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Running with the lizards and doing a 180 on energy!

The heat of the season is beginning to arrive earlier in the morning. And on this particular day it seemed especially sensible to get out ahead of the sun – well before it began to beat down with any real strength.  So I headed out early for a leisurely morning amble.  The route took me up a road that has very high curbs to channel the water from the fall monsoons. On this specific stretch of curb there was a single lizard, hugging the side of the concrete wall.  It scurried maybe 10 feet ahead of me as I approached, and then it stopped.  As I again advanced within three feet, it jumped ahead maybe another 8-10 feet, still hugging the curbside. And then again. . . .

I don’t have a clue why the lizard insisted on moving forward with me, hugging tightly to the pavement sidewall. The smarter thing, it seemed to me, would have been to scurry at a very quick right angle away from me to safety.  Yet, as I again approached it for perhaps the fifth time, it suddenly turned 180 degrees and bolted past me in the opposite direction – leaving me alone with my thoughts.  Although the suddenness of its movement startled me, I reflected a little and thought . . . that was very cool. And I immediately wondered why it is that we are so often dogged in maintaining our existing course of action?

A Changing of the Minds?

The good news is that people can and they sometimes do change their minds. Not to distract from his current predicament, in 2006 Rupert Murdoch, for example, “had a change of heart on climate change and now believes global action is needed.” Also changing his mind on climate change? Bjorn Lomborg who claimed for many years that climate was not an especially important issue to address. Yet in 2010 he released a new book with new equations stating the exact opposite. The indication is that while did change his mind, he hugely underestimates what might be an appropriate scale of mitigation effort. His current thinking recommends that we should spend $100 billion a year to mitigate and avoid the impacts of greenhouse gas emissions. The evidence, however, suggests it should be many times larger. 

In the year just before Lomborg released his book, the American Council for an Energy-Efficiency Economy (ACEEE) released a study on the role of productive investments in mitigating greenhouse gas emissions.  The ACEEE assessment in 2009 suggested that cost-effective reductions in greenhouse gas emissions might require anywhere from $100 to $200 billion per year – in just the U.S. alone. The good news is that the improved energy productivity would save consumers and businesses more money than it would initially cost. Depending on assumptions, climate change policy might be an “economic redevelopment opportunity” which could put anywhere from one to two million more people to work.

The Year of the Reversal

According to Mashable.com, the year 2011 was the year of humility in which we saw a series of epic shakeups in the technology world – including Verizon’s announcement that it would charge a $2 fee for processing payments online. This led to thousands of customers who threatened to leave the service provider if the fee was not changed.  And the good news is that Verizon did reverse its decision just over 24 hours later. At the same time, Netflix planned to divorce its online streaming format from its mailed DVD rental format. It introduced a new service called Qwikster. . . right after Netflix had already introduced a price increase to cover both services. Again, because of customer outrage, Netflix reversed its decision a few weeks later. Netflix now appears to be pursuing a larger variety of online media for customers to stream and this new strategy seems to hold promise for Netflix.

The question naturally arises, if changing your mind does hold more benefit and opportunity, why is it so easy for a lizard to do a 180, but so hard for most of us to drop whatever it is we’ve been doing and turn to a whole new strategy altogether?  There is some interesting science afoot in that regard.

Exploring the Human Motivation

Decision reversals often imply improved outcomes. This seems especially true in the case of our nation’s energy policy. If we turn away from a supply-side mentality and focus, instead, on greatly improving our larger energy productivity, the outcome would be highly positive – as yet another ACEEE study, The Long-Term Energy Efficiency Potential, clearly documents. With a greater emphasis on energy efficiency the U.S. could reduce energy demands by 40 to 60 percent by 2050, even as we strengthen the economy and increase employment by nearly two million jobs. Yet, people show a strong resistance against changing their minds. These are well-established findings, which suggest that changed decisions carry a subjective cost, perhaps by being more strongly regretted than we might first imagine.

As it turns out, reversing a decision leads to discomfort and less satisfaction with decisions, even though going with your gut instinct is often NOT the way to get the “right answer.” For example, going with gut instincts on a multiple choice test will not necessarily get you a better score. Revising your answers, however, generally does tend to result in a better score on your test.  This is called the first instinct fallacy.  Even so, we tend to remain more satisfied with our original decisions, even if they are less correct or accurate.

Norwegian psychology professor Geir Kirkebøen and his colleagues explored this phenomenon in a series of three studies to evaluate whether changing one’s mind would increase post-outcome regret. In a very interesting 2011 paper “Revisions and regret: The cost of changing your mind,” in the Journal of Behavioral Decision Making, the study indicates that “changing one’s mind seems to come with a cost, even when one ends up with favorable outcomes.”  And if the discomfort of changing our mind outweighs the greater impact of climate change, this may be a very real problem for the stability of our global economy.

Melissa Laitner contributed to the research for this essay.  John A. “Skip” Laitner is Director of Economic and Social Analysis for the American Council for an Energy-Efficient Economy (ACEEE), based in Washington, DC.  Tucson is his family’s hometown, and he likely will be there through August of 2012. He hopes to provide a new posting roughly every week over the year.  While these columns do not reflect the official opinion or views of ACEEE, its board or its staff, he can be reached at [email protected].