Predictably Irrational, by Dan Ariely

I think by now we all know people act irrationally, especially given the recent spate of books using research from the new field of behavioral economics. Many of us despair of ever making a dent in other people's beliefs by use of rational argument backed up with solid evidence. Even highly intelligent persons will review the reasoning and nevertheless jump to this position: I see the evidence and I still don't believe it.

Ariely sets out to confirm, through well-designed yet simple experiments, that we do in fact behave irrationally. What he finds, however, is that we are irrational in the same way when faced with the same choices: we are consistently, predictably irrational. And there is hope in this.

For example, when faced with three choices of DVD players on sale, ranging in price from low to high, we will predictably choose the middle one. This because the other two have set "anchors" for us. Knowing this, we can see how salespeople can manipulate us to make the choice they want us to make. Knowing this, we can go to the store armed with unbiased research and choose the model we actually want and ignore the manipulation. Knowledge is indeed power.

But that doesn't mean we will be able to escape our inner irrationality every time. Even Ariely admits to being caught up in a choice between equals that cost him time and money and didn't lead to a better decision. In cases like his it is good to step back and look at the consequences of either decision and then just get on with it. When there isn't much difference between them why agonize - just choose.

Many of the research experiments were designed to ferret out basic human inclinations. In some cases there are factors that can make a big difference, however, that may make the real situation lead to different results in some people. For example, Ariely offers the example of his wife when she was pregnant. She wanted to have a drug-free birth. To determine if she was up for the ordeal, the birth coach suggested that she simulate the pain by putting her hand in ice water for a certain period of time. If she could handle it, then she should feel good about her decision to avoid drugs. She felt she could not handle it and therefore was persuaded to have an epidural when the time came. I believe there are factors that influence such decisions that have little to do with how much pain we can handle. My own experience differs in a significant way from that of Dan's wife and not because I have a high pain threshold:

When I was pregnant I too determined that I would have a drug-free birth. I prepared for it by attending Lamaze classes and having a coach with me during labor. Although the pain was intense, far greater than I had anticipated, and although it went on for a long time, it never occurred to me to ask for pain relief (beyond the breathing exercises). The reason is twofold: 1) I knew drugs would get into the baby and would affect the experience negatively for both of us; 2) I knew labor has an end point. I would not be in pain forever. This knowledge kept me strong throughout and I successfully delivered both of my children without drugs.

However, if I had a severe migraine headache I would take relief in a second, even a painkiller I knew was not good for me in the long run. I would seek any kind of relief. Others have said that when in the grip of a bad migraine headache we just want someone to shoot us. In that case taking a drug affects only me and if I don't take it there may not be an end to the headache for a very long time. Different circumstances indeed. I don't think simulating labor the way Ariely's wife did was an accurate way to simulate the entire experience - even though in her case she did opt for an epidural. My point is that sometimes we have knowledge that changes the experience for us in the individual case.

I do believe the experiments Ariely and friends undertook offer great insights. And we should pay attention to the results, even while we may find that we have some variations in our own responses to similar circumstances.

Another objection I had to the book was with the recommendations Ariely made at the end of each chapter. He would sum up the type of irrational behavior and then offer ways we can overcome our own irrational tendencies in similar circumstances. The recommendations are weak and general and left me feeling a bit lost. I almost felt it would have been better if he'd offered no recommendations at all.

Of particular usefulness should be the chapters on "Free!" and the use of placebos in studies. Reading these chapters should make us aware of why we tend to choose more expensive medical treatment (even when identical to or even worse than the cheaper version) and why free stuff isn't necessarily free. Understanding these concepts could make major differences in our lives and our spending.