TEDBlog May, 2010 Archive
31 May 2010
Dan Ariely asks, What is the right amount to pay bankers?
Dan Ariely’s new book, The Upside of Irrationality, debuts tomorrow — he sends us this teaser, based on research that’s described in much more detail in Chapter 1 of the new book:
Recently there has been a public outcry against astronomical executive salaries. The basic public sentiment is that it seems unfair that people make so much money for mismanaging our money, especially when it is so difficult to see how bankers’ talents and abilities justify their compensation. Naturally, it’s particularly offensive when executives receive high bonuses after disastrous performances, or, worse, when the bonuses come from taxpayers’ money courtesy of government bailouts.
Not surprisingly, bankers have fought back, claiming that the high salaries are required to attract the best and brightest to crucial, high-stress, high-skill positions, and that the most talented and valuable bankers would go elsewhere if salaries were capped. It is your basic free market argument: if they can’t recruit and retain the best minds in business, these minds will simply go elsewhere, leaving us with less qualified people in charge of the economy—and that, in the end, would send us all down the tube.
Rather than seeing this as an ideological debate between self-serving bankers on one side and morally outraged taxpayers on the other, it is more useful to ask what we really know about the relationships between very large bonuses and job performance.
To look at the question of how bonuses affect performance, Uri Gneezy, George Loewenstein, Nina Mazar, and I conducted a few experiments. In one, we gave participants an array of tasks that demanded attention, memory, concentration, and creativity. We asked them, for instance, to fit pieces of a metal puzzle into a plastic frame, to play a memory game that required reproducing a string of numbers, to throw tennis balls at a target, and a few other such tasks. We promised payments of different amounts (either low, medium, or very high bonuses) if they performed any of these tasks exceptionally well. About a third of the subjects were told they’d be given a small bonus (relative to their normal wages), another third were promised a medium-sized bonus, and the last group could earn a very high bonus.
By the way, and before you ask where you can sign up for this experiment, I should tell you that we did the study in India, where the cost of living is relatively low. By doing it there, we could pay people amounts that were substantial to them but still within our research budget. The low bonus was 50 cents, equivalent to what participants could receive for a day’s work in rural India. The medium bonus was $5, or about two weeks’ pay, and the very high bonus was $50, roughly five months’ pay.
What do you think the results were? Would our participants follow the expected reward pattern with the group offered the smallest bonus performing worst, those offered the medium bonus performing better, and those offered the very high bonus performing best? When we posed this question to a group of business students, naturally they expected performance to improve with the amount of the reward. In the business world this assumption is practically a natural law, and the logic that gets executives to command very high pay. But our experiment results revealed the opposite. As it turned out, the group offered the highest bonus did worse than the other two groups in every single task! And the people offered medium bonuses performed no better or worse than those offered low bonuses.
We replicated these results in a study at MIT, where undergraduate students were offered a chance to earn a very high bonus ($600) or a lower one ($60) by performing two four-minute tasks: one that called for some cognitive skill (adding numbers) and another that required only mechanical skill (tapping a keypad as fast as possible). We found that as long as the task involved only mechanical skill, bonuses worked as we usually expect: the higher the pay, the better the performance. But when the task required even rudimentary cognitive skill (as we might suppose in- vesting and banking do), the outcome was the same as in the Indian study: a potential higher bonus led to poorer performance.
Our results led us to conclude that financial rewards are often a two-edged sword. They motivate people to work well, but when these financial rewards get very large they can be- come counterproductive and actually hurt performance. If our tests mimic the real world, then higher bonuses may not only cost employers more, but also hinder executives in working to the best of their abilities.
When I presented these results to a group of banking executives, they assured me that their own work and that of their employees would not follow the pattern we found in our experiments. (I suggested that with a suitable research bud- get and their participation, we could examine their assertion, but they were not interested.) I strongly suspect that they were too quick to discount our results. I’d be willing to bet that for the vast majority of bankers, if not for all of them, a multimillion-dollar compensation package could easily be counterproductive because of the stress involved in attaining it, because of the fear of not getting it, and because it takes their minds off the job and focuses their attention on the large bonus.
