The Upside of Irrationality

Predictably Irrational by Dan Ariely just might be my favorite non-fiction book ever.  There’s so much to write about that I have not been able start.  I’ve been irrationally procrastinating.

In fact I procrastinate on all these “book review” topics.  I guess I don’t actually want to review books, but I do want to make something from my time invested and share some of the high points. 

So, I’ll shift gears and just share the amusing stories I read in books instead of really reviewing them.

So, without further ado:

The upside of irrationality: The Unexpected Benefits of Defying Logic at Work and at Home, by Dan Ariely

I think the title is misleading.  It’s really just another book on the material from Predictably Irrational.  It was interesting, but did little to promote the “upside of irrationality,” or any “benefits” for defying logic.   Perhaps this opinion is just what you get from an engineer type who values rationality.

We value our own work

Experiments show that we value our pathetic attempts at crafts far more than a stranger would if we put any effort into it ourselves.  But here’s the funny story:

When instant cake mixes were introduced in the late 1940s, they were not well received.  It turns out there’s a huge difference in a Woman’s mind (this was 1940) between an I-made-it-myself homemade cake and a just-add-water cake.  When Pillsbury began leaving out the dried eggs, sales took off.  Apparently, adding water and eggs is enough to instill that made-it-myself feeling and enough pride of ownership to make it acceptable to serve.  This is commonly known as the “egg effect.”

Revenge

In another study, an actor administered a simple test to strangers in a café for a small payment.  In some of the cases, he would impolitely interrupt the instructions to accept a short personal phone call.  After the task was completed, the participant would be slightly overpaid and given the opportunity to violate social norms by stealing the extra money.  Shockingly, the slight, er, slight, was enough to drastically increase the rate of thievery.  Perhaps more surprising, a simple apology “sorry – I shouldn’t have taken that call” is enough to completely neutralize the effect.

Maximizing Your Happiness dollars

There’s a psychological phenomenon called Adaptation, that basically means we get used to stuff – good or bad.  The bottom line of Ariely’s musings is that we get the most happiness bang for our bucks by spreading out our purchases.  If you buy a whole house full of furnishings and decorations, the thrill wears off.  If you buy your items one at a time, the thrill still wears off, but you get a whole bunch of them.

Pop Economics wrote an excellent post on this here.   For the same reason, commercials actually enhance our enjoyment of television programs.  Hard to believe – go read the article.

The other bit has to do with keeping up with the Joneses.   Just don’t get the same stuff they get, because comparisons hurt.  Let’s say you want a Toyota RAV4 and you’re agonizing whether to spend the extra bucks for the Sport edition.  If you settle for the base model and your neighbor gets the sport (and loves it), your going to be unhappy.  If you settle for the base model and your neighbor gets a Subaru Outback Foo Foo model (or a Rolls Royce or Ferrari for that matter), you’re more likely to be happy with your base RAV4.  We have some control over who we choose as our “Joneses”, and that decision has a lot to do with our level of contentment.

On Empathy and Emotion

Human beings are deeply touched by stories.  The tale of a single suffering soul motivates us in a way that suffering millions do not.  This leads to misallocated resources in a big way.  The Cancer Society is able to raise gobs of money by telling stories, and by labeling everyone who as had cancer as a “survivor” (why do we not have “heart attack survivors” and why am I not a “torn ACL survivor”?).   Why do we pour out time and money to help a little girl who’s fallen in a well while the same resources would save 1000 lives in a poverty stricken village in Far-Far-Away?  Ariely’s chapter on this subject paints a rational picture of our collective irrationality, but utterly fails (in my mind) to indicate the “upside.”

 

The Long-Term Effects of Short-Term Emotions

In Predictably Irrational, Ariely talks about following the herd, and how sometimes our own past actions can be the herd – self herding.  (For example, if you stop at Starbucks for a $4.00 Latte several times (even under extenuating circumstances), you may decide that you are the kind of person who purchases and enjoys $4.00 coffee beverages.  Further stops at Starbucks happen not because you decide you want to stop, but because that’s just what you do.

In The Upside of Irrationality, he experiments with short term emotional decisions.  Sometimes emotion leads us to make a DECISION.  A DECISION (as opposed to just a decision) guides future behavior.   He uses the Ultimatum Game.  In this game, some money is given to a pair of players.  One player (the sender) divides the money and the other player (the receiver) decides whether to accept the division.  If he does not accept the offer, both players get nothing.  Rationally, the sender could divide $20 so that he gets $19 and the receiver gets $1.  If the receiver accepts, he’s $1 better off.  However, this generally offends the receiver’s sense of fairness and he would rather have nothing than let the sender get away with such injustice.

Enter the twist.  Ariely and company manipulated the receiver’s emotional state so that they felt happy/generous or sad/angry, and then rigged the sender’s offer to be unfair.  Not surprisingly, this changed the receiver’s  behavior.   When primed to be forgiving, they were likely to accept an unfair offer.

Now, the receiver was given the role of sender.  It turns out that the subjects tended to apply their primed receiver emotions in their role as sender.  If they were generous as receiver, they tended to assume, as sender, that their receivers would also feel generous, so they made stingy offers.  This is a systematic misapplication of experience.

Very interesting, but I fail to see the personal upside, save that I can personally watch myself and try to avoid the error.

The bottom line here is that we tend to make permanent behavioral changes based on decisions influenced by short term emotion.  Not rational.

The Bottom Line

Go read Predictably Irrational.  If you really like it and want more, read The Upside of Irrationality.

One Response to “The Upside of Irrationality”

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