Something You Should Know - How the Rich Get Rich & Subtle Things that Dramatically Influence Your Behavior

Starting point is 00:00:00 At Wealthsimple, we're built for whatever you're building. Built for Jane, who wants to break into the housing market. We're built for Ted, who's obsessed with what's happening in the global markets. And built for Celine, who just wants to retire and explore the world's flea markets. So take a moment and think about what you're building for. We've got the financial tools to help make it happen. Wealthsimple, built for possibilities. Visit wealthsimple.com slash possibilities. Today on Something You Should Know, have you

Starting point is 00:00:34 ever eavesdropped or snooped on someone? I'm sure you have, and I know why. Then financial advice that isn't all about cutting back and saving money. I believe that we should spend extravagantly on the things we love as long as we cut costs mercilessly on the things we don't. So I want to start by asking people what they love and the most common answers are eating out, travel, and health and wellness. Also there are some common foods that taste better frozen that you've probably never tried. And there are so many subtle things that influence your behavior and success. For instance, people tend to work harder when others are around. Cyclists race faster, runners run faster,

Starting point is 00:01:19 people work harder when others are present. And so rather than trying to hit our goals by ourself, we can use others to help us get there. All this today on Something You Should Know. This is an ad for better help. Welcome to the world. Please read your personal owner's manual thoroughly. In it, you'll find simple instructions for how to interact with your fellow human beings and how to find happiness and peace of mind. Thank you and have a nice life. Unfortunately, life doesn't come with an owner's manual. That's why there's BetterHelp Online Therapy. Connect with a credentialed therapist

Starting point is 00:01:53 by phone, video, or online chat. Visit betterhelp.com to learn more. That's betterhelp.com. Something you should know. Fascinating intel. The world's top experts. And practical advice you can use in your life. Today, Something You Should Know with Mike Carruthers.

Starting point is 00:02:15 Hi, welcome, and thank you for listening to Something You Should Know. Clearly, you have a lot of choices. You could be listening to one of bazillions of podcasts, and I appreciate the fact that you chose something you should know to listen to today. First up, have you ever eavesdropped and maybe felt guilty about it? Well, it turns out that eavesdropping or snooping is something pretty much everybody does. It's human nature, and it once served a very important purpose. Survival.

Starting point is 00:02:48 In fact, all animals eavesdrop. In order to protect ourselves from our enemies, we're wired to try to discover things they don't want us to know. Conversely, we keep secrets from people about things we don't want them to know. Think about the purpose of a whisper. The only reason people whisper is to tell something so that someone else doesn't hear it. Although it's considered bad behavior to eavesdrop, it's pretty hard not to do. Even though we don't need to do it for survival so much anymore, we still have that curiosity to know what other people are doing behind closed doors.

Starting point is 00:03:25 We satisfy that desire today with things like reality TV, social media. All of those things tap into our biologically driven need to peek into other people's lives. And that is something you should know. Money is always a fascinating topic because I think we all have our own issues with and beliefs about money and how we approach it. Ramit Sethi is somebody who has a really good understanding of money and how people relate to it and ways to make that relationship better. Back in 2009, he published a big best-selling book called I Will Teach You to Be Rich, and a revised second edition recently came out and has again become a big bestseller. I think because his advice is different from most advice you hear about money, he has a really

Starting point is 00:04:19 refreshing way to look at it and will make you feel less guilty about how you spend your money. Hi, Ramit. Welcome. Thanks for having me. So I think when people hear they're going to get some financial advice from someone like you, it's going to be stop using your credit cards, cut back, stop doing... It's all about deprivation and putting your money away somewhere so you can't spend it and living a very austere life. And nobody wants to do that. So what do you say to that? First of all, I just want to say that I have a pretty realistic approach to money. I think you should use credit cards.

Starting point is 00:04:59 I don't agree with some of the popular advice out there that credit cards are evil and you should stop using them. Guess what? If you use credit cards and use them wisely, you get massive returns, rewards like free hotels, free flights, et cetera. But the critical thing is you need to use them wisely. So everyone already knows that they should pay off their credit card debt. That's a given. And yet they don't. Why is that? Because the credit cards, number one, are engineered to get us to spend more. And number two, we don't understand the math behind it. So step number one is you want to make sure that you have the right accounts.

Starting point is 00:05:33 That means the right bank accounts and the right credit cards. So let me get a little bit specific here. I think many people use the same bank accounts they used when their parents opened an account for them. There are a lot better accounts these days. They offer better interest rates. They let you withdraw from any ATM with no fees. Then with your credit cards, there are great credit cards that offer you amazing rewards.

