It's become increasingly obvious that the dismal science of economics is not as firmly grounded in actual behavior as was once supposed. In "Predictably Irrational," Dan Ariely tells us why.
Despite our best efforts, bad or inexplicable decisions are as inevitable as death and taxes and the grocery store running out of your favorite flavor of ice cream. They're also just as predictable. Why, for instance, are we convinced that "sizing up" at our favorite burger joint is a good idea, even when we're not that hungry? Why are our phone lists cluttered with numbers we never call? Dan Ariely, behavioral economist, has based his career on figuring out the answers to these questions, and in his bestselling book Predictably Irrational (re-released in expanded form in May 2009), he describes many unorthodox and often downright odd experiments used in the quest to answer this question.
Ariely has long been fascinated with how emotional states, moral codes and peer pressure affect our ability to make rational and often extremely important decisions in our daily lives -- across a spectrum of our interests, from economic choices (how should I invest?) to personal (who should I marry?). At Duke, he's aligned with three departments (business, economics and cognitive neuroscience); he's also a visiting professor in MIT's Program in Media Arts and Sciences and a founding member of the Center for Advanced Hindsight. His hope that studying and understanding the decision-making process can help people lead better, more sensible daily lives.
He produces a weekly podcast, Arming the Donkeys, featuring chats with researchers in the social and natural sciences.
“We have very strong intuitions about all kinds of things — our own ability, how the economy works, how we should pay school teachers. But unless we start testing those intuitions, we’re not going to do better.”
“If you ever go bar hopping, who do you want to take with you? You want a slightly uglier version of yourself. Similar … but slightly uglier.”
“When it comes to the mental world, when we design things like health care and retirement and stock markets, we somehow forget the idea that we are limited. I think that if we understood our cognitive limitations in the same way that we understand our physical limitations … we could design a better world.”
“In life we encounter many people who, in some way or another, try to tattoo our faces.”
“The most difficult thing is to recognize that sometimes we too are blinded by our own incentives. Because we don’t see how our conflicts of interest work on us.”
“When we think about labor, we usually think about motivation and payment as the same thing, but the reality is that we should probably add all kinds of things to it — meaning, creation, challenges, ownership, identity, pride.”
“There's something about [cyclically] doing something over and over and over that seems to be particularly demotivating.”
“The bad news is that ignoring the performance of people is almost as bad as shredding their effort in front of their eyes. … The good news is that by simply looking at something that somebody has done, scanning it and saying ‘uh huh,’ [you] dramatically improve people's motivations.”
“Every time I assemble IKEA furniture, it takes me much longer, it's much more effortful, it's much more confusing … but when I finish it, I seem to like those IKEA pieces of furniture more than I like other ones.”