New Year Resolutions

New Year is not only a time of holidays and parties, it’s also a time to contemplate the past year, to see what went right and what went wrong, but also, what one achieved and what one didn’t achieve. Such thoughts often then turn into New Year resolutions, plans to improve one’s behavior in the upcoming year.

Making New Year resolutions is popular – a poll in the US found that about half of the survey respondents made New Year resolutions. According to MyGoals.com, last year in the US, the most popular resolutions for 2009 were ‘to lose weight’, followed by ‘to pay back debt’. For 2010, losing weight remains number one and resolutions related to ‘personal growth’, including reading more and spending more time on hobbies, have become increasingly popular. For 2008, 21% of goals set were related to career advancement, but for 2010, only 12% of goals are related to this, indicating that even New Year resolutions seem affected by the economic crisis.

Despite all good intentions, most people have troubles sticking to their promises. The above mentioned survey for example found that about 75% of people never or infrequently are able to keep to their resolutions. Given these statistics, George Bush should probably have been more careful when saying in his December 29, 2007 radio address that his New Year resolution for 2008 was ‘to work with Congress to keep our economy growing …’

If fulfilling New Year resolutions is so difficult, why do people make them? Or, more general, why do people make promises? Economists view promises as commitment devices – by promising ‘to lose weight’ one imposes extra losses on one’s self in case one does not lose weight. Indeed, if one fails to lose weight, one will not only face the consequences of being overweight but also of losing one’s reputation for being trustworthy. Hence, by promising something, one makes not achieving one’s goal more costly, which stimulates the person who makes a promise to put more effort to achieve his/her goals.

That so many people don’t stick to their resolutions seems to suggest that losing reputation is not too powerful a deterrence. To solve this problem, some economics professors have recently started a website, www.stickk.com, a website that allows people to attach money to their promises and in this way, put their money where their mouth is. If they don’t fulfill their promise, they not only lose reputation but also the money committed.

It would be nice if Ukrainian politicians start visiting that website…