Starting point is 00:05:59 We're talking about 2% cash back. We're talking about amazing travel rewards. Get them. And then the third, and this is really important, you need to automate your payments. So what happens with a lot of people is they don't want to give up control. So what they do is they get these bills at the end of the month. And because they don't have a spending plan in place, they sort of get all these bills, they shrug and they go, oh, I guess I spent that much. And that is how they start to get on this hamster wheel of debt. I can talk about how to pay off debt and I can share some pretty interesting psychological findings about people

Starting point is 00:06:35 in debt. But those are the three components. Get the right bank account, get the right credit cards and automate your payments. All right. Talk about debt and the problems people have with it. Okay. If you ask people who are in debt, for everybody listening right now, if you've got any sort of debt, if I asked you, how much do you owe? Guess what percentage of people don't even know the answer to that? Oh, I know that. That's got to be really high. That's got to be almost everybody. You're right. It's over 90%. Now, I ask a second question. What is the date that your debt will be paid off? Almost nobody knows the answer to that. But if you have debt, it's not the end of the world. I've talked to people who have $3,000 of debt. I've talked to people who have $250,000 in it. It's not the end of the world. You absolutely can make a plan to pay it off, but you should know the exact month and year your debt will be paid off. That means that you have a

Starting point is 00:07:37 debt payoff plan. It means that you know exactly how much money you're contributing and it means that you've automated it. And just think of the relief once you know that date it could be two years in the future two months five years but at least you know what's happening and what is amazing about that is once people make a plan they start to become pretty aggressive about it for example if you have student loans and you pay an extra $100 a month, you can often cut that down by years. People don't understand this because it's just this murky number in the back of their head. So make a debt payoff plan if you've got it.

Starting point is 00:08:17 And most people, again, they don't know how much they owe. They don't know what their debt payoff plan is, but it's not that hard. And once you plan it out and automate it, it's like, wow, I can see a light at the end of the tunnel. So let's talk about spending money and advice for people who are maybe spending too much money. You know, most of the advice that we hear is someone coming on a show like this and starting to berate everyone listening and saying, don't spend money on lattes. Don't buy jeans. Don't go on vacation. And I just never wanted to live life like that. And I frankly don't even think that's good advice. Saving $3 a day doesn't even really add up to that much at all. What matters and what is more important is getting those five to 10 big wins in life right. If you get those big wins right, just five or 10 of them, you never have to worry about ordering a latte or a coffee

Starting point is 00:09:11 or an appetizer, ever. So some of those big wins are automatically saving and investing, or finding a great job, and if possible, negotiating your salary. I think if you're in a relationship, finding a relationship with the right person is a huge financial big win. Sounds counterintuitive, but it's one of the most important determinants of your financial health. So if you get these five to 10 right, you don't need to worry about $3 expenses here and there. And that's the

Starting point is 00:09:41 difference in how you approach money once you integrate your psychology versus just this random advice that you see on the news all the time. I got to say, it drives me nuts. That's why I'm really happy to be able to be here and share this different perspective. But the fact is that a lot of people who are in trouble with money are in trouble because they spent too much. They spent money they didn't have and now they're in debt. And so it would make sense, you would think, that the way you get out of trouble is to cut back on spending, that that's the route out.

Starting point is 00:10:16 Well, let me provide a different perspective on spending. Okay, Mike, let me ask you a question. What is something you love to spend money on? Not just like, but love. So my boys love hockey. They play hockey. So I love spending money on them on hockey things. Perfect. Okay. This is amazing. Now, one last question here. If you could quadruple the amount that you spend on your kids for hockey or anything else, what would it look like? Oh, I don't know. You know, go to more NHL games, travel to other NHL games, get them some great coaches to improve their game, I guess, that kind of stuff. Okay. First of all, I just

Starting point is 00:10:58 want to point out a couple of things and I want everyone listening to follow along. Mike, thanks for having the courage to answer that question. Notice that you were a little uncomfortable answering the quadruple question. Why is that? Because most people have never thought about spending more on the things they love. Most people have only been told to cut back on everything. If I asked you right now, Mike, what do you spend too much on? What should you cut back on? You would have 50 answers for me. Coffee, this, that, my car, my house, whatever. But when I ask people, what do you love spending on? They all have an answer. And then I ask them this question about what I call a money dial. What if you turned that dial up? 2x, 4x, 10x. Nobody's ever thought about it. But the answer, I love what you said about taking your kids to a NHL game. Maybe you would do a meet and greet behind the scenes with the greatest

Starting point is 00:11:51 hockey player of all time. Maybe you'd hire them a different tutor or coach. There's so many things you could do. I share this example because I believe that we should spend extravagantly on the things we love as long as we cut costs mercilessly on the things we don't. So while everyone else is busy here feeling guilty about $3 here, $5 there, I want to start by asking people what they love. And the most common answers are eating out, travel, and health and wellness. Those are the most three common by far. So if I ask people what would it look like to spend more on eating out, they typically

Starting point is 00:12:32 give very linear answers. They're like, oh, I go out once a week. I'd go out four times a week. And I challenge them. What if you actually went deeper than just more? Might you eat at a different restaurant? And I remember I asked this guy in D.C. and he said, first of all, he just said I would eat out four times and I pushed him. He finally said, I have a list of every Michelin starred restaurant.

