238 of 249 people found the following review helpful
This book and Dan Ariely have recieved a lot of media attention, so I approached the book with some skepticism, thinking that it might be overhyped. I'm pleased to report that my skepticism turned out to be unwarranted.
The book has many strengths, the main one being that it convincingly presents many ways people are wired and/or conditioned to be irrational, usually without even being aware of it. This eye-opening revelation can be a bit disheartening, but the good news is that we can fix at least some of this irrationality by being aware of how it can arise and then making a steady effort to override it or compensate for it. That's not an easy task, but it can be done. As a simple example, I've programmed a realistic exercise schedule into my PDA, and I've been very consistent with my exercise because of that. The PDA imposes a discipline on me which I couldn't otherwise impose on myself (as I know from experience).
The book is also well written, and I would even say enjoyable to read. The many experiments described in the book are presented in a lively way which elicits interest, and Ariely goes into just the right amount of detail -- enough to convey the basic experimental designs, results, and plausible interpretations, without boring the reader by getting into esoteric points which are more appropriate for journal papers.
The one criticism I have of the book, which applies to most of Western pscyhology, is that most of the described experiments used US college students as subjects. That raises a serious question regarding the extent to which the results can be generalized to people of the same age who aren't college students, people of other ages, and people outside the US. Study of cultural psychology reveals that differences due to these factors can be profound, and Ariely himself notes a Korean study where such differences were observed, but he doesn't really elaborate on the point.
Despite this one criticism, I think this is an excellent and authoritative book, and among the better ones in the "why smart people do dumb things" genre, so I highly recommend it. The insights revealed are both fascinating and practical, if you can muster the discipline to apply them.
374 of 409 people found the following review helpful
on June 27, 2009
I have been thinking about economics seriously for nearly 30 years. Classical economics is built to no small degree on the notion that people will generally act in their own best self interest, after rationally and intelligently examining their options. This fit my world view fine in my first career as an engineer (BS and MS in Electrical Engineering).
From my 2nd Career as a Business Development person (MBA), I began to have to deal with people's tendency to not entirely think things through.
Here in this book, we have a professor who runs socioeconomic tests on his MBA students. These students are smart enough, worldly enough, experienced enough, and educated enough to approximate the standard economic assumptions and produce reasonably rational behavior.
Guess what. Even among broad experiments conducted on multiple MBA classes over time, one can predictably pre-bias the outcome of a particular run of a socioeconomic experiment by what seeds you plant in the class members' minds before the experiment. For example, in one experiment in estimating prices, the author requires his students to write the last two digits of their social security numbers on the top of the paper. Simply the act of writing a high number (e.g., 88) versus a low number (e.g., 08) produced statistically significant correlatable influences on the students' later price estimates. Those compelled to write "88" at the top of their papers would reliably estimate higher prices than those compelled to write "08" at the top of their papers, to a statistically significant degree.
Extrapolating to "real life." Watching Fox News will tend to make you more conservative without you knowing it. Watching MSNBC news will tend to make you more liberal without you knowing it.
If you want to understand "real truth," you are just going to have to do a little more than self-select your news feeds. You are going to have to seriously consider a diversity of viewpoints.
Moreover, if you have Social Darwinist beliefs as I once did, you may need to re-think the concept of the Poverty Trap. Early pre-conditioning really does make a difference.
Here is the way I think of it as an Engineer. Classical Economic Theory is analogous to Classical Newtonian Physics. There is nothing badly wrong with it, and it is a good approximation for most real world problems at the middle of the distribution.
However, General Relativity is indeed more correct that Classical Newtonian Physics, and the additional knowledge makes a real difference in certain special cases. And, those special cases are sometimes the really important ones. Likewise, Behavioral Economics is adding something very valuable to our knowledge of Classical Economics.
Read this only if you are brave enough to contemplate that the world might be a little more complex than we wish it were.
294 of 326 people found the following review helpful
on February 19, 2008
Dan Ariely is the guy you'd want at your dinner party. He's witty, smart and also very inclusive - sharing his passion for the way humans tick in a way that makes us feel great about the fact that, rational as we like to think we are, we make bad snap decisions, we cheat and we get ruled by our heart precisely when the facts are screaming "go the other way!" There's a lot in this writing which celebrates our human-ness. Why do we do this?
What Ariely has done here is shift a lot of the thinking developed by such pioneers as Kahneman & Tversky who worked in behavioural economics, and moved it into the everyday sphere. And he's done a great, insightful job. Where the behavioural economists are focused on financial decisions (why we buy high and sell low - and confound the assumptions of the classic economists who assume 'the rational man,) Ariely eschews the technical language and walks us through everyday examples of our often fuzzy and quite irrational decision-making.
The result is utterly engaging - and this easy 300 page read still has academic rigour and strong foundations. Ariely cites many experiments and examples, and shows that we often get things wrong because we frame things the wrong way, mis-judge probabilities, apply heuristic rules of thumb that don't always work, or we just plain let our emotions rule.