I don’t want to argue that in all situations, regardless of job type or the characteristics of the person, it will be more productive to pay less. But I do want to suggest that compensation is a complex issue involving complex economic incentives, stress, and other aspects of human psychology that we often don’t understand and don’t take into account. Perhaps the naively simple theory that more money equals better performance is not as practical as we thought, at least not all the time. If more money led to better performance, wouldn’t we expect that those who got tens of millions in compensation would be optimal performers? Maybe even perfect? The fact that those with very high salaries and bonuses failed so miserably in the financial fiasco of 2008 should add to the evidence against a direct link between higher rewards and better performances.
The bottom line is that much like in other areas of our lives, we are not perfect, we are not rational, and there are multiple hidden forces that shape our abilities and decisions. We can continue to assume that we are perfect, but this will only set ourselves up for more fantastic failures. If instead we were to realize where we fall short, where we fail, and try to do something about it, our future could indeed be brighter -– and not just in the domain of banking and salaries.
A few related TEDTalks:
1) This one talks about the research I describe in this blog post: Dan Pink >>
2) This one relates to the ways in which regulations can choke motivation: Philip K. Howard >>
3) This one is related to another chapter in the new book (happiness and adaptation): Dan Gilbert >>
– Dan Ariely
28 May 2010
Planet Green's top 5 eco TEDTalks
The US cable channel Planet Green counts down their five favorite eco TEDTalks — with some great big visions to save the planet and the people on it. Some old favorites and some you might have missed. Watch the short video roundup linked above, and watch Planet Green’s five top eco TEDTalks right here:
Paul Stamets on 6 ways mushrooms can save the world >>
Chris Jordan pictures some shocking stats >>
Jamie Oliver’s TED Prize wish: Teach every child about food >>
Al Gore on averting climate crisis >>
Michael Pritchard’s water filter turns filthy water drinkable >>
28 May 2010
Songs of secrets, city lights: Sophie Hunger on TED.com
This haunting, intimate performance by European singer-songwriter Sophie Hunger features songs from her breakout debut “Monday’s Ghost” and the just-released album “1983.” (Recorded at TEDGlobal 2009, July 2009 in Oxford, England. Duration: 23:04)
Watch Sophie Hunger’s performance on TED.com, where you can download it, rate it, comment on it and find other talks and performances from our archive of 700+ TEDTalks.
If you live in the UK, here’s a heads-up: Sophie will be playing at the 100 Club in London on June 9, and at the Glastonbury Festival two weeks later.
27 May 2010
Q&A with Seth Berkley: The search for an AIDS vaccine
Before his talk posted today, the TED Blog talked to epidemiologist and founder of the International AIDS Vaccine Initiative (IAVI), Seth Berkley. He told the story of the beginnings of IAVI, exploring why different decisions have historically been made in response to the HIV pandemic and explaining why a vaccine makes sense today. Read on to understand how we’ve progressed in the way that we think about treating AIDS and other global-scale viruses.
It seems like we’re close to the end of the race for AIDS and flu vaccines. Have there been any developments since you talked at TED in February?
On the flu side of vaccines, I was very disappointed by public concerns that we ordered too much flu vaccine and that some might get wasted. At the time those decisions were made and vaccines ordered, we had no idea of the severity of this particular epidemic (H1N1). In the US alone, somewhere around 50 million people or more ultimately got infected and there were a number of deaths. It turned out not to be as severe a pandemic as in 1918, but early on, when the first cases were seen in Mexico there were a lot of mortalities in young adults, which should make you very nervous. So, I think that both declaring this a global pandemic and accelerating vaccine production as quickly as possible were the right decisions. If you want to prepare a population for an emergency it means that you might ultimately spend some money that isn’t used. That’s part of the process. I worry that there’s going to be complacency going forward, that people will say, “Look what happened last time. Maybe we shouldn’t order as many doses.” If it turned out that this was a much worse flu, there would have been worldwide clamor for doses. One last point on that is that the amount of vaccine made available to the developing world was extremely limited, and had this been a really terrible pandemic there would have been massive deaths in those populations.
