Master Life Faster: Newsletter

Big Fish, Small Pond

Posted in Newsletter by Paul Lem, M.D. on February 8, 2010

Volume 3, Issue 1
HAPPY: Is it better to be a big fish in a small pond?
SOCIAL: How important is a personal touch?
WEALTHY: How much are friends and family worth?


“I would rather be first in a little Iberian village than second in Rome.
-Julius Caesar

Is it Better to be a Big Fish in a Small Pond?

I’m a biotech entrepreneur based out of Ottawa, Canada. When I’m visiting friends or clients in the United States, I invariably get asked when I’m going to move to Boston or the Bay Area. After all, that’s where the action is in my field (and the winters are warmer!).

Talent Clusters
So should I move? On one hand, there are fewer biotech entrepreneurs in Canada compared to the United States, so there is less competition for funding, talent, and other resources. On the other hand, there are more opportunities south of the border. The reason, as Richard Florida points out, is because “In today’s creative economy, the real source of economic growth comes from the clustering and concentration of talented and productive people.” This clustering force “makes each of us more productive, which in turns makes the places we inhabit much more productive, generating great increases in output and wealth.”

So is it better to be a big fish in a small pond, or a small fish in a big pond?

Gifted Schools
To investigate this question, Australian psychologist Herbert Marsh looked at the performance of students in gifted and non-gifted schools. He and his colleagues analyzed over 100,000 15-year-olds from 26 countries. Their results showed that students in schools with higher average achievement levels experienced lower levels of academic self-concept. Self-concept is the psychological need to think and feel positively about yourself. In other words, students in gifted schools had lower confidence in their abilities and felt less positively about themselves.

Some parents and teachers might argue: “Who cares how students feel as long as they perform better?” The problem is self-concept can directly influence performance.

Competition and Comparison
In an Israeli study with over 1,000 gifted students, researchers found that gifted students in mixed-achievement classes had higher academic self-concepts, lower anxiety, and higher school grades than gifted students in specialized classes with other gifted students. Other studies have shown that elite swimmers with high physical self-concepts perform better at international events than swimmers with comparable rankings but lower self-concepts. Similarly, employees who feel confident in performing a task will actually perform better and will try harder when things go wrong.

It’s a self-reinforcing cycle: How you think and feel about yourself both affects and is affected by your performance. Perhaps the underlying question is: What’s the optimal balance between the size of the fish and the size of the pond?

Stretch Goals
Mihaly Csikszentmihalyi is a psychology professor at Claremont University in California. He studies flow, the state of peak performance and peak experience. According to Csikszentmihalyi, “the best moments usually occur when a person’s body or mind is stretched to its limits in a voluntary effort to accomplish something difficult and worthwhile.”

There is a zone, the line between overexertion and underexertion, where we perform at our best and enjoy what we are doing. It occurs when the activity is appropriate for our skill level; when it is neither too hard nor too easy. If it is too hard, we experience anxiety. If it is too easy, we become bored.

Finding Your Level
Imagine you are learning to play tennis. One day, your coach surprises you. He has scheduled you to play top-ranked Roger Federer at center court in Wimbledon. How do you feel? Will you enjoy getting thrashed with the world looking on? Will you enjoy wasting Roger’s time?

Whether you are a tennis player, gifted student, or entrepreneur, look for a pond that’s challenging to swim, but not so deep that you’ll drown.

References
Florida, Richard. (2008). Who’s your city?: How the creative economy is making where to live the most important decision of your life. Random House.

Marsh HW, Hau K. (2003). Big-Fish-Little-Pond Effect on academic self-concept: A cross-cultural (26-country) test of the negative effects of academically selective schools. American Psychologist. 58(5): 364–376. Full Article.

Marsh HW, Byrne BM, Yeung AS. (1999). Causal ordering of academic self-concept and achievement: Reanalysis of a pioneering study and revised recommendations. Educational Psychologist. 34: 155–167. Full Article.

Zeidner M, Schleyer EJ. (1999). The big-fish–little-pond effect for academic self-concept, test anxiety and school grades in gifted children. Contemporary Educational Psychology. 24: 305–329. Abstract.

Csikszentmihalyi M. (1990). Flow: The psychology of optimal experience. Harper & Row.


There’s a difference between beauty and charm. A beautiful woman is one I notice. A charming woman is one who notices me.
-John Erskine

How Important is a Personal Touch?

Jacqueline Lee Bouvier Kennedy Onassis. First Lady, wife of a billionaire, she was at the center of power for most of her life. How did she do it?

Personal Notes
We know about Jackie’s style, elegance, and grace. But less well known was her skill at writing personal notes and letters. According to journalists Shelly Branch and Sue Callaway: “Jackie used her trademark stationery (light blue sheets with embossed white lettering) and loopy script to curry favors, charm lovers, maneuver out of tight spots, and evoke her famous wrath—usually in effusive fashion.”

Jackie wrote people’s names in large letters, and began lots of sentences with “you.” When writing on her tiny 3.5” x 4.5” notecards, she made use of every inch, often writing on the back and up the sides. Longtime Kennedy family aide Melody Miller remembers that Jackie’s notes usually opened with something personal up front. For example, she might write “what a spectacular soufflé!” and then follow up with a more generic “thank-you for a memorable evening.”

If it worked for Jackie, will it work for you?