We love to think that we're educated, rational and moral. Yet who hasn't overestimated the upside on a sure-fire investment, bought some clothing that we knew was a mistake even as we bought it, or got our wires crossed between work-rules and social rules? This book is fascinating, entertaining and very, very illuminating.
- Recommended for the general public, but I'd urge marketers, market researchers and business people to read this one carefully. Dan provides excellent dinner-party insights, but they apply to our real world and explain why so many poor decisions are made - whether by customers or by the 'rational' business people who make million-dollar decisions.
- Recommended companion book: Nudge: Improving Decisions About Health, Wealth, and Happiness here one of the godfathers of behavioural economics discusses the way we can manage the "choice architecture" in our world.
174 of 210 people found the following review helpful
on June 1, 2008
First, the good points.
The author turns our attention to some important things in human behavior. The comparison between 'social norms' (where people help each other and do good things for free) and the 'market behavior' is very interesting. Social norms in the work-place and social norms in education are very positive things.
Another very important point is the observation that young people can not make correct decisions when aroused. Thus, "Just Say No!" is really the right answer!
Well, many experiments and observations lack depth and scope. Most are done with students in prominent universities and therefore, can not be spread on the entire society. Young students often live in a special world of their own.
Next, the author sometimes extrapolates quite wrongly. For instance, in Chapter 11 where he discusses honesty/dishonesty in society, on pp. 214-215 the author writes:
"Adam Smith reminded us that honesty really is the best policy, especially in business. To get a glimpse at the other side of this realization - at the downside, in a society without trust - you can take a look at several countries. In China the word of one person in one region rarely carries to another region...Iran is another example of a nation stricken by distrust. An Iranian student at MIT told me that business there lacks a platform of trust".
OK, in the June 2008 issue of Scientific American there is a research article on the neurobiology of trust. On page 95 in that article we see a table 'National Trust' showing the trust levels in different countries. In this list of 30 countries the highest level of trust is found in Norway (above 60%), while China comes third (above 50%) and Iran fourth (50%), way above many European countries.
So, just because "An Iranian student at MIT told me", the author branded Iran as a nation "stricken by distrust" - and this in found in the chapter on honesty! What about the scientific method?
63 of 75 people found the following review helpful
on February 19, 2008
I had the privilege of taking Dan's class at Duke last fall, where all of us got the chance to read preview copies of Predictably Irrational. Of course, not everyone will get the chance to hear Dan's excellent lectures, but the book does a great job of capturing his wit while providing a wealth of information about why human behavior can be as fallible as it is.
The joy in this material lies in the fact that every few pages you will find yourself smiling because you too have behaved in the irrational manner being described, and now that you look back on it, it's hard to remember why.
Why are we so excited about free stuff, even if we just throw it out later? Do we convince ourselves that an expensive meal will taste better than a cheap one? And why are we motivated to act on some humanitarian disasters, but not others? We all make irrational decisions at times, but this book provides the rare opportunity to reflect on those decisions and observe the behavioral patterns underneath.
If you enjoyed Freakonomics or any of Malcolm Gladwell's writings, you will also enjoy Predictably Irrational. The pace is quick, and nearly every page contains some nugget of surprising information that you'll want to tell your friends. It is more like Freakonomics than Blink or The Tipping Point in that it is structured around experiments, with each chapter covering the results of experiments in a specific area of irrational behavior, the implications for society, and what individuals might do to mitigate it.
It's a hard book to put down, and it's both entertaining and interesting from start to finish. For those who are curious about the world, this might be the ultimate beach or airline reading!
145 of 179 people found the following review helpful
on August 23, 2010
This is an intellectually lazy book that buries a few mildly interesing studies under endless anecdotes, opinion and speculation. He gives very little detail of the studies (e.g. number of participants, mean vs median results) so it's hard to determine if the results he has are statistically significant or their precise meaning. For example, when given an opportunity to cheat, the average score of a group of students goes up - it would have been good to know if this was the result of one or two students cheating a lot or most of the students cheating a little (his opinion). Many of the studies' results could have other equally reasonable explanations and, rather than explore each of them, the author simply picks the explanation that fits with his rather tranparent social and political views. For example, he cites a study where his students who he asked to pay to listen to him read poetry offered to pay him when he asked again whereas when he offered to pay students to listen to his poerty they wanted to be paid to listen again. He attributes this to subconcious anchoring but another explanation is these students are conciously attempting to meet what they think their teacher's expectations are.
His thought process is also sloppy, Because humans are not entirely rational in determining their needs he concludes that the free market cannot be trusted and therefore the government must play a significant regulatory role. He cites the water and electricity industries as examples which seems silly - the need for regulation in these industries is because they are natural monopolies of an essential service, not because people are too irrational to decide how much electricity they need.
The author is also astonishly full of himself - he belives he's discovered the proper way for a group to order dinner, for companies to offer credit cards, how to lose weight, how to control lobbyists or how to solve the subprime mortgage problem. Each of his proposals raises a number of obvious questions which he makes no effort to present or answer. He suffers from an arrogance common to university professors who think they can run the world better based on studies that ask 18 year old volunteers to answer questions for a dime apiece.
