“Predictably Irrational” by Dan Ariely
By Dan Ariely
380 pages. Audio: 7 hours and 22 minutes
One of my favorite areas of intellectual inquiry well outside my own discipline is behavioral economics. I find the experiments that they do clever and fascinating and insightful. One of the basic notions of classic economics is the idea of the “rational consumer.” The economist asks herself, “What would a rational person do in this situation?” So you would expect that, if a person has the opportunity to buy an identical product from two different stores, both conveniently located to him, and one of the products is much less expensive than the other, the rational consumer will buy the least expensive product. Or in a similar fashion, if you have the choice between standing in a long line or a short line to get exactly the same service, you will prefer the short line. I will momentarily forgo the unseen hazards of line length.
But behavioral economists ask the question in a different way. They ask not what a rational consumer would do but what consumers actually do. You probably won’t find it particularly surprising that not all of our consumption is entirely rational. Thus, the premise of one of my favorite books, Predictably Irrational. Dan Ariely contends that not only are we irrational in our consumer choices, but the forms of our irrationality are actually quite predictable. Irrational and random are not the same things at all. While our choices are often irrational, they are not random.
I know it’s hard to believe, but here’s a book on basic economic behavior that is amazingly entertaining. Through a series of incredibly creative behavioral psychology experiments, we have come to understand a great deal more about why we make some really bad decisions.
How irrational are we? Well, how well we feel after we take an aspirin is largely dependent on how much we paid for the aspirin. You guessed it. The more you pay for the aspirin, the greater pain relief you get, even though it is exactly the same pill.
I cannot reveal much about the various studies in this book without taking from the reader the joy of discovery. But maybe a few suggestions from some of the chapter titles will induce you to read this book. For instance, you may not be surprised to find out that too many options is a bad thing, and that the fear of eliminating a future possibility may keep us from fully realizing present opportunities.
There are thought-provoking sections on honesty or our lack thereof. Almost everyone cheats a little; read this book and you’ll find out how much and why. Almost everyone over-values that which they already own. Thus, we struggle to give up what we already have to gain something that might be much preferable.
Ariely has become something of a cottage industry after the success of this book. There are two sequels, The Upside of Irrationality and The (Honest) Truth about Dishonesty.
Ariely’s personal history is alluded to several places in the book, and he is a genuinely interesting guide. Like many books of this kind, it appears to be about economics but, of course, what it’s really about is human nature. And how many preachers don’t need to understand a little more about themselves and the people to whom they preach?