But my guest would say that quit and grit are just two sides of the same coin, and that quitting is a valuable skill to learn and get good at. Her name is Annie Duke, and she’s a former professional poker player, a speaker, a consultant, and an author. In her latest book, Quit: The Power of Knowing When to Walk Away, she seeks to rehabilitate quitting by showing how — whether it’s in the context of ending a relationship, leaving a job, or climbing a mountain — it has essential benefits. We discuss those benefits in today’s show, as well as how to know when to quit. We unpack how whether you should stick with something comes down to an equation of its positive “expected value,” how setting goals too rigidly can get in the way of our being able to assess that value, and the cognitive biases that keep you from quitting when you should. We end our conversation with two strategies for overcoming these biases, including establishing “kill criteria” to give yourself a timetable for how long to go after an aim.
Resources Related to the Episode
- Annie’s previous appearances on the show:
- Podcast #210: Got Grit? (With Angela Duckworth)
- Alliance for Decision Education
Connect With Annie Duke
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Read the Transcript
Brett McKay: Brett McKay here. And welcome to new edition of The Art of Manliness podcast. Don’t be a quitter, quitters never win and winner’s never quit. These maxims encapsulate our usual attitude towards quitting, which deceit is a bad thing, a weakness, character effect. We celebrate those who stick with things, who have grit. But my guest would say that quit and grit are just two sides of the same coin, and that quitting is a valuable skill to learn and get good at. Her name is Annie Duke, and she’s a former professional poker player, speaker, consultant and an author. In her latest book, Quit: The Power of Knowing When to Walk Away, she seeks to rehabilitate quitting by showing how, whether it’s in the context of ending a relationship, leaving a job, or climbing a mountain, it has essential benefits. We discuss those benefits in today’s show, as well how to know when to quit. We unpack how whether you should stick with something comes down to an equation of it’s positive expected value, how setting goals too rigidly can get in the way of being able to assess that value and the cognitive biases that keep you from quitting when you should. We end our conversation with two strategies for overcoming these biases, including establishing kill criteria to give yourself a time table for how long to go after anything. After the show is over, check at our show notes at aom.is/quit.
All right. Annie Duke, welcome back to the show.
Annie Duke: Well, thank you for having me back. I think this is my third time.
Brett McKay: This is your third time on the show, and I’ve really enjoyed our previous conversations, and your episodes have been big hits with our audience, and I’m sure this is gonna be another good one. You got a new book out, it’s all about quitting. And this is something you probably thought a lot about as a professional poker player, thinking about when to fold them. But quitting is something that most people don’t like to think about, to celebrate, they don’t feel good about it. Instead, we like to talk about grit. We like the stories of people who persevered. But something you start off the book with is saying that grit needs to be in conversation with quit, and that they’re two sides of the same coin. So let’s start off things there, tell us more about this idea of grit and quit.
Annie Duke: Yeah, so I think that we think about grit and quit as opposing forces. And in that battle of the binary, grit has clearly won the day. We think about grit as a virtue and quite a vice. Just simply put like, Brett, if someone called you a quitter, would you take it as a compliment? [chuckle]
Brett McKay: No, I wouldn’t. No.
Annie Duke: No, they’re clearly trying to insult you. [chuckle] So we really think about perseverance is synonymous with heroism or building character, it’s character building. But the issue with thinking about those as opposing forces is that as you said, they’re actually the exact same decision. So at any time that I’ve started something, I have the choice to either continue or to walk away. So if I choose to continue, or if I choose to persevere, I’m by definition, choosing not to quit. And if I choose to quit, I’m by definition, choosing not to stick. And so as we face that decision, the factors that go into whether we stick or quit are the same because it really is the same decision, but we don’t think about it that way. And what that means is that it’s really absurd for us to have created this binary where one is good and one is bad, when something is the same decision, and it’s about the context. Because it’s really easy for me to give you example after example after example, where it’s incredibly obvious that someone should quit, and if they were to persevere in these circumstances that that would be folly, that that would actually be a bad thing. Super, simple example is, if you’re on a road where there was a huge accident, and there’s an exit right in front of you, and you could take that exit and get on another road that’s gonna get you to your destination, it would be silly to stay on the road where there’s an accident and the traffic isn’t moving.
So that’s a silly little example, but there’s all sorts of big examples of that type of decision where you can very clearly see that quitting has to be the better choice. As an example, if you’re on the top of Everest and a snow storm is rolling in as you’re attempting the summit, and we’ve all read those kinds of stories, don’t we think that it would be silly to continue up in those circumstances because you’re almost definitely gonna die. You should obviously turn around in that situation. So as I thought about that, and I realized, well, look, quitting is a skill that we have to develop and get good at because it does depend on context, and it is actually just the other side of the coin of grit, and we need to get good at both of those in parallel and figure out when we should do one or the other thing. That was really what made me say like, I need to write this book because my goal here is to rehabilitate the word to say it’s okay to quit things because quitting is often the wisest choice.
Brett McKay: I think when I knew that idea of that grit and quit are two sides of the same coin, I think, if I look at my life, in order for me to persevere in some things means I have to quit other things. I think back when I played sports as a kid, there was a period where I was playing basketball and I was playing baseball and I was playing football. And I remember when I was ninth grade, 10th grade, where I had to decide which one do I really need to focus on if I wanna get good at it. And it was football. And so I didn’t say I was quitting baseball and basketball or whatever, and wrestling, but I was.