Starting point is 00:12:56 I would go to every single one of them. And I said, awesome. Who would you take with you? And he stopped. He stepped back. He smiled and he looked at me. He said, I would take my parents because they've never been able to afford something like that.

Starting point is 00:13:09 So that is the power of using money to live a rich life. It's totally different than feeling guilty about cutting back here and there. And that's where I want people to start, is to think about spending extravagantly on the things they love, but cutting costs mercilessly on the things they don't. When you say, when you talk about wise use of credit cards, is wise use of credit cards having, paying off the balance every month, is that wise use of credit cards? Absolutely, yes. And do you ever think that, well, some expense, some purchases might need a couple months to pay off. Never. If you do that, you're making a mistake,

Starting point is 00:13:49 and you should not be buying that right now. I'm generally very generous with people when it comes to their financial management, but I'm a stickler for a couple things. If you can't afford to pay off your credit card debt this month, then you need to not buy that. But some people will have car expenses because their car broke, and they can't pay it all off this month, but they need their car.

Starting point is 00:14:08 So it might take them a couple of months to pay it off. Well, that's different. So first of all, that's an accident. That's something that was not predictable up front. But given enough time, almost all of these unexpected expenses are predictable. I'll give you an example. I used to get parking tickets. And to me, I was like, oh, man, this parking ticket came out of nowhere.

Starting point is 00:14:30 But when I looked at a year and a half of expenses, they were actually pretty predictable. Every few months, I got a parking ticket. So I created a sub-savings account, which everybody can do. And you can start to put money away. And you can put them away for things like, you know, car repair. You can also put them away for things like Christmas gifts that you know are going to come up in December or vacation. So when you go on vacation, suddenly you've got this money set aside. We're discussing some practical advice to save,

Starting point is 00:15:02 spend and invest your money with Ramit Sethi. He's author of the book, I Will Teach You to Be Rich. Bumble knows it's hard to start conversations. Hey, no, too basic. Hi there. Still no. What about hello, handsome? Who knew you could give yourself the ick? That's why Bumble is changing how you start conversations.

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Starting point is 00:16:46 Spotify, or wherever you get your podcasts. So Ramit, you know, I once heard someone say this, and I think it's true that, you know, people have that emergency car expense or that emergency something goes wrong with the water heater thing. And yes, you can't plan for those, except that if you look back at your expenses, something always happens. You may not be able to tell exactly what's going to happen, but something always happens and you need to plan for that. And that makes a lot of sense to me. Me too. And I have to say, I have a lot of empathy for people who always feel like they're trying their best and then something comes up. And I can understand, especially if you've got an old car or you live in a place that's constantly breaking down.

Starting point is 00:17:34 I completely understand that. The answer, though, is not to just keep trying to put a Band-Aid on it. The answer is to step back and realize, wow, I might need to play a totally different game. And that game means I need to make a plan, set an emergency fund at it from a different perspective rather than the usual, you know, stop spending money here, don't waste money on that, cut back on everything. You're saying, you know, spend money on the things you like and don't waste money on the things you don't. And it makes perfect sense. And I think people need to hear that. Thank you. Thank you for saying that. And that is exactly how I feel. I think when you ask most people, what are the first words that come to mind when you think of money?

Starting point is 00:18:30 They will almost always say the same things. Shame, guilt, embarrassment. And is it too late? These are super common. Every single one of them is negative. What I like to hear people say after they read my book is calm, cool, collected. I have a plan and I'm living a rich life. And what I love about this concept is if your rich life is sitting front row at a hockey game or if it's buying a really nice leather jacket, or eating out at an amazing

Starting point is 00:19:07 restaurant once a month, once a week for that matter. Great. Be my guest. I'll show you how to do it. And I think that there's too much judgment in the personal finance world. I think that honestly, people want to spend money on the things they love. They do need a little bit of guidance as to how to make it all work. But if they focus on the five or 10 things that matter and they learn certain things that are super counterintuitive, like the power of investing, if they learn about how to negotiate their salary, if they learn that, wow, buying a house is not always the best investment and that renting can be a really good financial decision. That's super not talked about. Suddenly people start to realize, wow,

Starting point is 00:19:52 I can take control of my money and create my rich life. It's totally different than what everybody hears every day. Okay. Lastly, since you just brought it up, negotiate your salary. What's the best way to tackle that? Okay. When it comes to negotiate your salary. What's the best way to tackle that? Okay. When it comes to negotiating your salary, I have helped thousands of people do it. And a lot of them negotiate between six and $20,000 on average. That's a big number, but it depends on how much they're already making. So the typical advice that people think is that they're going to kick down their boss's door and just stick out their hand and say, give me money. That's not how it works. There's a much better approach, but it means you have to slow down. So the first thing you want to do is you want to ask your boss, can I a good job, but I really like to do a great job. What would it take? And you discuss that. You summarize it. You start to execute on that. And then by the time you go back and meet your boss, which is typically three to six months later and you're polite and happy. Your boss is happy too, because you're making him or her look amazing. You pull like theatrically, you pull these papers out of your

