1) They both pay a price for their procrastination. American workers pay when it comes to planning and saving for their retirements; Kenyan farmers pay when it comes to planning and purchasing fertilizer for their harvests.

2) They both love free shipping.

In a working paper titled “Nudging Farmers to Use Fertilizer: Theory and Experimental Evidence from Kenya,” three economists from MIT, Harvard, and the University of California-Santa Cruz weigh in on a contentious policymaking debate with some interesting findings. Many policymakers consider fertilizer subsidies to be a standard tool for boosting agricultural productivity and economic growth in developing countries. Many economists criticize these subsidies as inefficient mechanisms, which are instead used to line politicians’ pockets and keep them in power. If Kenyan farmers behaved like econs, the economists’ argument goes, they would be able to figure out the exact amount of fertilizer necessary for generating more crops and more profits, all without the need for any subsidies. After all, it’s hardly a secret that fertilizer yields more crops, and since it can be bought and sold in almost any amount, farmers should easily be able to purchase the exact amount necessary for their plot of land.

But it turns out that most farmers behave like humans–71 percent of them according to the paper–by thinking they’ll buy fertilizer, which they’ll absolutely, positively buy…tomorrow. They overestimate their patience and planning talents, waiting until the last possible moment to buy fertilizer and ending up with not much of any. It is possible, authors Esther Duflo, Michael Kremer, and Jonathan Robinson say, that large subsidies could spur fertilizer purchases, but it is also possible that these subsidies could lead to wasted purchases, extra transaction costs, and fertilizer overuse among impatient buyers. (The consequences of saving too much seem less damaging than buying or using too much fertilizer.)

What if there was a commitment strategy that could help farmers use fertilizer more efficiently and boost crop yields?

Working with a non-government organization called International Child Support, the economists developed a plan to offer small, limited-time discounts right after the harvest when farmers have extra money from recent sales. The simplest form of the discount wasn’t much of a discount. Farmers were offered a voucher allowing them to pay full price for the fertilizer and get free delivery at a date of their choosing. But free delivery is a powerful incentive for a farmer who typically has to spend time and money going to town to purchase fertilizer. Farmers were also given the option to commit to these discounts before the harvest. The program could have offered discounts at different points during the harvest season, but the economists thought that earlier discounts would not need to be as big as later discounts in order to spur purchases. They tested the idea against a standard 50 percent subsidy and simple reminders about the importance of fertilizer (without discounts). Neither performed as well as the nudge. Simply offering free delivery early in the season increased actual fertilizer use by 46 to 60 percent, a bigger boost than with a half-off subsidy offered later in the season.

The Kenyan farmers example may offer some ideas for banks here in the U.S., which could certainly benefit from a healthier deposit base. There are many commitment strategies for saving – Save More Tomorrow being the favorite one from Nudge. The savings nudge with the closest resemblance to the fertilizer nudge is a debit card loaded with your tax refund. Aimed at Americans without bank accounts, the card provides a way to put cash aside without paying huge check cashing fees. Perhaps some marketing campaigns for special savings accounts or certificates of deposit with slightly higher interest rates could be offered around New Years Day, when people are always trying to make commitments, or tax day, when people have a few extra dollars in their wallet.

Of course, the real lesson from this nudge may be the power of free shipping. Would Americans accept lower interest rates or commit to locking up their money for longer periods if banks offered to pay the shipping costs (up to some amount) on their DVD and book purchases for the year?

Interested readers can find a full copy of the June version of the paper can be found here. A gated copy of the August version can be found here.

1. Foreign Policy traces the history of behavioral economics with this timeline in the latest issue.

2. One hundred and twenty six of the richest 300 colleges (based on endowment size) have curtailed cafeteria tray use. According to the group rating the environmental policies of colleges, the University of Chicago’s dining practices earn an A.

Dining Services purchases 20 percent of its food from local suppliers and contracts with a local dairy. The university is currently changing its dining hall format so that all meals will be served on reusable dishware. The university also offers reusable cups, mugs, and shopping bags.

3. A Mac application, Freedom, that disables networking on an computer for up to eight hours at a time, freeing you from the “distractions of the internet” and allowing you to do something better with your time.

Hat tip: Chad Valasek.

“If I didn’t achieve what I wanted to, a very large contribution would automatically come out of my credit card and go to a charity that I very much didn’t support,” Orszag says of his training strategy. “So that was a very strong motivation, as I was running through mile 15 or 16 or whatever it was, to remind myself that I really didn’t want to give the satisfaction to that charity for the contribution.”

He declines to name the charity.

Orzag on NPR. Hat tip: Economix, which also digs up a new favorite for our growing collection of alarm clocks. This one doesn’t turn off unless you feed it coins.

Courtesy of Felipe Insunza, an economics student at São Paulo University in Brazil.

To be admitted to any Brazilian university, especially one of high quality, students must pass a difficult exam that covers all the subjects taught in high school. The test covers basic subjects like math, Portuguese, biology, chemistry, physics, English, history, and geography. But, there are also very specific themes like botany, zoology, genetic, Mesopotamian history, analytic geometry, and stoichiometry, that students have to understand in order to do well on the exam. The competition for admission is intense – 20 to 30 candidates for every vacancy. Three factors largely determine your score. Do you have a good memory? Do you have strong study habits? Are you able to control your emotions?

After a one year of study, I won a spot in the Economics graduation, reaching the first collocation among more than 2,000 competitors. Along the way, I developed a self-punishment nudge to help me study more consistently.