Annie Duke: Yeah.
Brett McKay: Because in order for me to focus on football and really persevere in that, I had to quit the other stuff. But I think it’s funny. We quit all the time. Think about all the stuff. We all have hobbies that we as a kid that we did. I went through a magic phase. I don’t do magic anymore ’cause I wasn’t any good at it and I didn’t enjoy it, and there’s other things I found. But instead of saying we quit, you talk about how we tend to change how we talk about quitting so it doesn’t sound like quitting. It’s like, “Well, I shifted my focus or I’m pivoting,” but we quit all the time.
Annie Duke: Yeah, we hate the word quitting so much that we have a huge variety of euphemisms for it, like starting a new chapter or shifting my focus, as you said, or the big one is pivot.
Brett McKay: Pivot, yeah.
Annie Duke: I’m pivoting. And it’s really interesting. There’s an example that I have in my book about Lindsey Vonn, and then recently Serena Williams did the same thing, where you have people who have shown a tremendous amount of grit. Clearly nobody can question their ability to persevere and to stick to it. And yet, when they make the decision to retire, they say, I’m not quitting. So Lindsey Vonn announces, “I’ve decided that I’m gonna stop skiing. Okay, stopping is quitting. I have to listen to my body, which is telling me that it’s broken, and I really can’t continue, but I’m not quitting. And for all the kids out there, never give up.” And it’s so jarring. And then Serena Williams just said the same thing where she said, “I’m not quitting, I’m heading down a new path or something like that.” And you just look at these things and you say, “What is going on?” They’re demonstrably quitting, they’re retiring from the game.
That’s quitting. But why are they so unwilling to say the word? And it’s like… I say, quiting gets the Voldemort treatment, the word that shall not be named. So we wanna talk around it and not actually say that we’re doing the thing that we’re actually doing. And to your point, what a silliness. By the way, Angela Duckworth who wrote Grit: The Power of Passion and Perseverance, I think really agrees with this. I think that it may seem like, “Oh, I’m having a disagreement with her,” but I actually have no disagreement with her or whatever. I think that people misinterpret her work, it’s like perseverance is just good and it’s character building. But her point is that you have to explore a lot of stuff and then find the thing that you’re passionate about, and then be willing to stick to that even if it’s hard. But what she would never tell people to do is stick to hard things that aren’t worthwhile. To your story about, well, you tried a bunch of different sports, so you were exploring different sports and then you had to decide, what is the thing that I’m really gonna spend my time on and I have to quit the rest in order to be able to do that is a good example of how someone can be gritty and quitty at the same time.
Because we have limited time and limited resources and limited attention that we can devote to anything at one single time. So you have to figure out what are the things that aren’t worth my time so I can quit those to free up those resources to turn your attention to things that are worth your time. And so most people who are really good at quitting are also quite gritty. In fact, they view the point of doing the quitting in order to be able to free themselves up to persevere at the things that really matter.
Brett McKay: Okay, so yeah, let’s talk about the benefits of quitting. We’ve been talking around it, but one thing, it allows you to focus more of your time on the things that matter to you. Any other benefits of quitting that we overlook when we think about quitting?
Annie Duke: The primary function of quitting is to help you deal with uncertainty. So imagine if you were omniscient, not just omniscient, so you knew everything there was to know, but you also could see into the future, then quiting wouldn’t be such a valuable skill because when you chose to do something, you will be choosing something that was probably gonna continue to be great going forward. Likely, just because things change, you may wanna do some quitting in the future, but it would be less valuable because you wouldn’t be deciding under so much uncertainty. In other words, there wouldn’t be so much information discovery occurring after the fact, after you actually started something. But that is not the world that humans live in. We are neither omniscient nor time travelers, and so what that means is that whenever we enter into any course of action, whenever we choose to start something, we’re choosing to start something with very little information and a strong influence of luck on the way it’s gonna turn out. Think about something as simple as a decision to hire somebody. You have a few interviews with them and maybe like two references, and then you hire them. And obviously, that’s very little information and you know you’re gonna find out a lot about that person after they’re actually in the job. Are they good at it or are they bad at it? So on, so forth.
This is true very simply in poker. I start a hand and then I’m gonna find out all sorts of new staff. My opponent is gonna take certain actions, they’re gonna tell me something more about what they’re holding, and then there are gonna be new cards that come. And I need to have the option to be able to quit in order to deal with that, in order to be able to enter into that decision. So quitting is what allows us to do that because imagine if the first date you went on, you had to marry that person. It would be so hard to ever make a decision about who to go on a date with because the stakes would be so high because you wouldn’t be able to get out of it. But we can get out of it, and so you can go on lots of dates. So that’s really like the primary function and primary benefit of quitting. But then when we say, “Okay, so we have this option to quit, when we quit, what does it allow us to do?” Well, it allows us to get off paths that aren’t really worthwhile.