Starting point is 00:21:10 briefcase or your bag. It's called the briefcase technique. And you show them, this is what I've done. This is what people in my role are typically paid. I'd like to discuss a compensation adjustment and notice that there's no surprise because your boss already knows this is coming. Now I'm simplifying the whole thing here, but what you can find is that most people are underpaid by thousands and to get a three, five or $10,000 raise is a massive change to people's lifestyle. So people forget there's a limit to how much you can cut, but there's no limit to how much you can earn. And you's no limit to how much you can earn. And you can earn more by negotiating your salary. There's so many ways, but people forget, and they focus only on cutting.

Starting point is 00:21:53 They forget that you can earn more money too. And when you earn more money and you have more money, you have theoretically money to invest. So let's talk about investing. Right now, I can tell you there's tons of people listening saying, yeah, investing feels like gambling to me. And what people don't understand is that if you save money, that's a good thing. Give yourself a pat on the back. But your money is still losing money every day it's in your savings account. And the way to true wealth is not winning the lottery or some insurance settlement. It's actually simple, low cost investing.

Starting point is 00:22:31 It's not that hard. It's pretty straightforward. We can talk about it, but it's not gambling. And so I want everyone to be able to take their own wealth and their own money into their own hands. And the way you do that is by investing. In what? Okay, let's talk about what most people

Starting point is 00:22:45 think. When they think about investing, what do they do? They think there's some massive computer screen in front of them with all these green things rolling by, PE ratios. That's nonsense. That's what people put in movies. You don't need to have those screens. In fact, you don't need to spend more than an hour a month on your money. You shouldn't because the more time you spend looking at the stock market, you're going to lose money. The way that you invest is to pick a simple, low cost target date fund. And you basically, let me tell you how it works. If you go to a typical low cost company, all you need to know is how old you are. That's it. People think investing is about picking stocks, but it's not. What you want to do is you want to pick something called a target date fund. And a target date fund, I'll tell you why it's special. Number one,

Starting point is 00:23:35 it's one fund that automatically includes stocks, bonds, all that stuff. So you don't have to sit there and pick it out. And it's a good thing because most individual investors are not very good at that. The second thing that's really powerful is that as you get older, it automatically rebalances. It becomes a little bit more conservative. And that means that as you get older, your money stays safer. This is a really, really simple way to invest. And all it means is you set it up automatically every month. comes out of your paycheck it goes into your investment account boom your money will start to accumulate and grow and grow and that's where the magic of compounding comes in and where do you get these funds okay you can find these at any fund company so I invest through Vanguard I don't have any association

Starting point is 00:24:22 with them but any of these great companies, Fidelity, Schwab, they all have them. But let me tell you why most people don't know about these. So if you go outside and look at a billboard, you're going to see these nonsense advertising that say things like be better than average. And this really hits home with Americans because in our relationships, we want to be better than average. At work, we want to be better than average. But in investing, average is absolutely perfect. That's exactly where you want to be. So what happens with the typical American is that they absorb these messages that, oh, I really need to pay some guy to look after my money.

Starting point is 00:25:08 And what we don't realize is there's a lot of secret things that Wall Street bundles in that they hide from the average investor. I'll give you one number that most people don't know. Did you know that if you pay someone to manage your money, let's say you pay a 1% fee. Well, that doesn't sound like a lot. 1% for me to not have to worry about it. Some guy takes care of it. Guess how much of your returns you're now paying because of that 1% fee. Take a guess, Mike. Oh, I have no idea. 28% of your returns. What? 28% of your returns are now going to someone's pocket. Why would you pay that?

Starting point is 00:25:48 It doesn't make any sense. It's not like hiring someone to come clean your house or mow the lawn. That's a flat fee. What people don't understand, and the math is very counterintuitive, is that if you're paying 1%, that's 28% of your returns going away. 2%, that's over 56% of your returns going to this person. How does that math work? I don't get it. Exactly. So you think, oh, 1%, that's not that much. But you have to remember, it compounds over time. But here's the basic gist of it. You pay 1% and you say, oh, I have $1,000,

Starting point is 00:26:22 so I'm paying 1%. That's not that much. But remember, your money is growing over time. You keep contributing. And it's 1% of all assets under management. So as your money grows, they continue to take 1%. And that money compounds over time. Time, it becomes bigger and bigger. You want to use compounding to your advantage, not to some financial advisor's advantage.

