Tuesday, May 12, 2009

Informing economics through toileting

You know, the general characterisation of Parentonomics is how economics might inform parenting. Of course, for my day job, my concern is economics (so much so that I keep my blog posts separate -- the economics ones are here). So it was with some surprise that I read this column in the Financial Times by economist John Kay. It starts ...
The Australian economist, Joshua Gans, recently described a problem central to the current financial turmoil. How could he persuade his young son not to wet his pants?
Really? I had thought that it was central to our household hygiene and quite far removed from the global financial crisis. Kay makes a convincing case as to why, instead, what goes on in my household (yes, that is MINE not yours) really matters.

Kay recounts a version of the story but the facts are a little out (even if his point isn't). So let me quote instead from the book. Turns out you will find out all you need to know about the financial crisis from the chapter on Toileting. The salient bit was about night training our son which wasn't clicking for him.

He didn’t seem too bothered about it all and we noticed that he would get up dry, claim he didn’t need to go to the toilet and then go in his nappy, and later, pull-ups. This smelled (literally) of the basis of an incentive problem: once again, his interests were not aligned with ours.

Pull-ups help here. They have little pictures that disappear if ‘accidents’ occur. This gave us a visible and external monitoring device. It was viewable both to us and our son. So that is the first thing we would check in the morning and a celebration would ensue if the pictures were there.

As you can guess, celebrations only get you so far. So, as has been our pattern throughout all of this, we moved to more tangible rewards. He was old enough to understand a ‘points system’ that would lead to rewards. So a dry night would get a point and 7 points would get you a reward -- usually, a book or toy. This was sufficient motivation and he was focused: “make sure the pictures don’t go out and you get a point.”

Well we had good nights and intermittent accidents. But then we had a week of dry pull-ups. Much rejoicing ensued, including a bonus; no more pull-ups. Sadly, the next night there was an accident. Now you might say, these things happen. But it turns out that the problem was that these things hadn’t happened.

Our son had a small rubbish bin in his room. Upon inspection, we found 5 full pull-ups. It turned out that our son was getting up in the morning, noticing the pictures gone and getting himself a new pull-up! There was nothing malicious in this. He just understood the rule as: “produce a pull-up with pictures.” And so he worked out how to do just that.

Again the old adage of “you get what you pay for” was raising its ugly head. We paid for dry pull-ups and that is what we got.

Now the response to this was to impose a new requirement: you have to have the same pull-up on in the morning as was put there last night. Easy to monitor and we did.

So we got a couple of nights of successes and the one morning I went into his room and found his bed wet. His pull-ups were dry. I asked him about this and he said “it just happened.”

“But, how? It should have wet your pull-ups.”

“No it wouldn’t. I didn’t have them on. They were on the night stand.”


It turned out that he had been removing his pull-ups so as to ensure they were dry in the morning! I guess that worked. And we didn’t notice because the relevant part of his body was concealed under the covers.

When it comes down to it, giving children an incentive is a little like programming a computer. Unless you get the instructions just right, problems can ensue. There is an episode of Star Trek: The Next Generation where Geordi programmed the holodeck for a game “that could defeat Data” (the android) and ended up creating a sentient program that almost destroyed the Enterprise. Programming our son posed the same challenges.

We focused on the pictures on the pull-up and that is where our son placed his considerable creative energy. What we needed was a ‘program’ that gave exactly what we wanted: no accidents. That is what we turned to after that night. It took some months but eventually we were successful only to be disrupted again following an operation. Nonetheless, since that time, we have moved focus away from the pull-up (although getting rid of them became a common incentive as he grew older) and on to the activity we cared about.
Kay's point is that getting incentives and rules right is hard because people work their way around them.
The Gans household elaborated the rules to close the loophole, only to discover that their child was able to construct yet more ingenious methods of circumvention. Britain’s Committee on Standards in Public Life, and the Basel Committee on banking supervision, have the same experience. The Gans problem solved itself eventually – the boy grew up. We are not usually so lucky. Revenue authorities have been in pursuit of tax avoidance ever since income tax was introduced. They have never quite caught up, and they never will.
Kay argues that simple rules -- in the case of finance, mandated disclosures -- work better than punishments and rewards. In our case, for toileting training, it just didn't happen until he was on board with the program.

With Child No.3, we have tired ourselves out. At 4, her Pull-Ups remain on and we are going to wait until she is ready to do something about it or she can just deal with that when she leaves home. That said, we have dropped the name brand and gone for the cheaper stuff. Why should we spend money making her comfortable?

Oh yes, in the meantime, any financial institution wanting to work out how to deal regulations, my son is available on a consultant basis (fee to be negotiated).