transcript

Speaker 1:
[00:08] Tim Ferriss is a global icon. He's built a career championing the idea of lifestyle design, that you should own your time rather than letting your job own it. But in 2007, almost 20 years ago, Ferriss wasn't a brand name yet. He was a first-time author with a stack of rejection letters. 26 publishers told him no before one finally said yes, but with a warning. Don't expect this book to become a mainstream success. Ferriss decided that to make it big, he would have to become his own marketing engine. So he spent months interviewing best-selling writers and asking them what actually worked. What was worth investing in? And what he learned surprised him. A traditional book tour? Skip it. Hitting number one on a major bestseller list? An absolute must. But reaching number one on a list isn't about your total number of readers over time. It's about velocity. It's about getting everyone to buy your book at the exact same moment. So instead of a tour, Ferris spent months building genuine relationships with niche tech bloggers and online communities. Eventually, he coordinated them all to post pieces that referenced his book in a massive 48-hour surge. It worked. His book, The Four Hour Work Week, debuted at number one on the Wall Street Journal bestseller list, and soon hit the top spot on the New York Times advice and how-to bestseller list, where it would remain for years. Those number one tags changed everything. They transformed Ferris from a niche author into a mainstream authority, opening the door for multiple bestsellers, a world-class podcast, and a career as a prominent angel investor. Tim Ferris invested in a strategy that put his book at the top rank, and once it was there, the number one spot did a lot of work for him. In this episode, we explore how what lands at the top of ranked lists, shapes what we notice, what we value, and what directs the decisions we make, even when it really shouldn't. I'm Dr. Katy Milkman, and this is Choiceology, an original podcast from Charles Schwab. It's a show about the psychology and economics behind our decisions. We bring you true and surprising stories about high-stakes choices, and then we examine how these stories connect to the latest research in behavioral science. We do it all to help you make better judgments and avoid costly mistakes.

Speaker 2:
[03:10] That's when my gear starts spinning about, oh, okay, so if I wanna be quote unquote number one, I have to go somewhere that is quote unquote number one.

Speaker 1:
[03:19] This is Shriya.

Speaker 2:
[03:21] Hi, I'm Shriya Boppanna.

Speaker 1:
[03:23] Shriya was born in India, where she spent her early childhood with her grandparents. From a young age, she carried a deep drive to excel, a drive shaped by her family, especially her grandfather, who believed, rightly, that education could open the door to choice and opportunity. It was her grandfather who taught her one of life's most enduring lessons, during a game.

Speaker 2:
[03:47] We were playing Uno, and he was telling me, just so you know, every time you lose a game, it's okay, because knowledge earned his power, and now you know next time what to do better. So it's something he always used to say to me, knowledge is power, knowledge is power, knowledge is power, like, knowledge is something people can't take away from you.

Speaker 1:
[04:05] Education has been a source of identity, legacy and pride in Shriya's family. When after years living with her grandparents in India, she moved to Virginia, where her parents had immigrated, that emphasis on learning traveled with her.

Speaker 2:
[04:18] From a really, really young age, they would say, do really well in class, pay attention, make sure you're acing the test, let us know when you have homework, let us know if you need help, because this is going to be really important when one day you pick up big kids school.

Speaker 1:
[04:30] Big kids school meant college, the singular goal of Shriya's childhood. The equation was simple. The best education would lead to the most opportunities. While her parents gave her room to explore when it came to extracurriculars.

Speaker 2:
[04:46] Valley practice, gymnastics, tennis, the violin.

Speaker 1:
[04:52] When it came to academics, Shriya had less freedom.

Speaker 2:
[04:56] I was for sure pushed into math and science. Realizing early on that that is not my forte. And even if it was, I didn't like it. But one thing I did love was I was pushed into a little bit of the world of finance because everyone in my mother's side studied finance. And she's like, hey, maybe you might like this. It didn't particularly like that. But I did take classes on AP economics. Understanding how consumers make decisions eventually lent itself to me taking business classes and falling in love with marketing. And it was just enough qualitative, it was just enough quantitative for me to be like, I can really see myself doing this out in the real world.

Speaker 1:
[05:35] High school courses were beginning to offer hints at what Shriya was interested in. The next question became, where would she go to college to pursue those interests?