Starting point is 00:26:47 So here's what I'm saying. Most people who complain about money have never spent one weekend reading a good book about personal finance. I want people to take this seriously. I want you to read a good book. And I want you to realize you can take control of most of the finances in your life. Well, there's something refreshing, empowering, and kind of freeing about your advice. You know, spend money on the things you want and don't spend

Starting point is 00:27:13 money on the things you don't, but really enjoy spending money on the things you want. And you know, that sounds like a better life. Ramit Sethi has been my guest. He is the author of the very popular book, I Will Teach You to Be Rich, and you can see that book, and there's a link to it at Amazon in the show notes. Thanks for being here, Ramit. Thanks, Mike. I really appreciate it. People who listen to Something You Should Know are curious about the world, looking to hear new ideas and perspectives. So I want to tell you about a podcast that is full of new ideas and perspectives, and one I've started listening to called Intelligence Squared. It's the podcast where great minds meet.

Starting point is 00:27:56 Listen in for some great talks on science, tech, politics, creativity, wellness, and a lot more. A couple of recent examples, Mustafa Suleiman, the CEO of Microsoft AI, discussing the future of technology. That's pretty cool. And writer, podcaster, and filmmaker John Ronson, discussing the rise of conspiracies and culture wars. Intelligence Squared is the kind of podcast that gets you thinking a little more openly about the important conversations going on today.

Starting point is 00:28:28 Being curious, you're probably just the type of person Intelligence Squared is meant for. Check out Intelligence Squared wherever you get your podcasts. Hey everyone, join me, Megan Rinks. And me, Melissa Demonts, for Don't Blame Me, But Am I Wrong? Each week we deliver four fun-filled shows. In Don't Blame Me, we tackle our listeners' dilemmas with hilariously honest advice. Then we have But Am I Wrong?, which is for the listeners that didn't take our advice. Plus, we share our hot takes on current events.

Starting point is 00:28:59 Then tune in to see you next Tuesday for our listener poll results from But Am I Wrong? And finally, wrap up your week with Fisting Friday, where we catch up and talk all things pop culture. Listen to Don't Blame Me, But Am I Wrong on Apple Podcasts, Spotify, or wherever you get your podcasts. New episodes every Monday, Tuesday, Thursday, and Friday. Some people are just more influential than others. And some people are more influential in some situations than others.

Starting point is 00:29:31 So what are those factors that make someone influential? Particularly those hard-to-detect but powerful factors that make somebody very influential. And more importantly, how can you become more influential? Here to discuss that is Jonah Berger. Jonah is a professor at the Wharton School at the University of Pennsylvania and author of several books, including Invisible Influence, The Hidden Forces That Shape Behavior. Hi, Jonah.

Starting point is 00:30:00 So is being influential and being persuasive, do you think it's a talent? Is it a gift or what? Not so much. You know, we definitely have people in our own lives that seem to be more influential, but we can be more influential ourselves if we understand what makes people influential in the first place. Some researchers looked at negotiators to try to figure out what made certain negotiators more successful. And they found that one simple trick led negotiators to be much more successful, to reach better outcomes and get a bigger slice of the pie. And that trick very simply was imitating their negotiating partner. Their negotiating partner crossed their legs. They did the same thing.

Starting point is 00:30:43 Their negotiating partner rested their cheek on their hand. They did the same. Subtly imitating or mirroring the mannerisms, the words, the language used by someone else led negotiators to be more successful. Same thing actually in a sales context. So in a restaurant engagement, for example, if the waiter or waitress reads your order back to you word for word, they just got a 70% higher tip. And so it's not just that certain people are naturally more influential than others. They use some of these tools that we ourselves can use. We don't just want to listen to others. We want to emulate them as well, whether their language or their mannerisms. The more we seem similar, the more likely they'll be to like us,

Starting point is 00:31:20 to trust us, and the better those interactions will go. I imagine most people would think, gosh, that seems so simple and so elementary that it couldn't work. How could that be a way to be influential just by mirroring back? So there must be other ways that we don't think of that are kind of below the radar there that work, correct? Yeah, and you know, in this case, imagine you and I are chatting and we find out we have the same birthday, went to the same high school. Suddenly we feel like we have more in common. We feel a kinship. We like each other more. We trust each other more and our interactions go better. And that's exactly what mimicry does. But mimicry is only one of the dozens of subtle and often surprising tools that another great one is the power of peers to motivate us.

Starting point is 00:32:06 How can we use others to help us reach our goals? And it turns out that peers can be a great way to do things we couldn't do otherwise. People tend to work harder when others are around. Cyclists race faster. Runners run faster. People work harder when others are present. And so rather than trying to hit our goals by ourselves, we can use others to help us get there. Working out at the gym, for example, rather than at home or going running with someone else rather than running alone will help us run faster, work out harder, and as a result, be more successful. You talk about how new products should be different, but not too different. How does that fit into this discussion? Yeah, they're different flavors of influence.