In other words, we start things all the time that it turns out are not causing us to advance toward our goals in the way that we thought they would. So maybe we’re not gaining as much ground as we had hoped, or maybe we’re actually losing ground, and we find that out after we’ve started the thing. So what quitting does is allows you to stop doing that thing and go do something that is gonna cause you to gain more ground towards your goal. And in that sense, we can see where people really have it wrong about quitting. Most people, when they think about quitting, they think it’s gonna stop their progress, it’s gonna cause you to lose ground.
Well, that’s only true if you’re quitting something that’s worthwhile. But if you’re quitting well and quitting the things where after you’ve started them, you discover, “You know what? This isn’t really getting me to where I wanna go very fast, or maybe it’s actually causing me to lose ground so I’m going backwards.” Now, if you quit, it will get you to where you wanna go faster because it allows you to switch to something that is going to cause you to gain ground toward your goals. And that’s something that I want people to really understand and internalize, that quitting doesn’t stop your progress, it speeds you up. It allows you to get to where you wanna go faster. And that’s why one of the things I say is, we have this thing, like winners never quit and quietness never win. What I say is, no, winners quite a lot, and it’s part of why they win, because they’re constantly trying to get on the best path that’s available to them.
Brett McKay: So yeah, this idea, this is bringing the economic stuff that you research with quitting. When we make a decision to quit or continue, we’re using what’s called expected value. Correct?
Annie Duke: Yeah, suspected value, simply put is, if you compare the long-run cost to the long-run benefits, are you net positive? So a very simple way to explain expected value is, if we were betting on a coin flip, and heads, you win, tails, I lose. And when you win, I give you $2, and when you lose, you give me $1. That would be a positive expected value back for you because we know that you’re gonna win the bet 50% of the time. And so when you win, half the time you’re gonna get $2. So we can multiply 50% by $2, and that means that’s a $1 long-term win for you. And then half the time, you’re going to lose a dollar, and so 50% of a dollar is 50 cents, and so now we can take that gross earnings, that dollar that you’re gonna earn in the long-run against that 50 cents that you’re gonna lose. And you can see that for every dollar that you’re risking on every flip, you’re actually gonna make 50 cents. Now, what’s important to understand about expected value, it’s a long run waited average. And so what that means is that notice that on no flip, do you actually get 50 cents. You either get $2 or you give me a dollar.
But if we do it like 10,000 times, you’re gonna end up making 50 cents for every time that you bet, so it will be 10,000 times 50 cents, is what you would make, so $5000. So that would be pretty good, you would like that. [chuckle] But expected value isn’t just about these bets or money. If I invest a dollar in a stock, am I earning money on it? Expected value also has to do with how are we achieving our goals? There are different types of benefits that we can achieve as human beings that aren’t monetary, things like happiness or health. If you’re choosing to run a marathon, there are things that that’s costing you, like time with your family, some degree of expected physical discomfort. But what you’re getting in return for that is maybe the feeling of having accomplished something that very few people accomplish, the physical fitness that comes with it, that being in a flow state, the feeling of that endorphin rush, so on so forth. We can think about what are the things that you’re getting from deciding to train for a marathon versus what are the things that you’re sacrificing?
And when you decide to start it, what’s implied is that you think that your positive expected value, that you’re winning to that decision, that the benefits are gonna outweigh the costs. But what we need to realize is that when we’re entering into a decision, when we’re deciding to start something, we’re making educated guesses about whether it is positive expected value, whether you’re gonna win to that in the long-run. Not only are we making educated guesses about that where maybe our forecast was actually wrong, but also things can change about the world and things can change about us. So we can start a marathon and decide that the physical discomfort is worth it compared to the things that we’re gonna win, but then maybe we break our leg in the middle of a marathon, and then that expected value equation is gonna shift based on that new event that has occurred, and we wanna always be paying attention to that. So that’s essentially like if we get to the core of how do you figure out when it’s right to quit versus when it’s right to stick to something or persevere, it’s really a question of expected value.
If the path that you’re on is expected value, particularly in comparison to other things you could be doing with the time, and then you should probably continue even if it’s really hard. And if it’s not, then you should switch, taking into account switching costs.
Brett McKay: So this requires a lot of self-reflection and knowing what you want. ‘Cause I think sometimes when you get stuck on a goal, you forget about what you want. You say, “Well, I got this goal and I gotta do it,” even though you’re really not getting any satisfaction out of it.
Annie Duke: Well, I think this brings up actually a real problem with goals. So goals, obviously, there’s lots of research that say goals are good. I’m not telling people don’t set goals. Having clear goals in this world of KPIs and OKRs, having clear, well-defined goals for people to try to achieve is a motivating factor. It does help people to achieve those things more quickly and increases the probability that they’ll do so. But I think that we have to remember that there’s a downside of goals. And I think one of the best examples of that is a woman named Siobhan O’Keeffe, who was running in the 2019 London marathon. And somewhere around mile 3, she started to experience a lot of pain in her leg, and I think it was right around mile 8 that her fibula snapped.
Brett McKay: Oh, jeez.
Annie Duke: Yeah, so she broke leg. So I assume… Like really broke her leg. I assume that you have the same intuition that I do, that if that were to happen to you, you would quit running. You would just say, “Whoops! [chuckle] I guess I’m gonna stop this marathon because I just broke my leg. But that is not what happened.
