets from getting, you know —. 

DUBNER: Is not related to the family system, necessarily.

DUCKWORTH: I mean, come on. So what that you saved $45 on a dress that you probably didn’t want anyway? But she gets so much transaction utility. It starts to be a little bit absurd. By the way, she’s a doctor. She can afford dresses that are more than $4.99. 

DUBNER: I do think it is a fine line between transactional utility and extreme frugality that becomes counterproductive. So, when I was a kid, forget about picking the cheapest entree at the restaurants, we didn’t go to restaurants — in part because we lived in the middle of nowhere and there were none, in part because there were many, many children, and also, we just didn’t have any money. 

DUCKWORTH: Yeah: many children, not a lot of money, rural. 

DUBNER: Right. So, we made and grew as much as was possible. Then, for the things you had to buy, you tried to spend as little as you could. And one thing that I remember, from when I was pretty little, being really frustrated at was gasoline. My mom would never buy gas at the one tiny little village store in our closest village. As you got closer to the big city of Schenectady, the gas got a little bit cheaper. But sometimes she would drive 10 miles out of the way to save 25 or 50 cents. And I’m thinking, even as a kid, you know, “Forget, Ma, about the cost of the gas that you’re burning to get there, but what about the time? And what about the added risk of a car crash? You’re driving all these extra miles!” And my mother was also an extreme couponer. And again, I respect it, because she had to be. She had me doing a lot of couponing. There is the clipping. There is the sorting. There is the culling. 

DUCKWORTH: The planning. Plus they keep expiring, the damn things. 

DUBNER: One of my tasks was to sit down with the huge folder — like an accordion folder of coupons divided into different categories — and go through them and remove the expired ones. And I remember thinking then: I would much rather be spending this time doing something that would make me enough money so that I don’t have to coupon. You know, there’s the time/money trade off, which is a huge piece of this, because many people would think that, “Well, I could spend more time trying to pursue something cheaper, but what’s the shadow price of that time? What’s the opportunity cost of that time?” 

DUCKWORTH: That is actually what turned me off of coupons. I was, as a young woman, a great coupon clipper. I would, you know, think ahead to the menu that I would make so that I could use this dollar box of Ronzoni pasta — that was only because I happened to clip the coupon. And, at some point, I realized that I should actually spend time doing, well, nearly anything else. And so, there’s transaction cost, there’s transaction utility, but when I got this email from my sister, it actually spurred another memory. And I think this completes the picture a little bit. So, my advisor in graduate school, as you know, was Marty Seligman. And Marty told me the story that I think he has since also written about. But when he was an undergraduate, he was in a lab where the professor had a pet that was a South American lizard. 

DUBNER: Not for research. This was an actual pet. 

DUCKWORTH: No. I guess there were the animals that had to work, and then there was this lizard that just got to roam around and that people would take care of. And when Marty joins this lab, the crisis is that the lizard is dying, because it’s not eating. The lizard was recently gifted to this professor. And, as Marty tells a story, they tried everything. They tried every kind of bug. They tried every kind of fruit combination. They were looking up fruits from South America, and then they were trying to give it the native fruit. And still the lizard wouldn’t eat anything. And one day, the lizard is there, same as usual, wasting away. And there is a sandwich. And the lizard was not supposed to eat the sandwich. It was actually for a human being. And casually, the professor puts the newspaper on top of the sandwich, probably by accident. And what happens is the lizard immediately goes into hunting mode, and then shreds the newspaper, gets through to the sandwich, and eats the whole thing. And Marty took from this the lesson that, in life, there’s not just success, but the process of getting there. Like, life isn’t just the sandwich itself, but the thrill of it. 

DUBNER: The thrill of the hunt. 

DUCKWORTH: And I do think there’s something about how, in life, there’s the dress you buy — there is the thing you get — but there’s the cost of getting there and then there’s the utility of getting there.

DUBNER: It also makes me wonder what the endowment effect is like for an object that you got a good deal on, versus one that you feel you paid either market price or even maybe more than market price, right? 

DUCKWORTH: Do you want to expound on what the endowment effect is for the people who haven’t heard of it? 

DUBNER: Yeah. So the endowment effect says that we endow more value — we assign more value — to something that we have. When we humans have something that we have attained ourselves — whether we’ve hunted it down like the lizard or not — then we assign a higher value to it than something very similar that someone else has. And so, now I’m wondering. Let’s say you buy three “X’s” — three dresses, three books, three, whatever they are — and one of them you got at a great bargain, one of them you paid kind of market price, and the other, you hunted it down and paid above market price. You had to really work for it. I am curious to know what that endowment effect does to your feeling about those three objects in the long run. One might think that the more expensive one would remain more valuable. But I could also imagine that the one that you somehow scooped up much cheaper may feel even more valuable, given this transactional utility that we’re talking about, and the difference between perceived value and real value. 

DUCKWORTH: So, I get some ridiculous deal on a Lululemon workout shirt that’s usually $120 — I sound like I’m exaggerating, but for those of who know Lululemon, you know, sadly, I am not. And I’m like, “Oo, look at me, total bargain!” And now, you know, the opportunity comes for me to sell it, I guess. 