Starting point is 00:32:48 Sometimes people do the same thing as others. Sometimes they do something different. And sometimes they do something in between. And this in between is really important when launching a new product or idea. I think a good way to think about it is pitching like Goldilocks from Goldilocks of Three Bears fame. Usually we think it's all about being different. way to think about it is pitching like Goldilocks from Goldilocks of Three Bears fame. Usually, we think it's all about being different. A new product or service, we want to talk about how different it is than something people have seen before. If they feel like it's different, they'll want it and will be successful. But if you look at actually successful companies and ideas,

Starting point is 00:33:18 they tend not to be different. Think about Google and Apple, for example, succeeding because they're different, but Apple actually wasn't the first, or Google wasn't the first, to introduce the things they've become synonymous for. Google wasn't the first company to do online search. They just did it a little better than someone else. Apple wasn't the first to introduce the digital music player. They just did it better than someone else had done. And so if you actually look at the data, it's not about being different. It's about being optimally distinct, similar and different at the same time.

Starting point is 00:33:45 You know, if something is too different, people think it's scary. I don't know how to use this. I don't know how to fit this in to my existing world. Why should I buy this if I don't know how I'm going to use it? At the same time, if something is too similar, exactly the same as what we're doing already, what's the reason to switch? Why do we need to put the effort in to do something different? In between is just right. Just like Goldilocks and the three bears, one side's too hot, one side is too cold, but in the middle is just right. When we mix similar and different, we're optimally distinct. That's when companies and ideas end up being successful. Similar enough

Starting point is 00:34:20 to feel familiar so people understand it and they can see how it fits in their life, but different enough to feel novel, feel distinctive, and feel worth adopting. Give me some other examples of this, because there's so many in the book. You say that successful athletes have older siblings. Is that going back to the idea of having peers that push you along? It's both. It's actually being similar and different at the same time. When researchers looked at what makes elite athletes successful, what they have in common, they found that a lot of them had older brothers or sisters. And you might think it's all about older brothers and sisters playing the same sport. So if your older brother or sister plays tennis, you sort of follow them along to their tennis lessons, and you pick up a racket earlier, and you play with them, and you learn, and you compete, and so you get better.

Starting point is 00:35:10 But it turns out that actually wasn't the case. Elite athletes had older brothers and sisters, and those older brothers and sisters tended to play sports, but they were often a different sport from what the younger child ended up succeeding at. And so why was that helpful? Well, it turns out that older siblings do two things. One, they provide a guide, a person to follow to do something, a competitor to get better, but they also provide something to contrast yourself against. If your older brother and sister is really good at tennis, it's going to be hard to be better than them at tennis. They've got a head start on you. They're taller, they're bigger, and they're probably going to be much better.

Starting point is 00:35:47 And so younger siblings don't just follow. They also differentiate. They try to separate themselves and craft their own path. If their brother or sister is good at tennis, maybe they take up baseball. The same thing in our own families. If an older brother or sister is the smart one, we become the funny one. If they're the artsy one, we become the sporty one. And so those individuals in our lives, in this case, our siblings or our family members,

Starting point is 00:36:09 shape our behavior often without us even realizing it. Well, it's interesting when we think about the choices that we make, and we don't really think why we make them. We pick this thing over that thing, or we do this thing over that thing. But if we stop and think, well, if we stop and think, you know, why we pick one can of pasta sauce over another, would we be able to figure it out? Or is it all just happening behind the scenes? It often happens below our awareness, often in a way we don't even realize. We did a bunch of research on baby names, looking at why people pick a given

Starting point is 00:36:45 name for their child. And if you ask people, they'll give you an answer. People say, oh, I picked this name because it's similar to my aunt's name. Or, oh, it was similar to a friend's name that I had growing up. And yet, when we all have these idiosyncratic individual reasons for picking names, when our kids get to kindergarten, they often end up having the same name as two or three other kids in their class. And so if it's all about being different, how did everyone end up being the same? We're all trying to separate ourselves. How do we end up being similar? Well, it turns out that without our awareness, we're subtly influenced by what names are popular at the moment. If, let's say, Lisa's popular, for example, we may not name our child Lisa,

Starting point is 00:37:29 but we're more likely to name them Lindsay or Larry, other names that begin with that L sound. Similarly, hurricanes. Hurricane Katrina comes around. You'd think no one would name their child Katrina after that. If Hurricane Katrina has a big, significant impact on naming patterns, 10% more babies were born with K names after Hurricane Katrina. Again, not the same name as Katrina, but a slightly different name, because hearing Katrina more often made those K names sound better, and as a result, we adopted them. And so even simple things like how good something sounds is not just driven by our own personal preferences. Sometimes it's driven by the things we hear and see in our surrounding environment. Well, what about once you have a personal preference, is it pretty hard to move people

