Traditional economics says people are fundamentally rational beings. When confronted with a problem, we make the rational decision. But then why don’t people save for retirement? Why do we enjoy eating out but cut coupons to save money on a simple can of soup? Why do we feel better when we take a brand name medicine rather than the cheap, generic version?
Behavioral economics blends economics and psychology and rejects the idea that we are rational. Rather we are irrational beings. We consistently overpay, underestimate, and procrastinate. Ariely says we are predictably irrational and attempts to provide the world with a Freakonomics-esque book on behavioral economics.
This book, however, is not nearly as groundbreaking or interesting as its traditional economics counterpart. Some of the results from his social-science experiments were not surprising. If you stick a six-pack of soda in the common fridge of college dorm, of course they are going to be gone. I could have told you that based on my own experiences in college. The most interesting section was the differences in monetary norms and social norms as motivators. The introduction of social norms into the workplace is why so many people take their work home with them.
Some of his studies are flawed, particularly that on cheating. In the study, one group has to copy their answers from the test to a bubble sheet while another group is allowed to copy their answers from the test to a bubble sheet with the correct answers already filled out. The final group allowed the same privilege and they were allowed to destroy their answer sheets. When all the scores were tallied, the third group scores better than the first group and therefore they must have cheated. But they were allowed to destroy their answer sheets and, therefore, there is no proof that this group cheated. Maybe they did; maybe they didn’t. This isn’t the only time Ariely leads you to the conclusions he wants the reader to reach rather than laying the study bare for examination by the reader.
- Ariely, Dan. Predictably Irrational: The Hidden Forces That Shape Our Decisions. New York: Harper, 2008. Print. 280 pgs. ISBN: 9780061353239. Source: Purchased.
- Levitt, Steven D. and Stephen J. Dubner. Freakonomics: A Rouge Economist Explores the Hidden Side of Everything. New York: William Marrow, 2005. Print. 242 pgs. ISBN: 006073132X. Source: Library.
The Honors Project:
I read this book for The Honors Project, my own personal challenge to read more books about economics, food, and/or geography in preparation for writing my honors thesis. My goal for this project is to learn as much as I can about these topics so I can formulate better questions and, in turn, produce a better honors thesis. You can find out more information by checking out my introductory post, project post, or spreadsheet of titles.Book Cover © Harper. Retrieved: January 7, 2012.