Speaker 2:
[05:45] Slowly, I started doing my own research, which is when you start looking up universities. And I think that's how I fell into this concept of, oh my gosh, there is a list. That is why I hear the names of certain universities like the Harvards, the Yales, the Stanfords, the Princeton's over and over again. It's because they consistently make the top of the list no matter what choice you make in your industry of study.

Speaker 1:
[06:09] Every year, colleges and universities are ranked by numerous different websites, newspapers, and magazines, based on their students' high school grades, test scores, their graduation rates, and a host of other factors. Rankings are highly influential, and prospective students often rely on them heavily.

Speaker 2:
[06:28] So I bring up this list of rankings of universities to my parents, and I go to my mom and I say, hey, what is the likelihood of me going to any of these schools? Like where should I start looking? What does it look like? And she goes, Shriya, you should always aim for number one. Like you should aim for the moon, and if you miss, at least you'll land among the stars.

Speaker 1:
[06:50] Aiming for the moon meant Shriya had her work cut out for her. She pushed herself to be an exceptionally well-rounded student.

Speaker 2:
[06:57] I tried to be the best in school that I could be. Tried to get the 4.0 GPA, definitely chasing like the valedictorian, the student body president, the homecoming princess. I held all of that under my belt. I was taking seven AP classes by junior year. I think I was president of four clubs at the same time while I was still holding volunteering hours in the thousands.

Speaker 1:
[07:18] Shriya had stacked her high school years with every possible achievement. She was already holding herself to the highest standards. And then the bar was raised even higher.

Speaker 2:
[07:29] I start visiting career advisors and I start picking mentors to help me in the college decision-making process. And now rankings became the most important factor for me moving forward. Because after that, the discussions became, if you go to these number one schools, you'll get a really good job. If you go to these number one schools, you'll get a higher paid salary. If you go to these number one schools, your resume will be really padded again and again and again. These number one schools open a world of opportunity. They're basically the key to the door of the universe.

Speaker 1:
[07:58] The list of schools ranked from top to bottom became more than just numbers to Shriya. They became a measure of self-worth. Advisors, her parents, and broader societal expectations all reinforced this idea that going to a top-ranked school was how you secured value, prestige, and opportunity. This was what all her work had been leading to, so she set her sights on the very top.

Speaker 2:
[08:25] At that time, Carnegie Mellon's Tepper School of Business was, I believe, top five undergraduate business school. So it was really, really big goal. The weekend of my acceptance letter, I'm sitting there like a bucket of nerves, and it's like sometime around March-ish, where I'm like, oh my gosh, oh my gosh, oh my gosh, am I gonna hear back, am I gonna hear back? Monday morning, The Acceptance to Carnegie Mellon shows up in the mailbox, and I'm like, oh my gosh, you're kidding, you're kidding. I get the letter, I scream, run upstairs, I tell my parents, my dad takes the letter, walks into the other room, starts calling his parents, and he's like, she's gone to Carnegie Mellon. We haven't toured the school yet, we don't know anything about the culture, we don't know anything about anything at this point. We have no idea, but we're just fully aware that this is where she's going.

Speaker 1:
[09:23] Acceptance into Carnegie Mellon was a dream come true, as it would be for anyone. It's a top-ranked school and an incredible institution. In behavioral economics, by the way, it doesn't get better than Carnegie Mellon. It's the very best. There was no debate about whether Shriya would go or not. But once there, that certainty started to slip. Shriya questioned whether she had really chosen a school that would help her thrive, not just one that was top-ranked.

Speaker 2:
[09:54] It was really early on. I had just gotten a whole host of grades back from my core classes. Here I am, someone who has academically rarely felt like I was extremely challenged in a classroom. Someone who has rarely felt that there isn't anything that I couldn't tackle. So do I think calculus is easy? Absolutely not. But do I feel like it is the everest of all problems in the academic world? Not really. But I'm at the point where I'm struggling to see the results that my peers are. I'm rooming with three other girls and two of them are business students as well. One of them will study for like 10 hours and get a 93 on an exam, and the other two of us will study for like 10 days, and we're breaking 70s. I'm like 70 percent. That grade doesn't even register in my head. It shouldn't have to be this difficult. I shouldn't be fighting for my life in literally every class that I'm in. It doesn't make sense to me.