Starting point is 00:38:07 away from that, even with all the things we know or that, well, that you know? I don't know them yet. But because people have latched onto something, once they have, then it's tough to move them? You would think so, but it's actually surprisingly easy to change people's behavior. Imagine you're out to dinner, for example, with a group of friends and you're hungry. So you start perusing the menu. You figure out what entree you like and your stomach starts rumbling. You can't wait for the waiter to come over. Finally, after a couple of minutes, they come over, they start taking orders, your friend of yours orders, and they end up ordering the same

Starting point is 00:38:42 entree that you were thinking of getting, the exact same thing. And then it comes to you. Do you pick the same thing or do you pick something different? And, you know, as individuals, as people who think they're independent, we'd love to say, well, yeah, I'll stick with the same entree. Of course, you know, why would I change my choice? Yet we don't. Overwhelmingly, people end up changing what they were going to pick, picking something else because their friend chose it, and it makes them less happy as a result. They end up being less satisfied with the entree they chose.

Starting point is 00:39:10 And so even in this case, it's not just about following others. Sometimes it's about differentiating ourselves, and that's why I find influence so interesting. You know, they're different flavors. Sometimes we're similar. Sometimes we're different. Sometimes we're optimally distinct, right in the middle. Sometimes others motivate us. Sometimes others demotivate us.

Starting point is 00:39:25 And by understanding these subtle and often surprising influences, we can take advantage of their upsides and avoid their downsides. You know, that's an interesting example, one I've often wondered about. If you're going to have the whatever dish and somebody else orders it first, why should that influence your choice now? They should get what they want and you should get what you want. And yet you're right, people change because they don't want to look like a copycat, I guess, or something. Yeah, I mean, imagine your neighbor bought the car you were thinking of getting. You'd say, well, I should still buy that car. It's the car I like. Yet the fact that they bought it makes us a little less likely to buy it. We're worried we're going to look like a copycat. We're worried we're going to look like exactly the same as them. And so we don't imitate and we actually

Starting point is 00:40:13 avoid doing what we already liked to try to be different, to try to be distinct. What can cockroaches teach us about motivation? So a great study was done by a number of researchers looking at what motivates people to action. In this case, they didn't look at people, they looked at cockroaches. They had cockroaches run little races, so they ran down a track trying to hide away from light, and they timed how fast they ran. What they found is that cockroaches ran faster when other cockroaches were around. A little cockroach ran faster down the track if other cockroaches were watching that cockroach. Indeed, decades of research has shown the same

Starting point is 00:40:51 thing for people. We do things, many things, but not all things, faster and better when other people are around. If you're tying your shoes, for example, you're faster to tie your shoes if someone's watching you. And similarly, if you're running in a race or biking, we're faster to run or bike when other people are around. The mere presence of others, we don't have to be competing with us, but the mere presence motivates us to work harder. But not always. We've often had that experience, for example, where you're trying to parallel park and someone else is in the car and you find yourself having more trouble than you usually do. If you've ever tried to tie a bow tie, it's difficult to begin with, but it's even more difficult when a bunch of people are watching you. So when do others make us work faster and harder and when do others make it more difficult for us

Starting point is 00:41:37 to get stuff done? Turns out it depends on the type of task we're doing. For things that are easy to begin with, things that we've done a number of times, well, others help us do them faster and better. But for things that we're not so good at, things that are difficult, like parallel parking or tying a bow tie, the mere fact that others are present makes it harder for us to do them well.

Starting point is 00:41:57 Isn't that interesting? But you're right, it's true. I mean, if you're having trouble with something, having somebody watch you makes it more difficult for some reason. I guess you're more self-conscious of how you're screwing this up or something. But you're right. Yeah, it's really amazing.

Starting point is 00:42:14 So knowing what you know and understanding that all these things are going on, what can we do with that information? How do you then corral all this and start using it to your advantage? Well, the first thing is awareness, right? If we're aware of influences, we're often not, but if we become more aware, if we become attuned to how they're shaping us and how they're playing a role in our environment, we can take advantage of them. Influence is not a bad thing. Often it can be a good thing.

Starting point is 00:42:44 It can help us make decisions faster and easier than we would otherwise. And it can motivate us like we talked about. It can encourage us to work harder and perform better than we would. Yet sometimes it leads us astray. Sometimes we make worse decisions when others are around. And so by beginning to understand influence, how it works and how it shows up in the world, we can take advantage of its upsides and avoid its downsides. And that's really why I wrote Invisible Influence. There's lots of scientific research on influence, but most of us still don't see it. And if we can begin to see it,

Starting point is 00:43:14 that's how we can use it. Well, going back to the idea that having people around helps you do better and faster and all that, what is it about that? What's the magic ingredient that's causing that? What's going on in a person's head that says, people are watching me, I'll do this better? It's called social facilitation. That's the technical term for it. And whether it's a cockroach running down a race or whether it's a person working at the office. Others get