She actually continued to run despite the medical people telling her that she should stop and she finished the marathon. Now, you might think, you know, oh, that’s super nutty that she did that. That’s gotta be pretty rare. But the fact is, it’s not rare, actually three other people in that same marathon did the same thing, broke something relatively early in the race and then continued and ran until the end. And then if you just do a Google search of people who break something but finish marathons, you’ll see that it’s very well-populated. People are doing this all the time. And if we talk about what we were saying before about, if you’re doing something, it can prevent you from doing other things, and so there’s a cost to that, right? So you wanna be making sure that you’re quitting the stuff that isn’t worthwhile. There’s also another problem, which is sometimes when you continue something, it’s gonna stop you from being able to do that thing in the future.
So there are also future costs of that. And in the case of running a marathon from mile 8, where you’re now gonna be running 18 more miles on that broken leg, clearly you’re increasing the probability that you may never actually run a marathon again, because that injury is now gonna become more and more severe. There’s no question that you’re increasing the length of recovery. And so, you’re gonna sacrifice some time, and it may be significant time, and being able to pursue something that you clearly love. So, the question is, it goes so counter to our intuition as to why would someone continue run when they have a broken leg? And so, why is that? Like, why do we… Why does that break our intuition so badly? And the answer really is because there’s a finish line, and that’s really what a goal is, right? So when you start a marathon, there’s a finish line, it’s 26.2 miles.
And here’s the problem with goals, there’s a few of them. The first one is that they’re graded, pass, fail. So, if you complete eight miles of a marathon, you failed. In fact, if you complete 25 miles of a marathon, you have failed, never mind that you ran 25 miles more than most people, right? So, let me just ask you this, ’cause I think that it’s important to kind of get at this intuition. So which would feel worse to you, Brett? Let’s imagine that you determined that you had no interest ever in running a marathon, and so you stayed on the couch and watched television or obsessed about the news or something, or you read a billion non-fiction books while sitting on the couch, which may be part of what you spend your time on. So imagine that that was that version of Brett, and imagine another version of Brett who decides that you want to run the marathon, a Marathon. So let’s say you wanna run, say, the New York City Marathon and you train for it, which involves a lot of running, and you go out on that day to run the marathon, and you get injured on mile 16, so severely that you can’t continue, and so you have to stop running, so you have to quit, which feels worse? Never haven’t tried it all, or having started the marathon and having to walk away on mile 16?
Brett McKay: Well, I know my intuition would be like, the quitting would feel worse.
Annie Duke: Right.
Brett McKay: Right.
Annie Duke: And I don’t know anybody who doesn’t have that intuition, and think about how weird that is, because in one version of Brett, you never ran a mile, but the other version of Brett, ran many, many miles. So, isn’t the other version of Brett more accomplished at least as it comes to that? Of course. But the problem with the version of Brett that stopped on mile 16 is that you were 10.2 miles short of the finish line, so therefore, you failed, because there is no in-between. And so, this is the issue that we have with goals, and we have to be very careful about it, is that the minute that you set a goal, you also start… That’s the moment that you start. So now you have a starting line and a finish line. And as soon as you step your toe over the starting line, you are now, at least cognitively, what we would call in the losses. This is a term that Richard Thaler uses a lot.
So, in the losses means that we have some sort of loss on paper at that moment. So when you’re 16 miles into a race, we can see that sort of in reality from an objective standpoint, you have gained 16 miles, 16 miles more than from when you started, but cognitively, that’s not how we do it, because being in the losses is a cognitive phenomenon. And from our own cognition is processing that as being in the losses, in other words, 10.2 miles in the losses, because we measure that. The way that we sort of feel about losses and gains is in relation to our destination, not in relation to where we started from. And as Richard Thaler likes to point out, we do not like to close mental accounts in the losses, that’s just a fancy way for saying, we don’t like to stop short of finish lines. And we will do everything that we can to not do that.
And what that means is that even in a case where the goal is no longer worthwhile, we will continue toward it. We will keep running with a broken leg, we’ll stay in a relationship that is toxic. We’ll stay in a job that we hate, that we’re miserable in, because we don’t want to have to close that account as a failure. So that’s like piece number one, that’s kind of a problem with goals, and then what goes along with this pass-fail nature of goals is that goals are also fixed objects. So, what do I mean by that? Well, we talked about cost-benefit analysis and these expected value calculations, when you set a goal, you’re doing that cost-benefit analysis, so you’re saying in terms of the things that I’m trying to achieve, I’m gonna have this goal or this OKR or whatever, and this is what I think it’s gonna cause me to be on a path that’s positive expected value, that’s gonna get me to actually produce the things that I’d like to produce in my life, which might just be happiness, right?
And so, you go through that expected value calculation, and when you decide to run a marathon, you’re doing that, right? Like, what are the things this is gonna cost me, what are the things that I’m gonna gain from this? Okay, this seems like a reasonable goal to set in relation to the things that I’m trying to gain and the things that I’m willing to cost myself, and so now I’m gonna start and I’m gonna head down that path toward that goal. The problem is that once we set the goal, it’s a little bit set it and forget it. As Maurice Schweitzer of the Wharton School says, I think he says this really well, “Goals are fixed objects in a changing world.” So what happens is that we sort of make our best guess under uncertainty about what is gonna be the best goal to set in terms of what we’re trying to achieve, and then once we start on it, the goal itself becomes the object. And it’s a fixed object, despite the fact that the world might be changing and we might be changing, and it stops us from taking that stuff into account, because we’re just sort of heading toward the goal come what may. And so, I think that people have to be careful when they’re setting goals to realize that this is the case, and then start thinking about how can you create more flexibility in your goals so that you can react more rationally to breaking your leg in the middle of a race.