For each subject, I had to study I had a little notebook. There were 25 subjects. There were 5 classes each day. For each subject, I carried a notebook with me to school. When I came home I had to study the themes taught in all of my classes. I also had the notebooks for subjects that did not have a class that day. Each afternoon, I studied yesterday’s subjects and today’s. If I did not study a subject, I hauled that notebook to school the next day in my backpack – even if I did not have class.

Whenever I had a backache, I said to myself, “You have to study more.” I knew I would be tempted to procrastinate. People think it’s better to study today, but we tend to think that will be easier to do that tomorrow, so we postpone, and then regret. I think that with this nudge, I created a short run trade-off between pain and laziness. If you want to sleep all day long your spine will be upset with you the next day.

A commitment strategy to avoid gambling away your winnings from the non-fiction dad’s five part review of Nudge.

The last day of the cruise I couldn’t get the losses out of my head and was sure that if I sat down again I could get my money back.  This time my Dad came along to watch.  I sat down with $50 this time just in case I caught a cold streak before the winning was to begin.  Well sure enough the first few hands didn’t start off all that well, and I was down to $20.  Then finally the dealer busted and I won a hand.  This was followed by a tap on the shoulder.  My Dad told me to give him the chip that I had just won so I wouldn’t be tempted to bet with it.  Then I won the next hand, followed by another chip in my Dad’s pocket.  Then again, same routine.  I started to think that there was something to this, as after the fourth win in a row there had to be some kind of karmic energy involved with “being responsible” with your winnings.  I believe I won something like the next five out of seven hands and ended up even for the whole trip, all thanks to my Dad playing the role of the blackjack jiminy cricket.

As told to a software programmer:

(Seinfeld) said the way to be a better comic was to create better jokes and the way to create better jokes was to write every day. But his advice was better than that. He had a gem of a leverage technique he used on himself and you can use it to motivate yourself—even when you don’t feel like it.

He revealed a unique calendar system he uses to pressure himself to write. Here’s how it works.

He told me to get a big wall calendar that has a whole year on one page and hang it on a prominent wall. The next step was to get a big red magic marker.

He said for each day that I do my task of writing, I get to put a big red X over that day. “After a few days you’ll have a chain. Just keep at it and the chain will grow longer every day. You’ll like seeing that chain, especially when you get a few weeks under your belt. Your only job next is to not break the chain.”

“Don’t break the chain,” he said again for emphasis.

Shakeout says this story is an example of loss aversion in that “the benefit of writing another joke seems small, but as you build up the chain you give yourself something to lose.” Loss aversion doesn’t seem like the appropriate behavioral economic lesson to apply to Seinfeld’s story.

An alternative might be research on differences in decision making when facing isolated options versus sequences. The frame of a sequence typically enables individuals to make more farsighted decisions, which is exactly what happened in Seinfeld’s case. In much of this research – the best of it done by George Loewenstein – individuals typically postpone objectively “better” outcomes until the end of a sequence (like French food versus McDonalds). Though in the Seinfeld story, the sequence itself seems to differentiate the value of initially identical products (a self-produced joke).

This fitness trainer has come up with a creative commitment strategy to help him stay healthy.

But there’s one tool that helps me stick to my diet, and that is social support and public accountability. I use a free web site called twitter, where I tell the world what I had for every meal.

And since I’m an expert that folks look to for help, I have an incentive not to cheat. You can follow me and my meals and workouts here:

Click here to follow Craig’s diet and workouts

Hat tip: Andrew Schulman

From Yale psychologist Paul Bloom:

As I write this article, I’m using a program that disables my network connections for a selected amount of time and does not allow me to switch them back on, thereby forcing me to actually write instead of checking my e-mail or reading blogs. A harsher (and more expensive) method, advised by the author of a self-help book, is to remove your Internet cable and FedEx it to yourself—guaranteeing a day without online distractions.

Even pigeons can craft commitment strategies.

Ainslie conducted an experiment in which he placed pigeons in front of a glowing red key. If they pecked it immediately, they got a small reward right away, but if they waited until the key went dark, they got a larger one. They almost always went for the quick reward—really, it’s hard for a pigeon to restrain itself. But there was a wrinkle: the key glowed green for several seconds before turning red. Pecking the key while it was green would prevent it from turning red and providing the option of the small, quick reward. Some of the pigeons learned to use the green key to help themselves hold out for the big reward, just as a person might put temptation out of reach.

Read the rest of the article, “First Person Plural,” here.

Don’t check your 401(k) portfolio on a week like the last one, especially if you’re young. Take a tip from this guy.

Scott Jaffa, a 25-year-old systems administrator in Silver Spring, Md., called yesterday’s plunge “as much a test of my psychology as anything else.” Because he does not need the money “for another 30 to 40 years,” he asked rhetorically, “why should I worry myself about its performance over a period of days or weeks or even months?”

Mr. Jaffa is already developing what the ancient Stoics and the great Danish philosopher Søren Kierkegaard called ataraxia, or imperturbability. But he knows that ataraxia does not come naturally; it takes work. A year and a half ago, Mr. Jaffa destroyed the online access code for his 401(k) so he could no longer have instant access to his retirement accounts. His goal was to make it “significantly harder” and to require “human interaction” before he could trade on his own emotions. That enabled him to watch Monday’s decline without acting on it.

From the Wall Street Journal.