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 But is rational necessarily good? September 30, 2008
Dan Ariely has written an interesting and thought-provoking book on the behaviour of human beings in the field of money and commerce. There are some fascinating insights here that we already "knew" from our own behaviour but had maybe put it down to a personal oddity. Now we know, from the experiments of Dan and his colleagues, that we are not alone in our irrationality!
I like the style with which the book is written: it is extrememly readable and Professor Ariely's humanity and humour come through in large doses, which is refreshing for an academic/business book. The chapters that I found particularly interesting and pertinent were those on social and market norms (why is a gift for your neighbour helping with your house move OK but paying him is not?) and how our dishonesty increases the more steps removed we are from real money (some huge implications for our increasingly cashless society).
But...I started getting annoyed with Dan with his very liberal acceptance that as humans, we cannot be expected to have much self-control. When he starts suggesting that cars for teenagers have built-in warning devices that phone Mum or start playing classical music when the poor dears start getting out of control and breaking the speed limit, I wanted to scream "No! Teenagers shouldn't be allowed to cruise around in cars burning up the world's natural resources until their parents judge them to be adult and responsible enough!" Ditto the comments about a credit card with various limits built in.
Finally, I detected a rather odd implication throughout the whole book that rationality was somehow "good" or "desirable" and that irrationality was somehow associated with "poor decisions or wrong choices". I'm not sure that that is always the case. Some of the best decisons are made on the basis of intuition.
 Reality is absolutely relative. September 16, 2008
At first glance, the title of Dan Ariely's book seems to be an oxymoron. (It certainly catches one's attention.) Can irrational thought and/or behavior be predicted? Perhaps if it is repetitive? (The judgment and behavior of at least some people can be repetitive and thus predictable.) So I began to read his book with curiosity but also, yes, with some skepticism. Here are a few of my reactions. First, he learned a number of "lessons" from what he calls "experiments" in his life, each of which struck him as being counterintuitive. For example, everything is relative...even when "it shouldn't be"...or in fact isn't. That is, our mind can "play tricks" on us and thus we tend to see what we expect to see, hear what we expect to hear, etc. Images and sounds are relative to their context or frame-of-reference within which we place it. Or consider the frequently expressed observation, "one man's trash is another man's treasure" or one or more of self-serving juxtapositions such as "He's a tightwad whereas I'm frugal...she's narrow-minded whereas I'm a specialist...They're stubborn whereas I stick to my convictions." Ariely's other lessons also, directly or indirectly, involve illusions and delusions of one kind or another. They explain why we can't make ourselves do what we want to do, why we overvalue what we have and especially what we purchase, and "why a 50-cent aspirin can do what a penny aspirin can't."
As I worked my way through the first few chapters, I was reminded of a joke I heard years ago. This fellow arrived just in time to tee off for another round of golf with three friends. They played every Saturday morning. "Hey, I've got great news! Just bought the best hearing aids that money can buy. They cost $8,000 each but they're worth every penny. It's a whole new life for me. Never been happier." "You spent $16,000 on two hearing aids? That seems expensive." "Nah, like I said, worth every penny." "What kind is it?".... The fellow glanced at his watch. "Exactly 7:30."To paraphrase Descartes: It is if I think it is.
Also, Ariely shares what he learned about the differences between conventional economics and behavioral economics. Contrary to "the far-reaching conclusions" that generations of economists have developed "about everything from taxation and health-care policies to the pricing of goods and services," asserts that human beings are far less rational than standard economic theory assumes. "Moreover, these irrational behaviors of ours are neither random nor senseless. They are systematic, and since we repeat them again and again, they are predictable." (Hence this book's title.) Ariely makes a convincing, at times humorous but nonetheless rational argument to support modification of standard economics, "to move it away from naive psychology (which often fails the tests of reason, introspection, and most important - empirical scrutiny)." He collaborated with a number of colleagues when conducting various experiments that enabled them to "slow human behavior to a frame-by-frame narration of events, isolate individual forces, and examine those forces carefully and in detail." The results of the experiments illustrate general principles of human behavior (e.g. the decision-making process) within and beyond the workplace.
Finally, I admire the extent to which Ariely succeeds in explaining the fundamentals of economics and social science for a reader such as I who knows essentially nothing about either. (Oh sure, I have some scraps of information and countless opinions but....) For example, in Chapter 9, Ariely describes an experiment that he conducted with two MIT professors to answer questions that include "How to explain violence? Why does it happen? Is it an outcome of history, or race, or politics - or is there something fundamentally irrational in us that encourages conflict, that causes us to look at the same event and, depending on our point of view, see it in totally different terms...We came up with a simple test - one in which we would not use religion, politics, or even sports as the indicator. We would use glasses of beer."(I do have extensive prior experience with beer!) The details of this experiment are best revealed within the narrative but I will indicate that the material in this chapter provides a number of revelations that help to explain "the hidden forces that shape our decisions."
Congratulations to Dan Ariely on a brilliant achievement!
Absolutely fascinating. July 30, 2008
I was given this book to review several months ago, and it's been sitting on my 'to do' shelf ever since. I kept procrastinating because... well, it seemed like it would be a very dull read. I didn't even know what 'Behavioral Economics' was, and it didn't exactly sound like a page-turner.
In fact, I've discovered that I couldn't have been more wrong. It *is* a page-turner. I usually picked it up intending to read just one chapter, then didn't set it down until I'd read three or four.
The chapters are quite short and 'bite-sized'.
The book explores a lot of the totally illogical things that we do from day to day. Things that hurt our bank balance, or our health, or our relationship with family or work colleagues. It's full of interesting experiments that have been carried out to back up the thesis, and gives occasional pointers on how get ourselves out of our self-imposed traps.
Not that the 'traps' are always self-imposed. When you read the book, you'll find a trip to the supermarket will be a whole new experience, and you'll never feel quite the same about those 'buy one, get one free' offers. You'll have a much better awareness of how salesmen, advertisers, and probably governments manage to manipulate us so easily.
Definitely recommended for anyone interested in why we humans do the crazy things we do.
 Not as dull as it sounds (is that a compliment?) July 14, 2008
As book titles go, this isn't the catchiest. The subject matter could be construed as dull and narrow, and the weight of the book gives an air of study accompaniment rather than bedtime read.
But wait... luckily the study of behavioural economics requires lots of research and experimentation, and whilst the results may not always feel like "real science" (example - students are offered four beers, and the study showed that people would rather choose something different to the others in order to show individuality, dubious in my view), some of the studies reveal useful insight into the way the mind works and how business manipulates it.
It's actually surprisingly easy to read, aside from a sludgy section on social and market norms (the difference between, say, taking a bottle of wine round your friends house because they brought one round yours, as opposed to paying them back for bringing it). There is righteous criticism that this book takes too much of a US stance, and there are too many slants on the US health system for instance (maybe because he experienced so much first hand).
Overall, a very enjoyable bed time read, and I shall look carefully at the deals I'm offered in a supermarket from now on.
Go with your gut feel June 26, 2008
1 out of 1 found this review helpful
As a complement to something like Malcolm Gladwell's 'Blink' this is a useful reader. It explores more of the mechanics of why we make decisions on instinct and from emotion. In that sense it is fascinating.
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