The Power of Personalization
At Sam Houston State University in Texas, behavioral scientist Randy Garner tested the effect of personalized notes on response rates for mail-in surveys. He randomly selected 150 university professors to receive one of three packages:

  • 50 received a survey with a handwritten Post-It note that said, “”Please take a few minutes to complete this for us. Thank you!”
  • 50 received a survey with a handwritten letter with the same message as the Post-It note.
  • 50 received a survey with no handwritten note or letter.

Results showed that the response rates were 76 percent for the handwritten Post-It notes, 48 percent for the handwritten letters, and 36 percent for the no-message group. A Post-It note is such a small personal touch. Why does it cause such a big difference in response rates? And why does it outperform handwritten letters?

Norms and Forms
The answer lies in the difference between social norms and market norms. Social norms are the standards of behavior we expect from friends, family, and community members. It includes the friendly requests we make of neighbors, or the way we help an old lady cross the street. There is a feeling of goodwill and helping others. In contrast, there is nothing sentimental about market norms. You get what you pay for. It’s the world of salaries, prices, rents, interest, and cold calculations.

When you receive an unsolicited survey in the mail, you see it as work. Why should you fill it out if you’re not getting paid? If it includes a handwritten letter, it tells you that at least someone took the time to write. It’s better than a form letter, but not by much. In contrast, a handwritten Post-It note looks and feels friendly. It makes you think of the notes you got from your mom in your lunchbox when you were a kid. Or the love note you got from a Valentine in sixth grade.

Write a Note
A handwritten Post-It note nudges you into the warm and fuzzy world of social norms. You fill out the survey and mail it in because it feels like the right thing to do.

Learn from Jackie’s example. Write someone a personal Post-It note today.

References
Branch S, Callaway S. (2006). What would Jackie do? An inspired guide to distinctive living. Gotham Books.

Garner R. (2005). Post-It® note persuasion: A sticky influence. Journal of Consumer Psychology. 15(3): 230–237. Abstract.


“It’s the friends you can call up at 4 a.m. that matter.”
-Marlene Dietrich

How Much are Friends and Family Worth?

Friends and family are important. But money is important too. Money pays for food, shelter, health insurance, and sending your kids to college. It can also buy you more time to spend with friends and family.

Social Capital
What’s the right balance between making more money and spending more time with friends and family? It seems like an impossible question to answer. After all, how can you put a dollar value on the joy you get from playing in the park with your kids, or spending Christmas with your parents and grandparents?

It turns out there is a way. It involves taking a random sample of people, recording their happiness levels at different points in time, and then using regression equations to work out the implied “shadow price” of different life conditions.

Happiness and Relationships
Using this method, economist Nattavudh Powdthavee at the University of London analyzed responses to the British Household Panel Survey (BHPS) from 1997 and 2003. The BHPS asked over 10,000 randomly-selected people the same question: “How dissatisfied or satisfied are you with your life overall?” There were seven possible responses, ranging from “1. very dissatisfied” to “7. very satisfied”.

In addition, respondents were asked the following two social questions:

  • “How often do you meet friends or relatives who are not living with you, whether here at your home or elsewhere?”
  • “How often do you talk to your neighbours?”

There were five possible responses, ranging from ““1. never” to “5. on most days”.

Among working-age adults, 43 percent of men and 50 percent of women said they met up with their friends every day. The numbers were slightly less when it came to talking with their neighbors: 33 percent of men and 39 percent of women did so every day. In terms of happiness, three-quarters of men and women rated themselves higher than 4 on the life satisfaction scale.

Pricing Happiness
How did Powdthavee use this information to calculate the dollar value of friends and family? Suppose there is a woman who sees her friends “once or twice a month” at the beginning of the survey. By the end of the survey, she is seeing her friends “on most days” and reports a 1-point increase on the life satisfaction scale. Therefore, the shadow price of seeing her friends more often is equivalent to the income required to generate the same 1-point increase in life satisfaction. The actual calculations are more complicated because they control for variables such as marital status, health, education, employment status, children, hospitalization time, and so on, but the rationale is the same.

Crunching through the BHPS numbers revealed that someone who only saw his or her friends or relatives less than once a month required an extra $94,500 a year to be just as satisfied with life as someone who saw his or her friends or relatives on most days.

Here are the shadow prices for other life situations:

  • Talking to neighbors on most days versus less than once a month: $60,000/year
  • Getting married: $96,000/year
  • Moving in together: $81,000/year
  • Going from very poor health to excellent health: $450,000/year
  • Getting separated: minus $86,000/year
  • Getting divorced: minus $33,000/year
  • Being disabled: minus $92,000/year
  • Being unemployed: minus $99,000/year
  • Widowhood: minus $300,000/year

Note that these are huge effects considering the average annual household income per capita was $14,700 in the BHPS sample.

Of course, these shadow prices are only estimates based on averages. Your life situation may be far from average. But if you get a job offer in New York City at double your salary, you should consider the social cost of missing your friends and family.

References
Powdthavee N. (2008). Putting a price tag on friends, relatives, and neighbours: Using surveys of life satisfaction to value social relationships. Journal of Socio-Economics. 37(4): 1459–1480. Full Article.


Copyright 2010 by Paul Lem, M.D. All Rights Reserved.
Posted to: https://masterlifefaster.wordpress.com

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