Some of the great truths that most of us (actually all of us) believe about ourselves is that we are great drivers (it’s always the other jerk), that we look good in our favorite outfits, and we make good, rational decisions. In Predictably Irrational author Dan Ariely leaves our delusions about driving and fashion alone and focuses on “The Hidden Forces That Shape Our Decisions.”
Ariely is a professor of behavioral economics at Duke University and presents the results of numerous experiments to support his findings. Please do not think that this book is a dull science book and avoid it. I do recommend that you pick up a copy. Some of the results are not groundbreaking like when faced with a lower end free chocolate (Hershey’s Kiss) versus paying for a higher end chocolate (Lindt chocolate truffle) consumers took more of the free kisses. The experiment was more detailed and had variations, but that was something that I took from that section.
I found the beginning of the book extremely interesting and one fact stands out in my mind about our minds. Ariely states that “we are always looking at the things around us in relation to others…jobs with jobs, vacations with vacations, lovers with lovers, and wines with wines.” The key, according to Ariely, is that we tend to compare/contrast things that are easily comparable and avoid less easily compared items. Armed with this knowledge, marketers are able to sway our decisions about their products.
The author presents a compelling case that the forces of supply and demand are dependant on each other and affect our decisions. Think about how producers use Manufacturers Suggested Retail Prices (“MSRP”). Would you ever really pay that for an item? Most of us would not and are delighted when we get the item for much less than the MSRP. I HATE negotiating with car salesmen, but cannot understand how anyone can just go in and pay “sticker price.” Maybe I am just not rich enough yet.
Another interesting area covered in the book is the difference between social relationships and market relationships. Ariely uses employment as an example and worries that rather than a primarily social relationship (employee-employer trust, dedication, job security, etc.), many workplaces are becoming ruled by strictly market relationships (strictly bottom line). As someone who works for an entity that offers decent, though ever-dwindling, benefits I have seen a marked change in my workplace. Twenty years ago and even ten years ago, I would say that most folks thought highly of what they were doing. As I now talk to people, a high percentage think of their employment as just a job. Newer employees seem to only work there as a place to get some experience and leave.
Dan Ariely also looks at some social issues and his comments surprised me:
“We should work hard on making education a goal in itself, and stop confusing the number of hours students spend in school with the quality of the education they get.”
“Perhaps we could bring the Bible back into public life. If we want to reduce dishonesty, it might not be a bad idea.”
“Money, as it turns out, is very often the most expensive way to motivate people. Social norms are not only cheaper, but most often more effective as well.”
Again, what you should find very interesting is that all of Mr. Ariely’s comments are supported by actual experiments. His facts are supported by evidence as well as rational thinking.
The best praise that I can say about this book is that there were numerous times after I read a particular passage, when I had to share the information with the person(s) nearest me. Sometimes the folks in Subway did not even mind.