Brett McKay: We’re gonna take quick break for a word from our sponsors. And now back to the show. You highlight some other cognitive biases that make it hard for us to quit, sunk cost fallacy, status quo bias, the endowment effect, even our sense of identity can make it hard to quit. And there’s this great example you found, really obscure business story. I think the guy was named Staw, right? His last name was Staw? .
Annie Duke: Yeah.
Brett McKay: Yeah, he opened up this chain of stores, was a success, but then he just had a hard time quitting when he should have. And I think it was a confluence of these biases that get in the way. Can you talk about this and what this example highlights about why it’s so hard to quit sometimes?
Annie Duke: Yeah. So, I just wanna say off the top here that I think that we have the intuition that after we start something, when we get signals from the world that tell us that we should stop, we will, you know? I think we have the intuition that if you’re running a marathon and you break your leg, you’re gonna stop running, but that intuition is wrong. And Harold Staw, I think is such a great example of showing that not only do we not pay attention to the negative signals, but we actually tend to escalate our commitment to the cause. In other words, we double down. We re-double our efforts in what we’re doing. So, Harold Staw moved to California with his family when he was a young kid in the late ’40s. There, he met his future wife, Shirley, and they moved to the Inland Empire. And this was during a period of boom, so this was in the ’50s. So this was like, post-war America, when there was obviously a big economic boom.
So, they sort of got some… They sort of scratched together some money, and they bought a little storefront that at one point had actually housed chickens. And so they went in and they swept out all of the feathers and whatnot, and they started a store, and it did really well. Pretty quickly he got to move out at the [0:28:28.5] ____ airsets, chicken coop, because he started to open some other locations. He renamed the stores the ABC Stores. So you can think about it as kind of like Kmart. That’s sort of where he ends up, that’s what the stores were like. So household goods and appliances and sort of anything that you could imagine. He actually then leases a 50,000 square foot property in Montclair, and there, he not only has his stores, but he’s also sort of like, almost like a mall, he’s got booths or storefronts that he’s leasing out now to other people like CompUSA and whatnot. And so, it’s becoming pretty big and he’s moving west, there’s a highway being built connecting the Inland Empire to LA, and he starts to move west toward LA and eventually even ends up with locations in LA.
So he was a pretty big retailer and very successful. And at some point, he gets offered a merger with a similar chain that’s in Texas called Sage Stores. So now they merged and because I think Staw was sort of the bigger chain, he ends up being the CEO of the whole darn thing. Harold Staw stock was worth, I think about $3 million. Okay, so he’s a rich guy, he’s built the business from basically a chicken coop into this huge business worth… Where his worth is $3 million. But what happens at this time is that, as I’ve mentioned Kmart, this is when Kmart, which started off as SS Kresge, starts to sort of expand across the country, and particularly in California, they start to have a lot of stores, and it starts to impinge on the ABC Stores’ business. At this time, Walmart is in Arkansas, and it has not sort of moved out of there. So Sage is not experiencing the same problems. So Kmart is kind of crowding ABC Stores out, but the Sage Stores are booming.
So what happens is that the California stores, the ABC Stores, Harold Staw’s stores, start to become kinda loss leaders, and the shareholders come and say, we wanna sell off all of the California locations and just concentrate on the Texas locations. Which makes sense, right? You have one part of the business that’s making money, that’s booming, the Texas part of the business, but the California business, because of Kmart, is starting to lose money. And Harold says no. He doesn’t wanna do that. He not only says no in the face of that very clear evidence, but he says no in sort of like the unkindest cut of all, which is when he finally gets sued to force his hand to sell these stores, his lawyer switches sides and represents the shareholders. So basically, like his lawyer and one of his best friends ends up suing him over this, and yet he still stubbornly sticks to his opinion that you should have… That this… That he was unwilling to sell these stores, he ends up getting pushed out, and they separate in a deal where basically he kind of gets his stores back, and that’s what he kind of takes out of it.
He gets his stores back, and he abandons any interest in the Sage Stores. And then it just kind of goes from there. The stores are losing money, he had obviously built up a significant personal fortune that he starts to dump into the stores to try to keep them afloat. Other independent retailers are starting to go out of business because of Kmart, and instead of just sort of allowing that to happen, he starts to buy those stores that are clearly in trouble, so that’s sort of that escalation of commitment, doubling down on the cause, even though the signs are very clear that things aren’t going well and you’re losing money. And then eventually, I think somewhere around 1970-ish, Fred Meyer, who’s a very big retailer based out of Oregon, decided that they wanted to get a foothold in California, and they made Harold a buy-out offer for his stores, which at this point, he’s dumping his personal fortune into here, he’s just losing money at this point. And he refuses that as well, because he doesn’t think the offer is high enough, and eventually all of the stores go bankrupt.
