If you liked the books such as Blink by Malcolm Gladwell - or Tipping Point by Malcolm Gladwell or Freakonomics - by Steven Levitt and Stephen Dubner, there is a good chance that you’ll like Predictably Irrational by Dan Ariely.
Let me be honest, I have difficulty motivating myself reading such books. I strongly believe that human brain still remains a mystery – Science has not even come close to understanding what our brain is all about and what’s its maximum capability. So, when I pick up one such book, I feel I’ll be reading about some particular and narrow aspects of the human brain – deduced by these smart guys using limited empirical data. Note that temporal effects, spatial effects, and cultural effects are usually not considered in these experiments. So, these deductions are applicable only for certain demography and at a particular time in history. Hence, you may find that these books are short lived and do not gain long term popularity as much. It makes the book a best seller but not a classic.
But since my best friend Uday recommended this book to me – I had to comply. :-)
OK. With these constraints and biases – on to the review. The bottom line is, just like all other books in this category, this book is very easy read and reasonably successful in conveying several specific aspects of human behavior with examples that we can easily relate to. The book describes human traits in reference to “behavioral economics” (economics due to irrational human behavior as compared to the conventional economics that assumes humans to be perfectly rational in making all decisions). The book outlines three forces (namely human emotions, relativity, and social norm) to be instrumental in driving our rational decision towards irrationality. Given this premise, the author then takes various aspects of the human behavior (in different chapters) and demonstrates each of those with clever experiments (see my caveats above).
The author has embellished the write up with his personal experiences and decisions as well. So, this great professor at MIT makes the writing more interesting by playing on our other emotion – our natural instinct to be nosy/curious about other people’s business – both personal and professional (just look at the popularity of all those reality shows on TV!). And now that we are on the subject - how do I know the author of this book is from MIT? - you ask. Well, he mentions that at least 1000 times in the book. Not a single page goes by without him throwing name of this elite school along with others ‘names’ such as Stanford, Duke, Yale, and of course Harvard. My recommendation to the author is to tone this down for the future editions. I’m not exactly an “anti-establishment” type – but I have my limits.
Some noteworthy conclusions derived in the book are (some, not all – there are a lot others in this book – and in way more detail) –
Honesty - Humans are primarily honest but we tend to be dishonest when the stakes are not too high (Stealing office supplies, Wardrobing etc.) – This section made me feel guilty about taking stuff from office – Funny (ironic) thing is – I used office stationary and office pen to jot down notes about this book.
By the way, the author notes - When we are reminded of ethics, we tend to be more honest and Dealing with cash (rather than objects) makes us honest.
Social vs Market norms – We tend to keep the social and business norm separate in our lives – Moving boxes from your friend’s house – you don’t ask for money for that. But if your boss asks you to do more work – he better show money. Another example is why a $20 gift to a friend goes farther than a gift of $20. One is governed by social norm and the other by Market norm.
Medical placebos – Why patients feel better without actual medical procedure (When only suggested that they in fact did undergo the procedure)?
Perceptions – How a brand perception drives our choice in soft drinks (Coke and Pepsi taste tests)?
Costs - Effects of cost of the purchased item on our mind (why a 50 c asprin is more effective than a 5 c one? And how Starbucks convinced us to pay $3.50 for a cup of coffee?)
Zero – Author has done some good research on Zero. He describes that the effect of the word FREE is immense on the general population.
Poor judgment when sexually aroused – This is a no-brainer and so I won’t embellish it any further.
At places, the book does get preachy trying to take on bigger and ambitious policy making issues such as teen pregnancies medical practice, business and ethics, banking and credit cards, and medical insurance. Let me repeat my issue with these kinds of research – One should not be drawing conclusions based on a limited set of data (data points for this book gathered primarily by using students at MIT and other ivy leagues or the establishments nearby these colleges). The students at MIT (usually) are at different sigma levels (on the bell curve) as compared to the rest of the population. Hence a lot more research should be performed before suggesting higher level political policies.
But at the same time the book offers some suggestion to improve our life by identifying and correcting our irrational traits (I’ll try to stop visiting Starbucks from now on!).
Overall, this is good book – a well written book – Very effectively conveys some concepts of ‘behavioral economics’. Makes you chuckle once in a while. I would recommend reading it if you are interested in studying various aspects of human behavior. I, myself am registered at his website to receive updates on his research and be part of experiments, if possible.