Speaker 1:
[10:53] For the first time in her academic life, Shriya struggled to keep up, even after putting in massive amounts of work. She studied around the clock, retook exams, and it felt unfamiliar and embarrassing. Shriya couldn't figure out why nothing was clicking the way it used to, until it came time to pick an elective. She chose marketing research, and suddenly everything felt different.

Speaker 2:
[11:19] I'm acing that course. I'm breezing through it, flying colors, I'm contributing to the class, I'm picking up concepts really quickly, and I realized, oh my gosh, I just feel like I'm not playing to my strengths right now. It's not that I can't achieve what I think is great in this business curriculum, I just don't feel like I'm in an environment that consistently ever lets me make choices that are putting my best interests at play.

Speaker 1:
[11:47] Finding success in that class was an aha moment for Shriya. She realized her core courses weren't playing to her strengths. So she started looking at how her curriculum stacked up compared to the curricula offered at other business schools.

Speaker 2:
[12:03] I start talking to students at other business schools across the nation, and I'm trying to get an idea of what type of classes are you guys taking, and they're like, I don't know, we're given the choice of qualitative classes, we're allowed to take marketing, we're allowed to do communications classes, we're allowed to do these consulting and strategy classes, we're allowed to do them earlier on.

Speaker 1:
[12:20] These conversations revealed a blind spot in her decision making.

Speaker 2:
[12:24] I chose not to look at the way the degree is structured, I chose not to look at the classes that are being offered, that is your core curriculum, and frankly, it is just a mistake in my own choice. I did not make my decision based off of anything aside from the perception of others. These people made a decision or these friends made decisions playing to their strengths whereas I picked a decision playing to the rankings.

Speaker 1:
[12:48] Shriya realized that when she decided where to apply to college and where to go, she had focused too much on rankings and it had led her to completely ignore other important factors that make a college a good fit for a student, like the structure of its curriculum. But in that moment, her grandfather's words offered comfort.

Speaker 2:
[13:07] It's okay because knowledge earned his power, and now you know next time what to do better.

Speaker 1:
[13:12] Ever a determined student, Shriya completed her degree and spent a few years working as a consulting analyst. But the knowledge is power mantra she learned from her grandfather was still humming in the background. She knew she wasn't done with school, and she knew she didn't want to repeat the same mistake she'd made when choosing her undergraduate program.

Speaker 2:
[13:33] When it came to the choice of my MBA, I wasn't ever going to dismiss the role rankings played. But the one thing I added this time around was playing to my strengths. I focused a lot on cultural fit. I focused a lot on the classes and the freedom of choice in those classes. I did my fair share of research on everything. And based off of the people who went there, the people who I resonated with, I came to the conclusion that Duke was my number one choice. And I visited the campus and I interviewed that very same day. I finished my admissions interview. Then I went home and put in my application. And I put in an application nowhere else. I said, Duke or bust. It was not my top choice at that point. It was my only choice.

Speaker 1:
[14:16] This time, the number one on the list wasn't determined by a magazine or a website. It was determined by Shriya. She didn't chase rankings again. She found the program that matched her strengths. Bonus, it also happens to be highly ranked. Shriya was accepted into Duke. The experience has suited her perfectly. And not just because Duke is prestigious, but because the curriculum finally speaks her language.

Speaker 2:
[14:45] What would I tell old Shriya is that self-sacrifice isn't what had to come into play in the pursuit of a well-ranked institution. So, now that I made the choice that was the best fit for me and it was ranked really highly, I can't go through the world like recommending the school enough to other people because at the end of the day, I feel like I made the best choice for me.