And the only thing he ends up being left with is that big sort of lease that was sort of a lifetime lease on that property in Montclair, which is the way that he ends up sustaining himself until his death in, I think the 2000s. And he just sort of sustained himself by leasing that space out to other retailers. So it’s a real kind of rags to riches to rags story, but what’s so weird about it is that he had so many opportunities to save himself, right? I mean the signs were all there.
Brett McKay: Yeah, so like you said, there’s a lot going on with this guy, probably. There was some sunk cost fallacy. He was probably thinking, well, if I give up everything we worked for, the chicken coop and all that struggling, it would have been in vain if we give up on this thing. There’s this idea of the endowment effect. We prefer things that we already own, even if it’s garbage. We like our garbage, and so he’s like, he was invested, this is my store, I can’t give up on it ’cause it’s mine. I’m sure his identity was tied up with these stores that he… This is like, I’ve been doing this since I was just a poor guy. If I give up on it, I’m giving up on a part of me, so I can’t do that. And so all these things contributed to him to just to escalate, as you said, even when all the signs were saying he should give up. And I’m sure all of us have experienced something like that to some extent in our lives.
Annie Duke: Yeah, so I mean I think that one of the things that you touched on that is really important here is the endowment effect. So the endowment effect is basically things you own you value more than identical things that you don’t own. So it’s kind of simple that way. So I think we’ve all experienced that. Like you have a car and you’re thinking about selling it, and you look at the Kelley Blue Book and you think the price that they say that your car is worth is completely absurd, but when you go to buy an identical car, you think that the person is asking too much.
Brett McKay: Right.
Annie Duke: Right. Okay, so that doesn’t make a lot of sense. And I think that you can see this endowment effect with Harold Staw so clearly, right? Because the question is why when the California stores were failing and the Texas stores were booming… And remember, he was CEO of the whole thing. Okay, so he has an interest in all of this, why was he so stubborn that he would not sell off those California stores? And the reason is because those were the things that he really owned, those were the things that he built. And we build things, we have a particular ownership over them. So he was endowed to the California stores in a way that he was not endowed to the Texas stores, which was not an empire that he himself built. And we can see that again re-occur when Fred Meyer gives him the offer and he thinks the offer is too low, because he thinks that what he has, what he built is worth more than other people from the outside might see it. And this then causes him to escalate his commitment, not sell, not quit, not just say let’s go with the Texas stores. And a lot of it is because that is the thing that he built.
Separate and apart from that, as you said, we have this problem of thinking about waste as sort of a backward-looking issue as opposed to a forward-looking issue. So when we quit things we think we’re gonna have wasted all the time and effort and money that we put into something. Right? And I’m sure you’ve had that feeling before, where people will say that, right? Like why haven’t you broken up with this person? Well, because I put so much time and effort, and I don’t want that to be wasted. Why haven’t you quit the job? Well, because onboarding was so hard and now I know the ropes, and I don’t wanna have wasted all of that work. But the problem is that waste is not a backward-looking problem. Those costs are already sunk. It’s a forward-looking problem. Does it make sense for me to put another dollar, another minute or another bit of effort into the thing that I’m doing? That’s what you ought to care about.
But that’s not the way we think about it. So if we go back to Harold Staw, it’s like, yeah, okay, so he put a lot of time and effort and a lot of money and so on and so forth into building that empire, but the question is, is it… Does it make sense for him to do that going forward? But we’re very bad at looking going forward, instead we think about what we’ve already put into it and making a decision about whether to continue. And then there’s a very big issue of identity, because really in the end the hardest thing to quit is who you are, and the more that we make decisions around sticking to something, particularly when we’re now taking a non-consensus decision, the more that our identity gets wrapped up into it. And then when we buck everybody else to make a decision to continue, again, it kind of snowballs and our identity becomes more and more entangled in whatever it is that we’re doing, and you can see that with Harold Staw as well.
He builds the stores and then they’re telling him at Sage that everybody can see that you want to give it up, and he makes a very non-consensus difficult decision, he breaks up with one of his best friends over it, in order to hold on to the California stores. And you can see how that becomes a choice that really defines who you are, and that’s something that you find quite a bit, ike if I believe that the earth revolves around the sun, it’s not really part of my identity because everybody believes it, so then if I get information to the contrary, it’s really not hard for me to change my belief. But if I believe something that’s very non-consensus, like, I don’t know, the earth is flat, I can present you with all sorts of evidence that that’s not true, and what’s gonna happen is that you’re gonna tend to reject the evidence as opposed to change your belief, because if you change your belief, you’re abandoning a big part of your identity, which is this non-consensus extreme thing that you hold to be true that other people don’t hold to be true.
So it is part of who you are. And I love this Harold Staw story just because it kind of wraps all of that stuff into it, but the other thing I really love about the Harold Staw story is it turns out, his son, Barry Staw, started doing research in the 1970s, which really actually was some of the first work that was done on this problem of escalation of commitment, and so it was just really this really cool connection that you had this amazing researcher who had done so much work on showing this phenomenon that when we get bad news, we don’t abandon the cause, we double down and become grittier, right? So you’ve got this guy who that’s his life’s work and his father is Harold Staw.
