You can’t influence every automobile purchasing decision by asking every American about their intention to purchase hybrids. Nor can you influence every business or career decision, unless you use with success proper framing. You need, for instance, to find some way to frame the automobile purchasing decision so that people use fuel efficiency information in the best way.

People make better business and career decisions in the right frame

For your business and career purposes you don’t necessarily need everyone to purchase the same optimally efficient car. You’d be happy as an entrepreneur if the overall efficiency across all cars improved. It turns out that there’s actually a straightforward way to do this with success: you can change the frame in which fuel efficiency information is presented in a way that helps people make better future decisions.

It’s actually really easy you just switch with success from miles per gallon to gallons per mile. We have traditionally use miles per gallon which is a measure of engine efficiency. Now, miles per gallon does tell us something, but it can also mislead us in unexpected ways. Take a first pair of cars one gets 50 miles per gallon and the other gets 100 miles per gallon.

A meaningful difference in different business and career contexts

Is that a small difference in fuel usage or a big difference? It seems a big one, right?! But, consider a second pair of cars: one gets 14 miles per gallon and the other gets 20 miles per gallon. This seems like a meaningful difference in fuel usage although it also seems to pale in comparison to the 50 mile per gallon difference in the first example. As an entrepreneur this is some important concept to understand

Here’s the surprising thing: the difference between 14 and 20 miles per gallon is twice as large as the difference between 50 in 100 miles per gallon. You heard me right 14 to 20 is really big, but about 50 to 100 is really small. Let me explain why. Suppose that you’re planning to drive 100 miles.

If you switch from a 50 mile per gallon car to 100 mile per gallon car you’ll save 1 gallon but switching from 14 miles per gallon to 20 miles per gallon saves you twice as much, 2 gallons. A meaningful difference for any entrepreneur that has to decide in different business and career contexts.

Entrepreneurs might get trade-offs wrong in making business and career decisions

The decision scientists Rick Larrick and Jack Soll show that when people think about fuel efficiency or miles per gallon they get the trade-offs exactly wrong. Entrepreneurs might get trade offs wrong in making business and career decisionsThey overestimate the benefits of improving efficiency at the high-end and they underestimate the benefits at the low end.

But we can change the frame to emphasize not fuel efficiency but fuel consumption. When people and entrepreneurs see the same business information expressed using a fuel consumption measure by gallons per hundred miles then they get the trade-offs right and they make decisions that better minimize overall fuel consumption. I walked through this example in detail to underscore a take-home message: there is no single approach that always pushes people toward good decisions.

Sometimes institutional interventions, like legislation or incentives, will be necessary and bring success. Sometimes, although not often, business information helps and other times the tools of behavioral economics like pre-commitment and framing can shape choices. The challenge for any policymaker, like for any parent, is knowing which tool works in which circumstance.