Speaker 1:
[15:11] Shriya Boppanna is set to finish her MBA at Duke's Fuqua School this spring and is heading for a career in consulting and strategy. You can find a link to her website in the show notes and at schwab.com/podcast. Shriya's story shows how rankings can start to feel like everything, even when far richer information on the quality of all facets of a choice is available. College rankings didn't just organize her choices. They narrowed them, pulling her attention toward the highest number on a list and away from things like curriculum, which might have helped her find another grade school that would have been a better fit. And that dynamic isn't limited to schools. We see ranked lists everywhere. Top hospitals, restaurants, books, albums, movies. Rankings of the most livable cities and best doctors. If like me, you're a New York Times subscriber, then their Wirecutter newsletter offers you a new ranking of some arbitrary consumer good like lipstick or nightstands delivered weekly. And of course, Amazon will tell you the customer ranks of items in esoteric categories ranging from toilet brushes with tiny suction cups to LED dog collars that sync to Spotify. The question we want to dig into today is why people are so distracted by what's number one or at the tops of these lists. Especially when we have oodles of other information about the inputs used to generate that ranking, which might be a lot more relevant to our personal preferences. My next guest is here to help answer that question. Rick Larrick is the Hanes Corporation Foundation Professor of Management and Organizations at Duke University's Fuqua School of Business, where Shriya is finishing her MBA. Rick and his colleague JS Chun have done fascinating research on exactly why being ranked number one on a list is so powerful. Hi Rick, I really appreciate you taking the time to be here today.

Speaker 3:
[17:16] Good to be here with you.

Speaker 1:
[17:17] Could you start by explaining the bias that arises when people are presented with information about the quality of set choices and they explicitly see rankings? So say a set of doctors with their average ratings from patients, and then you explicitly note not only each doctor's rating, but whose first, second, third and so on.

Speaker 3:
[17:42] Yeah, that's exactly the question we tried to ask. And the way we thought of it is, once you know the rating, so let's say it's on a five-point scale and you know one doctor is a 4.7, and another doctor is a 4.5, the kind of information you know about how other people perceive their quality is in the rating itself. And when you then say, well, the 4.7 is higher than the 4.5, so one's first, the other one's second, you haven't said anything new. It's like you haven't learned anything new either. But the key thing that we then found in a series of studies was simply adding the additional kind of translation of the rating into the ranking that's perfectly redundant with the information you already have. It leads people to prefer the higher ranked one. And we think of that as kind of irrational because you haven't learned anything new.

Speaker 1:
[18:34] So rankings can irrationally grab people's attention. Even the ratings of different features of, say, a doctor already tell you the same information about the quality. Could you talk about either an experiment you actually ran or sort of a stylized experiment to help us understand the way that you dug into this experimentally with JS. Chun?

Speaker 3:
[18:57] Yes. At a very high level, the way to think about it is we would have the kinds of rating information, like we talked about with doctors being a 4.7 or 4.5, and then vary whether that translation to a rank was also present or not. Then we looked at how does that shift where you pay attention and all those kinds of questions. Just a simple illustration of varying that was an early study we did in the paper where people are thinking about restaurants in Manhattan and they got open table type dimensions that real people rate restaurants on, so how good is the food, how good is the service. Then it turns out many of these systems have just like an overall impression that's also just a subjective rating by people who frequent the restaurant. And the simple thing we did in this first study was we would give people six restaurants, no name just because names might influence people, and then varied whether that final dimension of overall had a rank associated with it or not. I should note some people might have a higher preference for food over whatever that vague overall ranking is. So in the absence of having overall be accompanied by a ranking, preferences may be varied more across the restaurants, but as soon as we provided that same overall rating with an additional ranking next to it, now more people were picking the restaurant that had the number one rank on overall. So the key part of the argument is that they could already see that the overall score was the highest. The rank of one didn't tell them anything they didn't know. But now they're using it as their guide for how they're making the choice among the restaurants.

Speaker 1:
[20:41] It's a really interesting phenomenon. There are many different places where this can come up. And I'm wondering if you could actually talk a little bit about some of the settings that you think this applies to in the world. What are some of the places where you think we may make suboptimal decisions thanks to the presence of rank information and could make better decisions if it weren't present, for instance?

Speaker 3:
[21:04] I mean, I just think of all the year-end lists that have the top. I know I looked at the top 100 albums from 2025 recently. And I do think once you start thinking about all the places where ranks show up, you then start thinking about what information can you parse out in addition to just knowing the ranking. Anytime you have ratings, you tend to be able to translate it back into a ranking as well.

