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To understand one of the many reasons why goals can backfire, consider the experience of trying to hail a taxi in a major city during a rainstorm. If you\u2019ve ever had to do this, you\u2019ll be familiar with the despair it can induce \u2013 and you probably think you understand why it\u2019s so difficult, since it seems like the kind of economics problem even a five-year old could solve. When it rains, more people want cabs, and so demand outstrips supply, making it harder to find and empty vehicle. That\u2019s obvious, surely? So when the economics Colin Camerer and three of his colleagues setout to investigate the problem of the rainy-day taxi shortage \u2013 taking New-York City as their field of study \u2013 you can imagine the kind of looks they might have received from their colleagues.<\/p>\n\n\n\n
Except, as their research revealed, the reason for the problem isn\u2019t as obvious as it appears. Demand for taxis does surge when it rains. But something much stranger happens at the same time: the supply of taxis shrinks. This contradicts the standard economic assumption that when people stand to earn more money, they work more. You might have expected cab drivers, who have some discretion over the hours they work, to work the most when demand was highest. Instead, they clocked off earlier when it rained.<\/p>\n\n\n\n
Further investigation revealed that the culprit was goals. New York taxi drivers rent their vehicles in twelve hour shifts, and commonly set themselves the daily goal of taking in double the amount of money that it costs to rent the cab. When it rains, they meet their goal more rapidly and head home sooner. New Yorkers are thus deprived of taxis during exactly the weather conditions in which they need them most, while drivers are deprived of additional income at exactly the time when it would be easiest to earn.<\/p>\n\n\n\n
The point is not that it\u2019s wrong for a taxi driver to choose more leisure time over more income, of course that is an entirely \u00a0defensible choice \u2013 but that it makes no sense to take that time off when it\u2019s raining. Far from behaving like stereotypically rational economic actors, the drivers appered to act more like the pigeons in experiments conducted by the behaviourist psychologist B.F. Skinner. Having learned to obtain a food pellet by pecking on a mechanism in its cage, Skinner observed, a pigeon would indulge in a \u2018post-pellet pause\u2019, relaxing after having attained a predetermined goal.<\/p>\n\n\n\n