A recorded interview on Guy Kawasaki's podcast "Remarkable People" with Uri Gneezy, discussing behavioral economics and incentives, centered on Uri's book "Mixed Signals: How Incentives Really Work." The episode uses anecdotes (seat belts/helmets and risk compensation, HIV treatment effects, and car choices like Prius/Tesla) to illustrate how safety measures and products signal behaviors and can produce unintended consequences.
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Want to know when there's a new episode of remarkable people? Simply text 831-609-0628 if you live in the US or Canada, don't miss upcoming shows. Take a moment to follow Remarkable People in your app or podcast player. I'm Guy Kawasaki and this is Remarkable People.
We're on a mission to make you remarkable. Helping Joining me in this episode is Yuri Ganese. Yuri is a Professor of Economics and Strategic Management at the School of Management at the University of California at San Diego. He has taught at the University of Chicago and Technion in the past. Yuri is also the co founder of Genizi Consulting, a company specializing in behavioral economics. I have to say that if I were entering college today, I would major in Behavioral economics. Just FYI. Today we are discussing Yuri's new book, Mixed Signals How Incentives Really Work. In this book, Yuri dives into the topic of effective and ethical incentives. It is filled with great examples of incentive plans gone wrong that will amuse and educate you. My thanks to Katie Milkman, Wharton professor and author of the book how to Change. She's also the next Bob Cialdini. When I got pitched to have Yuri on the show, I asked her if I should, and Katie was adamant that I interview Yuri. Over the course of the past two years, I have learned to just do whatever Katie says. So without further ado, let's dive into my conversation with Yuri Ganese and learn about the fascinating world of incentives and behavioral economics.
I'm Guy Kawasaki.
This is remarkable people.
I have to tell you, I have very fond memories of visiting Israel several times. And one of the concepts that you talk about in your book is this contrast. And one of the great contrasts that occurred to me after visiting Israel is you can complain all you like about the US airports and TSA and security and then you go to try to fly out of Tel Aviv and oh my God, it's at 100x more difficult to get through security in Israel than freaking sfo, right?
So then you're happy to go back to sfo. It seems easy. Yeah, I know the feeling.
I have to tell you one more funny visit to Israel story. So my first trip to Israel and I noticed that everybody in Israel has at least three cell phones. So there's the personal phone, the business phone, and the phone just for you and your mistress or whatever. And so I'm listen, listening to all these Israelis talk and they're saying, ken, Ken, Ken. I'm thinking, how is it that so many people in Israel are named Ken? I'M like, what the hell is going on? And then finally somebody told me, oh, they're saying, yes, guy, you idiot. So anyway, right.
You had to be.
So I have a similar story that may be even more dramatic. When we moved to the us we had a Swedish babysitter and she and our daughter still didn't speak English. So she asked us how to say stop in Hebrew. And stop in Hebrew is die. So she would run after her daughter and scream at them, die, Die. You know, in the playground.
Oh, my God, that's better than Ken. Yes. I want you to know that this weekend, as I was driving my teenage son around, I considered not wearing a seatbelt after reading your book because. And I'll explain, people are listening, saying, what the hell is he talking about? And you make a very interesting point in your book that there's a false sense of safety and security when you have a helmet on or a seat belt on. And so maybe the safest condition is when you're riding in a car that the driver doesn't have a seatbelt on, because then the driver will be extra careful. Did I get that story right?
You got the story right. The conclusion is not that you should not wear a seat belt, you should wear a seat belt. But the conclusion is exactly what you said. When we have more safety things that help us, we feel safer. So we'll drive, for example, less carefully. Maybe we know, for example, with HIV used to be a death sentence in the 80s, 90s, and people became scared and really, really protected themselves with the advancement in medication. So now getting HIV is unpleasant, but it's a chronic disease that you can live with. You don't want it, but you can live with it. And we see when the health care gets better, the unprotected sex increases and infection increase. So whenever we feel safer, we do more dumb things. And in the book I write that the worst you can have in places like Vietnam, I was there in December. The law says that the driver must have a helmet, but the passenger doesn't. And that's the worst incentive you can have as a passenger, that the driver will feel safe and you will not. In many places, only the people in the front seat of the car have to wear seat belts. The people in the back don't. So then your driver feels protected and you are not protected. That's not a good incentive.
When I read that, I went to ChatGPT, which is the source of all knowledge now, right? And I went to ChatGPT and I asked it, do rugby players get less concussions than football players because rugby players don't have the super duper helmets. I thought, oh, maybe rugby players are more cognizant of injuring their head. But Chat GPT said that it's not conclusive that there's less rugby concussions. I loved your discussion about the Prius. Toyota just announced the 2023 Prius and it is a very attractive looking car. And so there are fewer and fewer, if any, trade offs in driving a Prius anymore. So do you think Toyota is shooting itself in the foot that you can't hold yourself as a green concerned, socially acceptable citizen because you're driving a Prius because nobody knows you're driving a Prius anymore?
No. It's also now it's a good car, so it's a very competitive car. But back in the early 2000s when they just started, those were bad cars. So they were bad on any dimension. Meaning you could have, for the same price, you could have gotten a much better car. So if you drove a prius back in 2004, that meant that you're a good guy that cares about the environment. Right? You sent a very strong signal that you care about the environment today. Anyway, you don't send this signal because it's a competitive car. So I don't know. We are driving Tesla. We just got a Tesla, we like it, it's a really good car. So are we driving it because we care about the environment or are we driving it because it's a good car? The signal that you had back in the days when the cars were really bad is not there anymore.
Since you brought up the word Tesla. I think Tesla had the same effect.
When it came out.
If you bought a Tesla, to some people it signaled that you're a rich pain in the ass vc. But to other people it signaled that you were more concerned about the environment. But let's just say with Elon Musk going off the rails today, if you drive a Tesla, don't you think you're in effect communicating that you're supporting white supremacy and basically craziness and anti vax and you're a trumpist? I mean, I wouldn't buy a Tesla before, I am sure as hell not gonna buy a Tesla now.
You sound like my son. That's what my son told me. Well, it's a good car. I definitely do not support white supremacy and all the other good stuff that you said. I definitely had a problem with the signal that you sent by buying a Tesla and my wife wanted the Tesla and I don't know if you're married. I'm married for more than 30 years now, and I do what my wife wants. That's my rule. So it's her fault.
So if Mercedes called you up and said, listen, we're going to convert our entire line, or Volvo called you up and said, we're going to convert our entire.