Speaker 1:
[21:29] So Consumer Reports comes to mind for me. I don't know if your Consumer Reports junkie, but like every product that we buy, we tend to go look and see, oh, here's how this car does on safety versus reliability versus et cetera.

Speaker 3:
[21:41] So I love that example. And there still is a kind of ranking that tends to emerge. They're clear about the attributes that they're using. And maybe in the fine print, it's a little bit clearer on how they're weighted. But I think this is the tricky thing then in many domains where you can gather multiple dimensions of information, like top colleges and top business schools and things like that. There's some set of dimensions that there's some ability to quantify. Someone's then making a choice about how important each of those are. Then they're all being kind of aggregated in some way, and then a final rank is being put on it. And we varied in our research the location of where the rank was. Was it on some overall rating that is a summary of a bunch of other dimensions? Or is it on like just one attribute? And the same effect always emerges, which is anytime you put a rank on anything, you then shift people's choice toward whatever is number one in it. And then practically in terms of is this harmful or not, it itself then raises some interesting questions. So let's take the Consumer Reports example. To their credit, they're using lots of dimensions. They're somehow weighing them and kind of summing them all up and then giving you a rank. But the danger then of the college ratings and the Consumer Report ratings is that you have to agree with the dimensions that they're saying are the most important and how much weight they deserve. And you really could care more about one thing than another. And in fact, we had a study-

Speaker 1:
[23:16] I'm a safety girl, so I normally do.

Speaker 3:
[23:19] And I'm an MPG guy on cars. So technically gallons per hundred miles. So, like, I don't want to put equal weighting on all the dimensions. And I would prefer to have the more fine-grained information and kind of decide myself what's most important. And I do think this kind of tendency to then create these overall ratings within a rank attached to it means you're always going to have a number one, but it may not be that high on the thing you care about. And the other subtle thing about real world rankings versus ratings is that the differences between things often aren't that big. Is that number one thing that much better than number two? And what are the other dimensions I might care about that thing? And so I think that the danger with the rankings is that there's just a lot of questions you have to ask. What are the dimensions that are being used? What are the choices the rater is making about how much weight to put on each of the dimensions? And then how close or far apart are things in reality? I think rankings give you this artificial feeling of separation that may not really exist. And if it takes any cost or effort to get the higher rank thing, it may not be worth it because 4.7s and 4.5s might be very close in terms of your own experience of something. Why drive 20 miles further to get the 4.7 rather than the 4.5? So, I think the fact that the rank makes it seem more attractive. It's simplifying, it's useful, but it may lead us to have too strong a preference for something where there's really a small difference.

Speaker 1:
[24:59] Rick, why is it that making rankings explicit, even when they're already communicated implicitly in the presence of quality data changes our choices? What is going on here?

Speaker 3:
[25:11] Yeah, so the one that really seemed to work in terms of our ability to tease it out empirically was simply that once you have the ranks, you pay more attention to the dimension that's being ranked high and the option that is ranked high. So if you do simple tests like, can you recall the details of what you saw in the data, that's the data that gets remembered best. So I think it really is just like you look more closely at things that are number one ranked, you think about it harder, you probably also tell yourself stories, whatever, but there's something about the additional attention that you get. And maybe the easiest way to think about it is the flip side. Let's say there's some other dimension in the restaurant scenario, service and food might be the other two dimensions, but if the ranks only appear on the overall, and you look at the number one restaurant and overall, you won't have looked to see, well, what was actually number one in food? And so that's the way that we were able to show empirically, you are not able to recall that accurately because you probably, if you looked at it, didn't look at it for long enough or closely enough to remember it. And so we at least thought that for the kinds of choices we gave people, which is multiple options, multiple dimensions, and then the presence or absence of the ranks, the ranks was just leading you to kind of look in one corner and then ignore the other corners. You could defend that as that's very efficient, but it's also very incomplete. And so maybe the higher the stakes of the decision, the more you would like to more carefully kind of weigh that information across the space. But the primary effect seems to just be due to where we focus and ranks capture our attention.

Speaker 1:
[26:58] I'm curious what got you and your co-author interested in studying this in the first place?