36 of 42 people found the following review helpful
While it is comforting to know that so many decisions are made on from irrational bases, it is discomforting to be made quite so aware of it. No, I take that back: it is quite reassuring to know that while the principles of logic have their place, people are influenced by other factors.
Professor Ariely explains some of the factors that influence our decisionmaking: from the influence of emotions to the sometimes agonising choice between options; the pitfalls of procrastination and the lure of free offers. And why is it that we are often perfectly willing to do something for nothing, but not if payment is involved? From the discussion of the creation of a market for black pearls through discussion of types of dishonesty, Professor Ariely provides insights into human behaviour, in many cases backed by experiments that have tested his hypotheses.
This book is primarily focussed on behavioural economics, but I would argue that it would be of interest to a far wider group of readers. We are all decisionmakers and our decisions impact on others. I believe that many of us with a specific interest in public policy or management, in marketing, or in human behaviour more generally would find value in reading this book. While many of the concepts are profound, the subject matter is presented in a readable and entertaining way.
105 of 129 people found the following review helpful
on October 5, 2008
Blame Malcolm Gladwell - but after Blink: The Power of Thinking Without Thinking social psychologists of the type he featured in that book have been coming out of the woodwork to publish in the pop science market in alarming numbers figuring, reasonably enough, that there's a bit of money to be made on the side. I'm guessing royalties from articles in the International Journal of Psychology would pale in comparison.
One of the latest is Dan Ariely, whose unique selling point is a horrific accident he sustained as a student Israel which left him with burns to 70% of his body. His book does what it says on the tin, by way of explaining a number of social experiments that he and his colleagues have run in the last few years, loosely themed around the observation that we don't always act as sensibly as logic would dictate.
Which is fine - as you would expect, some of the examples are eyebrow raising - but it really shouldn't be news and it certainly doesn't require Dan Ariely to tell us that our liberal western societies aren't as rational as we like to think (incontrovertible proof of that, not offered in Ariel's book, being the politicians we elect and the amount of attention and money we collectively devote to cosmetics, fashion, celebrity and professional sport), especially as deeper epistemological examination reveals the idea of "rationality" is incoherent anyway.
But just as some anecdotes are enlightening, the implications of others are not nearly as plain or convincing as Ariel thinks they are, and some of his experiments struck me as being particularly glib, superficial and susceptible to plenty of alternative interpretations.
And what Ariel's book lacks is any further theoretical drive: OK, so we are predisposed to behave in silly or odious ways - but what's your point? In what underlying way are our irrational proclivities linked? What conclusions can we draw; what can we learn; what strategies can we adopt to counteract the harmful effects of our fecklessness?
Ariely implies, but doesn't say, that some sort of regulation is required to save us. But given that it is also our irrational proclivities by which we arrive at these politicians (and the political institutions through which they organise themselves) I'm not sure he leaves us any better off than when we started.
60 of 73 people found the following review helpful
A broad survey of how we often make decisions and judgments that ultimately are wrong or not in our best interest, this book is best when it talks about specific issues of economics and rather mundane when it examines general psychological behavior. Mr. Ariely is not a gifted writer, but he is a serviceable one. He also is not shy about citing other people involved in this work. Culturally, he is definitely an Israeli, which means American readers, especially women, may groan when he writes about male/female relationships. The book is front loaded with the interesting material, which focuses on such topics as pricing. Toward the end, the author seems to be out of his depth in his cursory looks at broad topics like dishonesty.
From the standpoint of a scientist, his descriptions of his experiments seem a bit alarming. They seem overly simplistic and more importantly have far too few people surveyed to fully back the conclusions of the work. I can only hope that the author, in trying to make the book more accessible to the lay audience, has left out important information on how his work is done.
Overall, I'd say that there is about 1/2 a book worth of interesting material here. That's probably better than most books today. It tends to have a fairly engaging and humorous style. It's very accessible (although my mother-in-law, a very bright woman, said to me that a couple of the chapters were tough going). I'd recommend reading the first four chapters and skipping the rest.
13 of 14 people found the following review helpful
on February 13, 2011
The book had its moments, but in the end, was a disappointment. It seemed to have started with a conclusion, then interpreted various experiments as a means of supporting them. For example, the author demonstrated that more cheating occurs in certain situations, but failed to explain if it was large scale cheating by a few or widespread cheating by many. The same types of errors were made in regard to consumer behavior. Whether the irrationality was widespread, or simply extreme irrationality by a few was a distinction he never attempted to make.
He then correctly states that the free market works well when each person acts in their own rational interest, but since we are all irrational, we need a central planner to tell us what to do. And, of course, he sees himself and his ideas taking on such a role. He even concluded at one point that we are willing slaves at heart (not his words) in that we truly yearn to be told what to do. However, if he is right, he is advocating a system where a few irrational people make decisions for the masses. Is that really so appealing?
A prime reason why the free market should be left alone is that it is an incentive for people to act rationally. Isn't rationality a commodity in short supply already? Giving credit where credit is due, this book is somewhat entertaining thanks to a great job by the narrator. However, like perfume, it should be sniffed and not swallowed.