On the HIV side, it’s an extraordinarily exciting time. We’re really experiencing a Renaissance in AIDS vaccine development. At the time of the TEDTalk, I discussed this retro-vaccinology concept and the host of new antibodies that have been found. Since that time there have been three more found, some of which target different areas, and we now know that if you combine a couple of them, at least in the laboratory, you can neutralize all of the strains. And so there’s a real move now to both try to understand where these antibodies are binding better and how we can make proteins to make antibodies like this, as well as whether we give these antibodies passively or do gene transfers. We could go ahead and transfer the genes that make these antibodies and so have people make them, just until we figure out exactly what the vaccine looks like. And, even while that work is going on, there is the other piece I’d mentioned, which is that there are now a lot of vaccine candidates that look far better than the first candidate that had been tested in the past and didn’t succeed. In the pipeline, there are a number of candidates that look much better in the best of the animal models, and those are working their way towards humans now.
Can you give us some background on how the International AIDS Vaccine Initiative (IAVI) began?
Well, when AIDS first appeared people didn’t know what it was. You’ll remember that it affected mostly young gay men — it was actually called GRID for a short period of time, Gay-Related Immunodeficiency Syndrome and people thought it actually might be recreational drugs or other types of toxins. It was discovered, of course, that it was a virus in late 1983 and the virus was further described in ’84. At that moment, people said that the only way to deal with a virus was with a vaccine. And, at that moment, there was only one licensed retroviral drug. So, when people said, “Let’s move forward,” the newest vaccine that was out was Hepatitis B and that was the paradigm they followed. That was the first kind of biotech vaccine. They tried to take a little piece of the surface of the virus and use that, and what they found was that 100 percent of people got a good antibody response. However, it only neutralized the strains in the laboratory, it didn’t neutralize the strains that were circulating in the population. That’s why they pulled away from neutralizing antibodies — they didn’t know how to deal with the amazing variability.
Over time, the companies began to pull away from a vaccine because it was scientifically difficult, very politically controversial at that moment and it was mostly a disease of the developing world, and the combination of those made it not a particularly good approach, economically. Also, vaccines were not a particularly good business in those days as they were very inexpensive. The public sector was interested in vaccines, but the activists — and rightly so — said, “My God, people are affected. They’re going to die. We need treatment.” And science said, “We don’t know how to make treatment.” The activists continued to push, and that’s why we now have more drugs to treat HIV than all other viruses put together. That really accents the amazing effect of the population of activists driving this forward. That has become a model for all other diseases, where patient advocacy has really become important.
So, because of this, a strange thing happened in the early to mid-1990s. There was virtually nobody working on HIV vaccines. The world had dropped down to about 150, 160 million dollars total. Everybody in the world — basic research, public, private, small companies, large companies — not much of an effort. And so, at that time our role was to take a look at that and to say “Oh my God. We have to do something about this!” So, we went ahead and created a new initiative which was a public-private initiative using the best of industry and combining it with the methodology and ethos of the public sector, which put product development and access to the poor at the core of what it was doing.
It may not seem like a big deal today, because now everybody has public-private partnerships, but at the time IAVI was a really bold new idea. If you think about it, at that moment it hadn’t happened before. The places where you would do vaccine development for diseases such as HIV would be large companies and maybe large governments. The idea that an NGO would play a role in this seemed ludicrous. Also, this was pre-Gates Foundation, this was pre-large amounts of money, so the costs that were associated with doing something like this seemed way above levels that were plausible. It really was seen as a wild, bold idea.
You mentioned the political difficulty associated with a vaccine, could you elaborate on that?
The reason it was politically difficult was because all this activism was going on — companies were being picketed, blood was being thrown on researchers, and so concerned companies were thinking, “If we’re in this space, look at what could happen to us.” Now most of that was about treatment, not about vaccines, but the other side of it was that there aren’t constituencies for prevention, and this is a problem. If you really are effective in prevention, there’s no disease, so you’re invisible. Once you get sick, of course, a person wants to spend whatever they can to get better. So there’s enormous activism for treatment and people will spend large amounts of money, but for prevention it can be very hard to get both activism and also the long-term expenditure that’s required. Although drug development was obviously also a long-term phenomenon (it took many years for them to develop drugs), it was all of this activism and interest and pricing — you could price the drugs high because it was a fatal disease — that wasn’t there for vaccines. And so, it didn’t experience the same effect of attention
The main thrust of IAVI is the vaccine, but there’s also other work being done there. Would you like to talk about that?
