Hey, it's OK, you are not alone. Seems like everybody is looking for the easy button, the get-out-of-jail-free card, a set of personal-finance hacks that can get you up and out of wherever you currently find yourself stuck. Yet in the back of your head you have a sneaking suspicion that a lot of the personal-finance advice out there just doesn't work. Way too much of it sounds like the same old tired advice.
Yet what if there really were a personal-finance hack that really worked? What if these finance hacks were actually based on a 1950s Harvard study on the nature of human performance? What if you could take the findings from this study and transform your personal life?
Truth Revealed
There really is a bit of a financial life hack that you can put to use today. It comes to us courtesy of an employee-performance study done way back in the 1920s in a now-defunct Western Electric factory in Chicago.
Although at the time, the original researchers were only working to increase employee productivity, a later researcher, Mr. Henry Landsberger, came to a startling conclusion some 30 years later when poring over the data. In short, the earlier studies revealed that employee performance spiked when employees knew or suspected that they were being watched or evaluated. Landsberger coined the term "Hawthorne effect" to refer to this phenomenon.
So What?
Now that you know a bit about the history of the Hawthorne effect, how can you use it? Easy: Set up scenarios where you can use this bit of wisdom as one of your brain hacks to up your personal-finance game.
Here's an example: Suppose you have been trying in vain to get out from under your credit-card debt. You send in an extra payment one month but end up buying another trinket a week later. Instead of beating yourself up, take a look at how you can use the Hawthorne effect. You could set up a clear plan with your life partner or even your personal-finance coach that you will pay off that credit card by the end of the year. Then, at the end of the month, the two of you review the progress to date. The Hawthorne effect tells us that simply knowing you are now being held accountable, your performance is going to improve.
Think of this another way -- say, like sports and coaching. The old coach wisdom from yesterday still stands true: "What's measured is improved." In other words, because you know you are being "watched," you are less likely to go astray and much more likely to take steps to meet your goal.
Disclaimer
The other side of the equation you really need to get a handle on is another piece of the Hawthorne effect. You see, the researchers also found that the performance improvements rapidly disappeared after the employees were sure that they weren't being watched anymore. Sounds like common sense, does it not? Your boss walks into the room and asks how you are doing, and you are full of energy, explaining how much you got done this week. Your boss takes three weeks off? Well, you know how this story plays out.
Knowing that the Hawthorne effect does seem to have a short shelf life, you may be tempted to discard the wisdom available. Sadly, that's what far too many financially broke people will do. On the other hand, this is an opportunity to engage in your own personal brain hacks. It's all about continually resetting expectations. Something like a ladder, if you want to think of that way.
So you share with your life partner or your personal finance coach or support group your goals. Along the way you share your progress. As you get close to your goal, you will want to reset or upgrade your goals. You see how this works?
Lessons From The Secret
If you take a minute to think about it, you will see that the Hawthorne effect is in many ways similar to the lessons from that movie The Secret. In the movie the teaching was that your mind sees what it expects to see. Knowing that you are accountable, whether that is your life partner or some other such support group, it is more likely that you will be taking the right actions. This is one reason that many people find financial coaching so valuable.
The bottom line is this: The Hawthorne effect is another tool in your toolbox that you can use as one of your personal life hacks.
