Undercover Economist

The power of saying no

‘Every time we say yes to a request, we are also saying no to anything else we might accomplish with the time’

Every year I seem to have the same resolution: say “no” more often. Despite my black belt in economics-fu, it’s an endless challenge. But economics does tell us a little about why “no” is such a difficult word, why it’s so important — and how to become better at saying it.

Let’s start with why it’s hard to say “no”. One reason is something we economists, with our love of simple, intuitive language, call “hyperbolic discounting”. What this means is that the present moment is exaggerated in our thoughts. When somebody asks, “Will you volunteer to be school governor?” it is momentarily uncomfortable to refuse, even if it will save much more trouble later. To say “yes” is to warm ourselves in a brief glow of immediate gratitude, heedless of the later cost.

A psychological tactic to get around this problem is to try to feel the pain of “yes” immediately, rather than at some point to be specified later. If only we could feel instantly and viscerally our eventual annoyance at having to keep our promises, we might make fewer foolish promises in the first place.

One trick is to ask, “If I had to do this today, would I agree to it?” It’s not a bad rule of thumb, since any future commitment, no matter how far away it might be, will eventually become an imminent problem.

Here’s a more extreme version of the same principle. Adopt a rule that no new task can be deferred: if accepted, it must be the new priority. Last come, first served. The immediate consequence is that no project may be taken on unless it’s worth dropping everything to work on it.

This is, of course, absurd. Yet there is a bit of mad genius in it, if I do say so myself. Anyone who sticks to the “last come, first served” rule will find their task list bracingly brief and focused.

There is a far broader economic principle at work in the judicious use of the word “no”. It’s the idea that everything has an opportunity cost. The opportunity cost of anything is whatever you had to give up to get it. Opportunity cost is one of those concepts in economics that seem simple but confuse everyone, including trained economists.

Consider the following puzzle, a variant of which was set by Paul J Ferraro and Laura O Taylor to economists at a major academic conference back in 2005. Imagine that you have a free ticket (which you cannot resell) to see Radiohead performing. But, by a staggering coincidence, you could also go to see Lady Gaga — there are tickets on sale for £40. You’d be willing to pay £50 to see Lady Gaga on any given night, and her concert is the best alternative to seeing Radiohead. Assume there are no other costs of seeing either gig. What is the opportunity cost of seeing Radiohead? (a) £0, (b) £10, (c) £40 or (d) £50.

If you’re not sure of your answer, never fear: the correct answer (below), was also the one least favoured by the economists.

However dizzying the idea of opportunity cost may be, it’s something we must wrap our heads around. Will I write a book review? Will I chair a panel discussion on a topic of interest? Will I give a talk to some students? In isolation, these are perfectly reasonable requests. But viewing them in isolation is a mistake: it is only when viewed through the lens of opportunity cost that the stakes become clearer.

Will I write a book review and thus not write a chapter of my own book? Will I give a talk to some students, and therefore not read a bedtime story to my son? Will I participate in the panel discussion instead of having a conversation over dinner with my wife?

The insight here is that every time we say “yes” to a request, we are also saying “no” to anything else we might accomplish with the time. It pays to take a moment to think about what those things might be.

Saying “no” is still awkward and takes some determination. Nobody wants to turn down requests for help. But there is one final trick that those of us with family commitments can try. All those lessons about opportunity cost have taught me that every “no” to a request from an acquaintance is also a “yes” to my family. Yes, I will be home for bedtime. Yes, I will switch off my computer at the weekend.

And so from time to time, as I compose my apologetic “sorry, no”, I type my wife’s email address in the “bcc” field. The awkward email to the stranger is also a tiny little love letter to her.

Answer: Going to see Lady Gaga would cost £40 but you’re willing to pay £50 any time to see her; therefore the net benefit of seeing Gaga is £10. If you use your free Radiohead ticket instead, you’re giving up that benefit, so the opportunity cost of seeing Radiohead is £10.

Written for and first published at ft.com.