We’re pretty focused on AIDS vaccines. We did a little bit of work on one other type of prevention treatment, just because we were in the right place at the right time and had the capabilities to do that, and that was pre-exposure prophylaxis using drugs, but virtually 100 percent of what we do is AIDS vaccine work. Now, as part of that we train scientists in the developing world, we build laboratories and then bring them up to world standards, we create situations where people get screened for HIV and then get referred for treatment if they’re infected. So, a lot of secondary benefits occur to the work, but like a laser beam we’re focused at preventive HIV vaccines.
The international work that you do at the Initiative is also very interesting. You’re in a huge number of countries, so how do you coordinate all these efforts?
There are two sides to that. We’re working in 26 different countries. On the research side, we’re very different than most laboratories. In a country or in a laboratory they do the best science possible to be able to solve the problem, and at a country level, country-based initiatives tend to fund the scientists in their country that are doing the best science possible. Our role is not to do that basic research, our role is to glean that basic research. But, it’s not based on country, so that if there’s a fabulous technology in Japan, Sweden or in Belgium, or in the US, our job is to find that technology and to try to drive that forward and then move it forward as fast as possible in whatever country can do so. Now, why is that important? Because what we’re constantly doing is asking, ”Where’s the best new technology?” It means not only taking up new technologies, but it means dropping old technologies.
So, we rely on national research efforts, but national research efforts don’t do the same thing as we do. By definition, the Danish government is going to fund the best in Denmark and the Canadian government the best in Canada, but not necessarily the best in the world. They don’t have a mechanism to look at how the Canadian vaccine is versus the Japanese vaccine. So that’s on the science side — we’re constantly looking to move forward and say, “Ok, where’s the best place to test these? Could we test them in a place that has good regulatory experience with this type of product? Where is there a high incidence of HIV? Where are vaccines needed?” That’s why we work across the developing world as well.
So, on the developing world side, we’ve set up a diversity of relationships with places with good science, but also places with different circulating types of virus. This allows us to not only test the vaccine in populations with different genetics, but also different circulating virus. And that’s why we’re working across Africa — in East, Central and Southern Africa — and not just in Africa, but also in India. Now, one of the other exciting things I mentioned is that as we’ve transitioned and done a little bit more upstream science, we’ve also tried to find places in the world that could do that. We’re doing a lot of exciting work in India now, in not only the first two clinical trials in India of AIDS vaccines, but also working with Indian biotech companies and computer companies to try to model this to do medicinal chemistry which turns out to be a skill that Indians have in large amounts because the previous major industry there was to copy drugs. So, they have a lot of medicinal chemists that were working on that, and as the new IT regimen came in and they weren’t doing as much of that, there were chemists who were very good who weren’t working as much. We can now get them working on these structural issues around HIV vaccines. And, we’re actually creating a new laboratory facility with the Indian government — a translational facility that’s going to be very similar to the lab that we recently created here in New York, in Brooklyn, that does similar work.
READ MORE: Seth Berkley talks about the brand new facility in Brooklyn, how small biotech companies are the new hotbeds of innovation, sourcing young scientists and why a vaccine is the only way. (more…)
27 May 2010
HIV and flu — the vaccine strategy: Seth Berkley on TED.com
Seth Berkley explains how smart advances in vaccine design, production and distribution are bringing us closer than ever to eliminating a host of global threats — from AIDS to malaria to flu pandemics. (Recorded at TED2010, February 2010 in Long Beach, CA. Duration: 21:05)
Watch Seth Berkley’s talk on TED.com, where you can download this TEDTalk, rate it, comment on it and find other talks and performances from our archive of 700+ TEDTalks.
