A lucid and accessible description of the biases that affect our decision making.
Classical economics is the story of how humans are rational beings who calmly weigh up the pros and cons of each economic situation before making a logical decision. Many aspects of the way our society works are built on this story of how humans think and behave. Unfortunately classical economics, although interesting, turns out to have some serious problems.
A new generation of social scientists – behavioural economists – are examining the actual ways in which people behave when making economic decisions and it turns out that the truth would have Adam Smith turning in his grave.
One of those leading the charge to educate us about the findings of behavioural economics is Professor Dan Ariely. And crucially he’s able to do so without sending us off to sleep.
Predictably Irrational, he uses his light and breezy style to describe studies demonstrating the situations in which we display irrational economic behaviour. What emerges is a picture of humanity that is sometimes irrational, but often predictable. In many ways we are actually distressingly predictable, such as our blind worship of all things ‘free’ or how we try to avoid difficult comparisons.In his new book,
Ariely addresses these complicated problems with admirable clarity, which you can sample at his blog. The experiments he describes are all easy to understand and he points to their implications for society and its policy-makers. Sometimes it’s tempting to think he’s glossing over the hard stuff, but actually he’s just succeeding where many academics fail: by speaking plainly.
Ariely’s mission is to help us understand how our decisions are affected by society, by our emotions and by relativity. And hopefully through this understanding, allow us to escape the habits of economic behaviour we didn’t even know we possessed. So what might seem like a pessimistic book about human irrationality, turns out to be an optimistic book about how we can escape some of the tricks our mind plays on us.
If you’ve been enjoying the articles here on the psychology of money, then you’ll enjoy this book – and see where I got the ideas for some of the posts! Highly recommended.
» Buy Predictably Irrational by Dan Ariely from Amazon.com.
» You can hear Ariely talk about his research in this London School of Economics podcast.
» Read more on the psychology of money.
Published: 4 April 2008