DUBNER: Well, forget about even selling it. Imagine how you’re thinking about it as you continue to own it. That’s really what I’m asking, because here’s the other thing that’s key here: there’s also some signaling going on, because you might wear that Lululemon shirt to a yoga class where other people see it, and they know what a Lululemon shirt is, and they know what it would cost. But you didn’t pay that. So, what does that do to your psyche? 

DUCKWORTH: I think, for me, in particular — I’m not saying that my sister would feel this way — well, mostly, I wouldn’t care. But if I cared at all, I don’t know if I would prefer that they thought I paid full price.

DUBNER: Right. Because they might take you for like, “Oh, brand name sucker.”

DUCKWORTH: There’s also the, you know, like, “Yay, I did the smartest thing.” I don’t know about that. I’m pretty sure nobody’s studied that. This transaction utility stuff goes all the way back to early Thaler writing, but there’s not a boatload of empirical research on it. 

DUBNER: I know that there are many people who feel a different relationship between the object they have — or the object they make, even — and money. I’ve been doing some interviews for Freakonomics Radio lately of artists, and art dealers, and museum curators, and so on, because I find the art market incredibly interesting, and incredibly opaque, and incredibly expensive. And I was interviewing one artist who is very successful. His work is collected in the best museums. He puts on exhibits at amazing cultural institutions, and so on. And yet, he couldn’t buy his own art at auction. And then I interviewed an art dealer and an art adviser. And she loves the art of this particular artist. And she wants to own some work that she can’t afford, because it’s in the, let’s say, tens of millions of dollars. And I think she wants to own it, in part, simply because it is very, very, very expensive. I’m sure she loves it, but there’s something about the value of it that totally changes the perception. So, if there is, let’s say, a Basquiat or a Rothko that would sell for $20 million, and then a similar painting that would sell for $20, does she really love it a million times more? That’s the kind of question that I think about when your sister asks about buying that dress. 

DUCKWORTH: Well, the point that I think this transaction-utility question makes — really the reason why Thaler got the Nobel Prize — which is that “econs,” as he likes to call them — the rational, “it only matters what the value is of the goods or service, et cetera” — are unlike humans who have feelings, who make decisions that seem irrational according to pure economic theory, that there are other things to factor in. It’s a lot more complicated. And this idea of transaction utility — that there is some amount of happiness or unhappiness that a human derives from buying a dress or getting a deal on a car that have nothing to do with the actual dress or the car. For those of you who wondered, like, “Why the heck did he win the Nobel Prize for his work?” It is for giving a more accurate picture of human decision making. And you know what I would say about my sister’s email, about this conversation, and even Richard Thaler? 

DUBNER: Tell me.

DUCKWORTH: Priceless. 

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No Stupid Questions is part of the Freakonomics Radio Network, which also includes Freakonomics Radio, People I (Mostly) Admire, and Freakonomics, M.D. This episode was produced by me, Rebecca Lee Douglas. And now, here is a fact-check of today’s conversations. 

In the first half of the episode, Stephen explains that a bit, or binary digit, is the fundamental building block of all computing. This is true for traditional computers, but quantum computers are built using qubits. Unlike bits, which can be either on or off (represented by one or zero), qubits can function in what’s called a superposition, where they’re both on and off at the same time, or somewhere on the spectrum between the two. The capacity for quantum computers to depart from the binary system and operate in a grey area is what makes them so revolutionary. In 2019, Google’s quantum computer Sycamore in 2 seconds performed a mathematical calculation so complex that it would take the world’s most powerful supercomputer, IBM’s Summit, 10,000 years to do the same equation.

Later, Stephen and Angela discuss how they aspire to be less binary and more like the color spectrum of Crayola crayons. In particular, Angela admires that Crayola offers both blue-green and green-blue. Upon investigation, I found that the company does, in fact, have a shade called “blue-green,” but unfortunately, they currently don’t produce a hue named “green-blue.” Crayola does, however, provide sea green and aquamarine, which both look pretty green-blue to me. And they do offer burnt sienna, which should make Angela happy if she chooses to draw more tree trunks in the future.

Finally, Angela says that shirts from the activewear company Lululemon usually cost $120. This is false. The company’s website currently lists a total of 191 women’s tops ranging from $24 to $98. But to be fair, the men’s section of the website does offer a three pack of, quote, “basic tees” for $128. And Angela may have been thinking of the company’s signature leggings, which do, in fact, ring in at an average price of about $120.

That’s it for the fact-check.

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No Stupid Questions is produced by Freakonomics Radio and Stitcher; our staff includes Alison Craiglow, Greg Rippin, Eleanor Osborne, Joel Meyer, Tricia Bobeda, Emma Tyrell, Lyric Bowdich and Jacob Clemente. Our theme song is “And She Was” by Talking Heads — special thanks to David Byrne and Warner Chappell Music. If you’d like to listen to the show ad-free, subscribe to Stitcher Premium. You can also follow us on Twitter at NSQ_Show and on Facebook @NSQShow. If you have a question for a future episode, please email it to nsq@freakonomics.com. And if you heard Stephen or Angela reference a study, an expert, or a book that you’d like to learn more about, you can check out Freakonomics.com/NSQ, where we link to all of the major references that you heard about here today. Thanks for listening!

DUBNER: What did you do with the nubs of the crayons that got too small to color with? 

DUCKWORTH: You mean, did I melt them down into candles? 

DUBNER: Correct answer.