26 May 2010
Inside a school for suicide bombers: Sharmeen Obaid-Chinoy on TED.com
Filmmaker Sharmeen Obaid-Chinoy takes on a terrifying question: How does the Taliban convince children to become suicide bombers? Propaganda footage from a training camp is intercut with her interviews of young camp graduates. A shocking vision. (Recorded at TED U 2010, February 2010 in Long Beach, CA. Duration: 8:09)
Watch Sharmeen Obaid-Chinoy’s talk on TED.com, where you can download this TEDTalk, rate it, comment on it and find other talks and performances from our archive of 700+ TEDTalks.
25 May 2010
Lessons from fashion's free culture: Johanna Blakley on TED.com
Copyright law’s grip on film, music and software barely touches the fashion industry … and fashion benefits in both innovation and sales, says Johanna Blakley. At TEDxUSC 2010, she talks about what all creative industries can learn from fashion’s free culture. (Recorded at TEDxUSC 2010, April 2010 in Los Angeles, CA. Duration: 15:36)
Watch Johanna Blakley’s talk on TED.com, where you can download this TEDTalk, rate it, comment on it and find other talks and performances from our archive of 700+ TEDTalks.
24 May 2010
Bring on the learning revolution!: Sir Ken Robinson on TED.com
In this poignant, funny follow-up to his fabled 2006 talk, Sir Ken Robinson makes the case for a radical shift from standardized schools to personalized learning — creating conditions where kids’ natural talents can flourish. (Recorded at TED2010, February 2010 in Long Beach, CA. Duration: 16:48)
Watch Sir Ken Robinson’s talk on TED.com, where you can download this TEDTalk, rate it, comment on it and find other talks and performances from our archive of 700+ TEDTalks.
21 May 2010
Unveiling "synthetic life": Craig Venter on TED.com
At a press event in Washington, DC, Craig Venter and team make a historic announcement: they’ve created the first fully functioning, reproducing cell controlled by synthetic DNA. He explains how they did it and why the achievement marks the beginning of a new era for science. (Recorded at the Newseum, May 2010 in Washington, DC. Duration: 18:18)
Watch Craig Venter’s talk on TED.com, where you can download this TEDTalk, rate it, comment on it and find other talks and performances from our archive of 600+ TEDTalks.
20 May 2010
Meet Dimitra Papageorgiou, TED volunteer translator
Tell us about yourself.
My name is Dimitra Papageorgiou and I was born in Athens, Greece. I have a 14-year-old daughter, Amphitrite, named after an ancient sea nymph. When my daughter was 2 years old, I got divorced, so I raised her on my own. A year ago I moved to Thessaloniki, in northern Greece.
Since I was very young, I’ve been into arts and culture. I used to spend endless hours drawing and creating crafts. It was a way for me to express my thoughts and feelings, and it’s become a useful and creative pastime for my daughter and me. I studied photography and scientific photography, and later on I became fascinated with digital image manipulation, which is what I do now.
What drew you to TED?
I saw Brian Cox’s talk on the Large Hadron Collider and I was infatuated with his presentation, which was simple to understand, yet inspiring and informative. Most importantly, I could see his passion for particle physics on his face, and it was contagious. A lot of interesting talks have followed that broadened my way of thinking and at the same time entertained both me and my family.
Why do you translate?
I began translating so I could share TED’s wonderful talks with my young daughter and my family. It’s ended up being one of my favorite hobbies and has unraveled a whole new world of knowledge to me. I’ve encountered great people like Theodora Apostolopoulou — together we translated the first TEDTalks into Greek, and in the process, we became friends.
I am also a member of a Greek online community, where I now share the talks that fellow Greek translators and I have completed. We have interesting and long-lasting debates and conversations about each talk. TED give us a new excitement everyday, as we discover breakthrough technologies and admirable thinkers.
What are you favorite talks? Why?
One of the talks that affected me deeply was Jill Bolte Taylor’s stroke of insight. I enjoyed both of VS Ramachandran’s talks — the neurons that shaped civilization and on your mind — as well as Barry Schwartz’s, Isabel Allende’s, Elisabeth Gilbert’s, Helen Fisher’s … I suppose the list is endless.
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