Back in my ECON 101 class [1], the message the professor drilled home above all else was “Behaviour is Optimization.” [2]
This assumption that people are rational agents is the fundamental assumption that allows economists to distill the hot and unpredictable mess that is human behavior into something predictable and procedural.
What’s a ration agent? It’s something that acts optimally under a set of premises and choices.
For example: under the premise that more money is better if a rational agent has the choice between a $5 outcome and a $10 outcome they will always pick the larger one.
Another example: under the premise that more of a good is always better if given the choice between 3 oranges or 1 orange, the 3 oranges are always taken.
You might be thinking to yourself, well, there are so many other things that go into decisions than something as cut-and-dry as cost or volume. And you’d be right. But that’s the beauty of it. It allows you to simplify otherwise complicated decision processes into something procedural and conclusive.
Steps: outline your premises, evaluate the options under the premises, pick the optimal one. [3]
As a student of economics, you need to buy into this ration-agent assumption. Otherwise, everything you’re taught is going to feel unintuitive.
Once you’re bought in, then the fun begins because you can start to model human behavior! “Make them dance.”
A premise that went unstated in my class but I think is useful is the least-effort assumption. If given two choices, a ration agent will prefer the choice that requires less effort (a.k.a. “friction”). It’s intuitive. And, generally speaking, pretty damn well representative of humans.
Under this premise, you can predict which of two options people will prefer, all else aside.
Example: suppose you give a group of people a choice between two options A and B. And you give a different group (from the same population) a choice between A and B but in this case option “A” is selected as the default option. Among those two groups, the second group will have a higher rate of “A” choices because they didn’t need to do anything to pick “A”. Picking “A” was the least effort choice and thus was chosen more. Toy example, but it should convey the point.
Similarly, if you have a payment funnel that takes three button clicks to complete versus one that only takes two, the one with fewer clicks will likely garner more sales.
And, conversely, if you have an unsubscribe funnel that takes 10 button clicks - cough Amazon Prime cough - versus one that takes 1 click, the one with 10 button clicks will have lower rates of unsubscription.
This is all well and good, but I think the greatest bit is when you remark the application of this thinking to daily life.
Putting my lifestyle-guru hat on, you can see how if there are things you want to do (e.g. workout, run, write, read) the likelihood that you do them increases by making them easier to do. And, on the contrary, if there are things you want to curb (e.g. eating poorly, spending time on social media) then you can reduce their likelihood by making them harder to do.
It’s a really simple idea, and it’s been stated in different ways by the hundreds, but that doesn’t understate its utility.
If you buy into the idea, tailoring the effort required to do different activities becomes an ingrained part of daily life, and for the better.
Two examples from my life.
Making Learning Easier
I love learning things but I hate forgetting things. So, several times, I’ve taken to using space-repetition flashcard softwares to help not forget things. Basically, you create flashcards and then you review the flashcards at optimal times to avoid forgetting them.
The problem was that it was always too much work for me to use them for a long time, so I would stop after a while. Hence, to reduce friction, I wrote a Hammerspoon script to make a hotkey window on my computer that instantly shows my flashcard software [code].
Now, when I’m on my computer I’m 0.2 seconds away from the gates of knowledge. And, as a result, I’ve been reviewing consistently.
Making Writing Easier
I enjoy writing and sometimes I want to share the things I write. However, my blog setup required me to open a code editor or Obsidian and edit in a less-than-agreeable UI. Managing images was also a pain. As a result, when all I wanted to do was write I had to do much more than just write. So, I devised a system to make it easier.
Now I write all my blog posts in Notion and use an app I built N2M to automatically upload the posts to my website. I find Notion great for writing; it's got spellcheck, drag-and-drop images, and pretty decent shortcuts. Now all I need to do is write, and so I write more.
Economics demonstrates the utility of reducing human behavior to a set of premises, making it easier to predict. One premise is the least-effort premise which assumes options that require less effort will be chosen more often than those that require more effort. If you believe this premise, you can draw great value from tuning the effort required to do various activities in your life. Increasing friction around things you want to do less and reducing friction around the things you want to do more.
Basically, we’re all robots and econ’s reductionist assumptions are useful.
TLDR: fiddle with the knobs.
[1] Among my favorite university courses.
[2] There were three core points:
[3] This is obviously an incomplete picture of what economics is and what economists do, just FYI.