Speaker 3:
[27:04] Yeah, it probably came from a couple of directions. JS Chun has done a lot of work on the social aspects of ranks in organizations in social settings. I guess I've been interested probably for 20 years now in, if you give people numbers of different kinds like miles per gallon and gallons per 100 miles, what do they do with those numbers and are there times when they get those numbers wrong? That's obviously more of a cognitive decision-making question. But it was a natural place where, and in our research, we often start with, yeah, I think I would fall for this. Let's see if other people do and try to see how big the effect is and how robust it is, and this turned out to be relatively big.

Speaker 1:
[27:50] Well, it's really interesting research and I'm so glad you and JS decided to study this. I really appreciate you taking the time to talk to me about it today. So thank you very much.

Speaker 3:
[27:59] My pleasure. Thank you.

Speaker 1:
[28:07] Rick Larrick is the Hanes Corporation Foundation Professor of Management and Organizations at Duke University Fuqua School of Business. You can find a link to his research on rankings and their outsize influence on our choices in the show notes and at schwab.com/podcast. And if you're curious about other ways numbers sneak into our decision making, check out our March 2025 episode, The Numbers Game, where I chat with my colleague and collaborator, Linda Chang, about a bias called quantification fixation. Our sister show, Financial Decoder, covers many of the biases we explore on Choiceology, emphasizing their potential impact on your financial life. And there are other Schwab podcasts that cover the markets, politics, and even golf. You can check them all out at schwab.com/podcasts. Rankings don't just shape where students enroll in school or which restaurant we book. They can move markets. In 2016, Morningstar started publishing sustainability ratings for more than 20,000 mutual funds, awarding the most sustainable funds five globes and the least one globe. In the 11 months that followed, research by Samuel Harzmark and Abby Sussman of the University of Chicago found that funds with the top rating experienced roughly $24 billion in net inflows, about 4% of their assets, while the lowest rated funds saw more than $12 billion flow out. Investors may have cared about sustainability long before the rankings were announced, but the introduction of a clear, simple, top-ranked, powerfully redirected attention, and billions of dollars, toward the funds that sat at the top of the list. I'll be the first to admit that I also see plenty of allure in a number one ranking. I truly never tire of hearing and repeating that the Wharton School, where I work, has been declared the number one ranked business school on yet another list. And I'll happily tell anyone who will listen that my hometown, Philadelphia, was named the Wall Street Journal's number one city to visit in 2026. Rick Larrick's research suggests that when you want to persuade, leading with the top rank is smart. That number one label captures attention instantly and is a more effective way to change hearts and minds than reciting all the underlying attributes that produced it. It would be far less effective, in other words, to tell you about Wharton's path-breaking scholarship and excellent job placements, or Philadelphia's incredible historic landmarks and world-class eateries, than to flout those number one rankings to get you excited about Wharton and Philadelphia. But what makes touting rankings such an effective persuasion tactic also makes rankings risky shortcuts when we're choosing for ourselves. When we fixate on what's number one overall, we tend to neglect the specific dimensions that matter the most to us. If you're like me and care most about safety in a car, don't rely on the overall score it's given by Consumer Reports. Look closely at that safety rating, or you'll over-index on responsive steering at a roomy interior. If you're like Shriya and would thrive in a curriculum with more electives and fewer core requirements, don't just chase the school at the top of this year's US news rankings. Examine how the program you're considering is structured. The next time something is crown number one, pause and ask not just what's on top, but whether the reasons it got there align with what you value most. You've been listening to Choiceology, an original podcast from Charles Schwab. If you've enjoyed the show, we'd be really grateful if you'd leave us a review on Apple podcasts, a rating on Spotify, or feedback wherever you listen. You can also follow us for free in your favorite podcasting app. And if you want more of the kinds of insights we bring you on Choiceology about how to improve your decisions, you can order my book, How to Change, or sign up for my monthly newsletter, Milkman Delivers, on Substack. Next time, I'll speak with Ulrike Malmendier, Professor of Economics and Finance at UC Berkeley Haas. We'll hear how the economic shocks you live through, like a big recession or runaway inflation, can leave a mark on how willing you are to take risks for the rest of your life. I'm Dr. Katy Milkman. Talk to you soon. For important disclosures, see the show notes or visit schwab.com/choiceology.