Starting point is 00:43:46 our competitive juices flowing, and they also generate physiological arousal. They fire us up and they ready us to take action. They make it easier for us to engage in the dominant responses or the things that we're already good at. In some sense, others facilitate what we're already used to doing. But again, whether that's good or bad depends on the thing we're doing good at. And in some sense, others facilitate what we're already used to doing. But again, whether that's good or bad depends on the thing we're doing. Others make it easier for us to do well-learned things, but more difficult to combat the stuff that we're often used to doing. Having other people around, for example, makes us stereotype more because we're used to the default tendency is to stereotype. And so others around makes us more anxious and we default to those usual tendencies, which in some cases can make us worse off than we would be otherwise. I imagine, too, it depends on who's around,

Starting point is 00:44:32 that something that you might do better with your peers around might be more difficult if your boss is standing there staring at you. Certainly, and it also depends on where they are in relation to us. We did a bunch of research on NBA basketball and found that teams that halftime affected their performance at the end of the game in a particular way. Being ahead was generally a good thing. But teams that were behind by just a little were more likely to win, not teams that were far behind. If they were far behind, they'd get demotivated and give up. But teams that were behind by just a little got motivated more. They worked harder and they closed the gap. And so

Starting point is 00:45:09 thinking about the people we surround ourselves with is really important. If we're trying to motivate ourselves to work harder at the gym or at work or lose weight or exercise, we need to surround ourselves with the right people, pick our peers carefully, and use that influence. It's really amazing because when you talk about this, there's all these things going on around us that are in some ways invisible, or at least the force field is invisible, and we don't make those connections, and yet it's happening to us like 24 hours a day. It's hard to think of a choice we make or a behavior we engage in that is not in some way, shape, or form affected by others. But again, if we understand it, if we can see it, if we can recognize it, that's how we can take advantage of it. Well, and it's good to have you

Starting point is 00:45:59 here because as the title of your book implies, a lot of these influences are invisible, so it's good to have you explain them and reveal how they operate. Jonah Berger has been my guest. The book is called Invisible Influence, The Hidden Forces That Shape Behavior, and there's a link to that book in the show notes. Thanks, Jonah. Thanks. This was really interesting. Thank you so much. Good to chat. Everyone knows, or most people know and agree, that Reese's peanut butter cups taste better frozen.

Starting point is 00:46:36 And so do Snickers bars, in my opinion. But there are some other foods you would never guess also taste better after some time in the freezer, according to the people at Prevention Magazine. Grapes, for example. Grapes taste like candy when they're frozen, and they're very refreshing. Same thing with strawberries. That frozen crunch makes strawberries taste even better. Birthday cake.

Starting point is 00:46:59 While it can be quite dry at room temperature, freezing birthday cake makes it amazing. Avocado slices, frozen with a little lime and chili powder, and well, you just have to try it. Pecans, somehow they're just better frozen. And that is something you should know. If it's been a while since you have, or you never have, left a rating and review of this podcast, I invite you to. I ask you to. It helps us. It helps us in our rankings. It helps us in a lot of ways. So please leave a rating and review on Apple Podcasts or wherever you listen.

Starting point is 00:47:37 I'm Micah Ruthers. Thanks for listening today to Something You Should Know. Welcome to the small town of Chinook, where faith runs deep and secrets run deeper. In this new thriller, religion and crime collide when a gruesome murder rocks the isolated Montana community. Everyone is quick to point their fingers at a drug-addicted teenager, but local deputy Ruth Vogel isn't convinced. She suspects connections to a powerful religious group. Enter federal agent V.B. Loro,

Starting point is 00:48:05 who has been investigating a local church for possible criminal activity. The pair form an unlikely partnership to catch the killer, unearthing secrets that leave Ruth torn between her duty to the law, her religious convictions, and her very own family. But something more sinister than murder is afoot,

Starting point is 00:48:22 and someone is watching Ruth. Chinook, starring Kelly Marie, and someone is watching Ruth. Chinook. Starring Kelly Marie Tran and Sanaa Lathan. Listen to Chinook wherever you get your podcasts. Hi, this is Rob Benedict. And I am Richard Spate. We were both on a little show you might know called Supernatural. It had a pretty good run. 15 seasons, 327 episodes.

Starting point is 00:48:48 And though we have seen, of course, every episode many times, we figured, hey, now that we're wrapped, let's watch it all again. And we can't do that alone. So we're inviting the cast and crew that made the show along for the ride. We've got writers, producers, composers, directors, and we'll, of course, have some actors on as well, including some certain guys that played some certain pretty iconic brothers.

Starting point is 00:49:12 It was kind of a little bit of a left field choice in the best way possible. The note from Kripke was, "'He's great, we love him, "'but we're looking for like a really intelligent "'Dicovany type.'" With 15 seasons to explore, it's going to be the road trip of several lifetimes, so please join us and subscribe to Supernatural then and now.

Something You Should Know - How the Rich Get Rich & Subtle Things that Dramatically Influence Your Behavior

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