Brett McKay: One thing I’ve found when I’ve read books about cognitive biases that cause us to make bad decisions, is that even though I know that they exist, it’s like I feel like there’s… Knowing doesn’t really do anything. Have you found that to be the case? Even though you know about this stuff, like, okay, we know this stuff exists, what do you do about it? How do you overcome all this stuff so that you can quit when you need to?
Annie Duke: Yeah, this is actually where Barry Staw becomes so influential in the book, which is, first of all, he shows that… Knowing about it isn’t particularly helpful. But what he also shows is that trying to do a Jedi mind trick where you say, well, I’m not gonna worry about what I’ve already put into it, I’m just gonna think about it going forward, like if you go like, I know I bought this stock at 50 and it’s now at 40, but I’m not gonna think about that. I’m just gonna think about whether I would buy it today, which is actually something that people in finance say all the time, and he did some really beautiful work that showed that’s not true. You will take it into account and just saying to yourself, Oh, I’m gonna treat it like a new decision, what would I do if I were starting this today, does nothing to solve these problems of escalation, commitment, and sunk costs and so on and so forth.
But he did find that there were two things that are really helpful, and they both relate to something which Kahneman talks about a lot, which is that the worst time to make a decision is when you’re in it. So what does that mean? When you’re actually facing down the decision, that’s when you’re gonna be at your decision-making worse, when you’re actually facing the choice. So what Staw found is that there’s two strategies that can actually be really helpful. The first is to think in advance about what are those signals that I might see in the world that tell me that I ought to walk away?
So it kind of goes back to what his point was when he was first thinking about this problem, which is we have the intuition that when we get those signals, we’re gonna actually react to them and walk away, and that’s not true. So he says, but what if you actually thought about what those signals were beforehand, instead of assuming that when you see them, you’ll notice it, think in advance about what those might be, and then write those down and pre-commit to what the action is that you’re gonna take, and that that actually is really helpful. The term that I use for this is kill criteria. One of my favorite examples of this type of thinking is called the turnaround time, which they use in mountain climbing. So on Everest, when you go on summit day, you’re leaving at about midnight from Camp four to head toward the summit, but they set a turnaround time before you ever start, and that turnaround time is 1:00 PM. And what a turnaround time means is that no matter where I am on the mountain, even if I haven’t reached the summit, if it’s 1:00 PM, I have to turn around.
And the reason they do that is that after 1:00 PM, you’re… Basically the probability that something really terrible is gonna happen gets up too high because you’re too likely to not reach what’s called the southeast ridge on the descent in daylight. And that would be a very dangerous thing to do. So they set turnaround times of 1:00 PM. Are people perfect in following these things? No. But more people follow them than don’t, because you’ve actually thought about this in advance. I’ve done that with sales teams as well, where we think about what the adverse signals are that you might see from, say, a lead that you’re pursuing, something like in the first meeting, they only wanted to talk about price, they didn’t even wanna know what your product was, and we write those down as kill criteria and say, if you see those, then you shouldn’t pursue the lead anymore. And that’s really important because sellers, who are greedy by nature, even if they go to the first meeting and the prospect only wants to talk about price, they still think they can close the deal, and now they’re wasting time when they could be spending that time on better, more fruitful prospects.
So that’s kind of the first thing you can do, is sort of think in advance, and notice this get you out of the decision. The other thing that Barry Staw found is that you can get someone else to be the decider for you. This is something that Kahneman says… He would call a quitting coach. Kahneman’s quitting coach is Richard Thaler. I’d like to have Richard Thaler as my quitting coach, but I don’t. But basically, it’s the idea that when we’re in it, we don’t see things very clearly, but people from the outside looking in can see things very clearly. Just is like when we’re… When I tell you the Harold Staw story, it’s very easy for you to see that, well, he should have quit when he had that offer to split up and sell off those California stores and just concentrate on the Texas stores, like, duh, why didn’t he do that? Because we can see that from the outside. We can see friends of ours who are in relationships where clearly they should be breaking up and we know it. We see friends in miserable jobs, where we know that they should stop doing it. We see friends holding on to investments where we know that they should let it go, so on so forth. It’s very easy to see it from the outside looking in, but it’s not so easy from the inside looking out, and so going and find somebody on the outside that can actually help you and coach you toward those quitting decisions is super helpful.
Brett McKay: So I can see this happening… Let’s say there’s a career you’re thinking about, and you can set a kill criteria, it’s like I’ll give myself three years, and if I don’t reach this benchmark, then I need to quit. I knew someone who they wanted to give theater a go, and they gave themself a deadline, if I don’t make a career out of this where I’m getting paid regularly, I can make a living, by X date, then I gotta stop. And he ended up stopping, and he went on to something else, and he’s successful there. So I guess that first thing, is just establish… Well, for any goal you set out, establish kill criteria, where you’re like, this is when I gotta stop.
Annie Duke: Yeah, and the best kill criteria combine a state in the date, which is what your friend did it. If by this date, I’m not in the state, then I need to quit. One of the examples that I love is… Which is similar to theater, is if you get a PhD in the humanities, tenure track positions are rare, but if that’s your goal, then you should go and look up the average time it takes for somebody, a newly minted PhD to get a tenure track position, write that day down and literally circle that date in your calendar and say, if on that date I don’t have a tenure track position, then I’m gonna go and do something else. And what that stops you from doing is that constant feeling of making progress. So if we think about your friend with theater, I’m sure that he got some roles in between, and so then he gets a role, he gets paid for it, he thinks, but I just got a role, I know that my success is just around the corner, and then it’s kind of not going as planned, but then he gets another role that kind of gives him hope, and then it’s like, Oh it’s, oh, I know I’m about to break through.
