BizzaroComics.com on Psychology
Why do people spend a fortune on brand name drugs instead of generic drugs – and report more cures? Why does jotting down an honor code instantly make you more honest during an exam? Why are people more apt to steal office supplies, tokens, points, and stock options – but not cold cash sitting in a fridge? Why do people buy Diet Cokes – only to splurge on three more servings of apple pie, cake, and ice cream shortly after?
People are strange. They make irrational decisions, mistakes, and habits in classrooms, courtrooms, shopping malls, banks, and doctor’s offices every day. In the New York Times bestseller Predictably Irrational: The Hidden Forces That Shape Our Decisions, MIT behavioral economist and professor Dan Ariely set out to investigate the predictable but irrational behavior of humans in a series of groundbreaking, controlled behavioral studies conducted on a booming populace of undergraduate students at MIT. Wildly entertaining, exuberant, detailed, and conversational, Ariely provides intelligent, well-documented insight into nearly 13 seemingly unrelated factors that influence our behavior. Those oft overlooked or ignored factors are emotions, relativity, and social norms – and they come to play in the marketplace, economics, public policy, and law.
The first edition of the book, published in 2008 by Harper Perennial, falls into a popular classification of “behavioral economics” books that integrate human psychology, behavioral science, and economics to prove but one thing: human decisions are fallible. The book has garnered popularity from reputable newspapers (Click here to read what The New York Times had to say), pop magazines, entertainment digests to publishing circles and average readers with Engineering backgrounds. While I had drawbacks to Ariely’s comical and oversimplified language, the book quickly won me over with his engaging voice, personal anecdotes, a systematic break-down of irrational human behavior on a case-by-case basis, and social implications on how society and we should take heed and break the cycle; change needs to occur in ourselves, our policies, our ads, and even our buying behavior.
Read 5 compelling human behaviors that have social implications:
1. The Revolving Doors Between Market Norms and Social Norms. Market norms are strictly transactional exchanges: payments, wages, “prices, rents, interest, and costs-and-benefits” (68). Social norms are social exchanges: favors, gifts, promises, offers, and implicit exchanges made in close corridors among friends, family, and familiar individuals. Friction happens when both spheres get tangled. Say, for example, a national bank spends billions on advertising the impression of “social relationships” and offers dog treats and candy per visit; but then it regularly slaps its customers with outrageous late or overdraft fees. When market norms and social norms are mixed, customers become disillusioned and distrusting of the company. You can bet customers will take offense or switch banks. Conclusion: Companies should choose to associate with one or the other – not both – in how it manages its relationships with its employees, consumers, and the like.
2. Keeping Doors Open. People have an incessant need to keep their options open. Even if they have a “best option”, “medium option”, and “worst option”, people will waste opportunity and time to dabble between multiple options – only to regretfully see doors close on them. In the real world, there is a terrible cost to dabbling with options but not committing time, opportunity cost, and concentration on one option. For example, when parents obsessively involve their children in a range of activities like ballet, football, flute, Tae Kwon Do, swimming, and art, exhausting their children, wasting money, the worst part of it is, they lose time, money, and effort that could be spent mastering one particular gift, talent, or study that could make a difference in their children being superstars or staying average.
3. The Power of Price. People are so easily swayed by the cost of a product as positively correlating with its worth/value or effectiveness. In examining “the Placebo effect“, Ariely provides a wealth of studies that have proven that medical patients that received placebo operations and medicines experienced equal healing as did patients that received the actual operations. Implications are severe: There are countless costly medical procedures and exams that are unsupported by scientific evidence, and thus, could be done away with. Also, despite their controversy, placebo goods, drugs, and operations could be a cheap and yet successful method for curing serious illnesses or even improving test scores for the LSATs.
4. Ten Commandments, Honor Codes, and Honesty. Who would’ve thought that reading the Ten Commandments and being asked to rewrite them by memory would cause students to not cheat? Ariely provides startling implications on how reading a moral code, being primed with honest “terms”, or simply pledging truthfulness before taking an exam or speaking in a courtroom can lead to more honest behavior.
