Goal Setting = Not Getting a Taxi in NYC

Throughout the years, I have pushed back against celebrating any milestone in my life.  I felt that by celebrating, I would limit myself and be satisfied with today’s achievement instead of looking to tomorrow’s horizon.  Turns out, economics backs up my hunch!

Colin Camerer, a Robert Kirby Professor of Behavioral Finance and Economics at the California Institute of Technology, studied why it is more difficult to get cabs in the rain in NYC.   Yes, we all feel like it’s more difficult to get a cab because we are getting drenched on the curb -- AND, we surmise that there are more people looking for cabs, so they are harder to find.  Both true.  BUT there’s more to it than that -- and that's where it gets fascinating related to goals!

In his study, Camerer found that cabbies, on average, have a target daily goal of fares that equate to roughly double the daily taxi rental cost.  Once that threshold is met, they retire for the day.  Since more people are looking for cabs on rainy days, they meet their ‘goal’ faster and quit EARLIER on rainy days!  This makes no sense, right?  It is easy money to work a bit longer for significantly more reward.  And yet, rigid goal setting robbed them of a greater payout that could have been achieved with proportionally less effort!  As I read this and related it to my internal bias towards not celebrating goals, it made sense (to me -- as I do everything I can not to truncate my full potential).

It's my philosophy that goals should not be written in stone, but rather evolving benchmarks setting what I call "true north".  If it’s ‘raining,’ proactively set your goals higher to take advantage of the circumstances. (The idea of changing goals isn’t an excuse to downsize them because of your own laziness, but that’s another blog post.) Recognize that by standing still when it’s ‘raining,’ you are not taking advantage of your full potential.

- RH