And that can literally go on for 20 years, where you always think you’re about to make it. But by doing what your friend did, you’re tethering yourself in advance to reality, which is, there’s all sorts of things that can occur here that are gonna feel like progress to me, but they’re not actually enough progress. When we go back to that idea of stick to hard things that are worthwhile, don’t stick to hard things that aren’t worthwhile, what does it mean to not be worthwhile? It means that you’re not making enough progress towards your goal, and that there are other things you can do that would help you to do that better. But there’s all sorts of things that give us the illusion of progress. So for somebody who is a newly minted PhD, they can do adjunct positions, they can do post-docs, they can do all these things that are making them feel like they’re making progress in their career, but in relation to the actual goal that they have, which is to become a tenure track… To secure a tenure track position, they’re really making no progress at all. But if you get that post-doc, you’re gonna say, okay, I got another post-doc, this is great because I know this is gonna be the end, it’s gonna get me the job.
And then the job doesn’t materialize and you get an adjunct position, and then you rinse and repeat and you say, but now I’ve got an in with the university, and I just know that when a position opens up at this university, because I’m doing such a good job, they’re gonna take me, and then that doesn’t happen, and then you get another adjunct position and you get… And you can see how this can just kind of go on forever if you haven’t thought about it in advance. And that’s why I love that example of turnaround times on Everest. If I am not at the summit at 1:00 PM, I must turn around. It’s like the perfect example of a state and a date that you can then apply, as your friend did, to a wide variety of types of decisions.
Brett McKay: Okay, so we establish kill criteria. And if you wanna up that, bring in someone else, a third party, who is not so tied up into the decision, ’cause they’ll avoid all the… They don’t have their identity wrapped up in your decision, they don’t have… There’s no endowment effect going on to hold you to that. Well, Annie, this has been a great conversation. Where can people go to learn more about the book and your work?
Annie Duke: Well, first of all, I wanna tell you how grateful I am to you, because when Thinking in Bets came out, nobody knew me as an author in this space. I don’t think people even knew that I had a background in cognitive science. And I was just really appreciative that you took a chance on having me on your podcast way back then, and so I just wanna tell you how grateful I am for that, because you were a really big part of the success of that book and the continued success of that book. And so I’m also very appreciative of you having me on to come talk about my latest obsession, which is quitting. But anyway, so I just wanna… I just wanna express my gratitude there.
Brett McKay: It’s my pleasure.
Annie Duke: In terms of finding out about me, you can obviously follow me on Twitter. I am the one who’s actually running my Twitter account, so that’s where you’re gonna get the most authentic version of Annie Duke. But you can also just go to my website, annieduke.com. You can contact me there. I do try to respond to people who contact me. I’m not always perfect at it. It depends a little bit on how busy I am, but I try. You can also see speeches and writing that I’ve done, and so to find out what the latest media is there. There’s a newsletter there that you can subscribe to, which I think that… I hope that people enjoy. And obviously, you can find out about where to buy my books there as well, so that’s really kind of the best place to go find me.
And then the last thing is, I would love it if people would check out the Alliance for Decision Education, which is a non-profit that I co-founded, trying to take a lot of the principles that I talk about and write about to an adult audience and bring that into K-12 education, to start to think about, in the world that we live in now, shouldn’t we be teaching kids, starting very, very early about how to make decisions, how to process information and understand what is true, how to figure out what to do once you find out what’s true? What is a habit, how do you think about your habits, how might you change your habits? And I think that we spend a lot of time teaching kids trigonometry and not enough time teaching kids how to make good decisions, and that’s what we’re trying to do, is bring decision education into K-12.
Brett McKay: Well, Annie Duke, thanks for your time. It’s been a pleasure.
Annie Duke: Well, thank you so much. I really appreciate it.
Brett McKay: My guest’s name is Annie Duke. She’s the author of the book, Quit. It’s available on Amazon.com and bookstores everywhere. You can find more information about her work at her website annieduke.com. Also check out our show note at aom.is/quit, where you can find links to resources, and we delve deeper into this topic.
Well, that wraps up another edition of The AOM podcast. Make sure, check out our website at artofmanliness.com, where you can find our podcast archives as well as thousands of articles written over the years about pretty much anything you think of. And if you’d like enjoy ad-free episodes of The AOM podcast, you can do so on Stitcher Premium. Head over to stitcherpremium.com, sign up, use code, Manliness, at checkout for a free month trial once you signed up. Download the Stitcher Premium app on android iOS. And you start enjoying ad-free episodes of The AOM podcast. And if you haven’t done so already, I’d appreciate if you take one minute to give us review on Apple Podcast or Spotify. It helps out a lot. If you’ve don’t that already, thank you. Please consider sharing the show with a friend or family member, who you think will get something out of it. As always, thank you for the continued support. Until next time, it’s Brett McKay, reminding you to not only listen to the AOM podcast, but put what you’ve heard into action.