5. Handling Cash Makes Us More Honest. How profound! People are likely to cheat more for tokens and symbolic items of value (points, answers on an exam), simply because they are one step removed from money and can be easily rationalized. While most people won’t necessarily steal cash out of wallets or a few bucks planted in dorm community fridges, they will steal office pens and food, cheat on stock options, and get away with fraud – without touching a hint of green.
After this book, I have decided to take time to rethink my choices down to the food I order at a restaurant or the coupons I choose to clip. If our irrational behavior can be boiled down to systematic and predictable factors, it’s a shame for us to proceed through life not stopping ourselves from falling for the same ads, the wrong people, or poor, dishonest decisions that cost others or ourselves. Beat the system that is the subconscious human mind.
Michelle J. | Blog 
It sounds like this economist is more than willing to admit that economic models predicated on rational behavior don’t always work because folks aren’t rational. If they were libraries would have more customers and the roads wouldn’t be clogged with single-occupant cars.
Exactly. There would be better choices made in general, no lapses of judgment, no regretful decision-making, and so forth. But Ariely gives predictable models for such irrationality; it’s interesting to see that social media and marketing can easily prey on these models of misbehavior. Maybe I should do another follow-up blog on how this is found in social media.
Michelle, this is very interesting topic. We like to think of ourselves as creative, fresh innovators and surprising creatures. But this study about our irrational predictability makes me realize how easily manipulated our brains are and how frequently we become preys of those who understand the illogical patterns of our mind. I agree that awareness of these flaws could help us be savvier about our choices and decisions and consequently becoming “real” unpredictable human beings.
I’m not even sure what I would do if I was asked to memorize and rewrite the Ten Commandments, but 100%, I certainly wouldn’t cheat! I think the one that resonated most with me is weighing multiple options. I’ve always been a cheerleader for the idea of allowing multiple options to percolate up at the same time, to play multiple options against one another (a particularly useful tactic when choosing between job offers or schools, etc.), however, human nature still makes the ultimate decision a difficult one. At least recognizing the problem is the first step to fixing it!
Def an interesting topic… #4 made me laugh a little given the fact that every Georgetown syllabus states what the “Georgetown Honor System” is and then provides the “Honor Pledge”. When you read the pledge the word “I” is used which according to Ariely’s thinking it will make us more honest? I thought that the honor system and pledge inclusion into our syllabus was more for legal purposes, but perhaps now it serves a greater purpose? Hmmm… wonder if our required “Ethics” class makes us more ethical?
“Bamboozled.” Gotta love that word. Appreciate your participation in Big Dog Data. Great contributions to the class. Your blog looks professional and inviting.
“Yes! I’ve accepted the challenge of posting once a week on my blog for an entire year.” Would like to know who challenged you and why. Have you written a blog about it? You have a wide range of skills, why not run a marathon, or swim the Chesapeake Bay, or raise money for Haiti? How about getting twenty freelance articles published in the New York Times? Will blogging reach a goal you have?
As far as your book report goes, this rational/irrational argument is a classic debate. I don’t know much about Areily, but he seems to make some interesting points. Because we are studying at Georgetown, does Areily indicate that all human behavior can be changed? Just pick up a newspaper and read about CIA leaders and wonder what motivated them to behave the way they did.
I guess the rational/irrational debate can be extended to nature/nurture. My son has a friend who is a medic for the Marines in Afghanistan (Navy Corpsman). This Marine regularly does irrational things to save lives. What would Areily say about this person? Is he genetically predisposed to be brave, or is he acting irrationally? It is irrational to save a human’s life? Just in a combat situation?
Keep bloggin’ The discipline of writing will help you in formulating opinions in the future. Even if they are irrational.
John Gilroy
Thanks for finally writing about >Predictably Irrational: 5 Ways How Our Brains Are Easily Bamboozled
| Michelle J. | Blog <Liked it!