MattA's Reviews > Predictably Irrational: The Hidden Forces That Shape Our Decisions

Predictably Irrational by Dan Ariely
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's review
Mar 25, 2008

really liked it
bookshelves: non-fiction

A thought-provoking book on behavioral economics. Why do we make the choices that we do? What is our motivation? Why are seemingly irrational choices made over and over? The author's natural, readable style allows the laymen easy access to his academic research and the conclusions he draws on these topics. I especially liked the author's basic emprical approach. There isn't hardly a proposition or theory in the book that hasn't been tested via experiment.

I don't agree that everything the author presents as "irrational" is actually "irrational." What does "irrational" mean, anyway? In the introduction, the author casts irrationality as "distance from perfection." To me that definition doesn't fit. Just because you aren't making perfect choices, doesn't make you irrational. It may mean that you simply lack perfect information about your situation or about the final outcome stemming from your choices. Or it may mean that the economist studying the situation (and judging things to be irrational) simply doesn't understand all of the costs and benefits being considered by the consumer. If a researcher doesn't fully understand what motivates a person, how can he consider them "irrational?"

Or it could mean that the economist isn't using the right tool to judge the behavior. I especially dug into the third chapter, on "The Cost of Zero Cost." I think if the author had analyzed that chapter's examples in terms of benefit/cost ratio rather than absolute benefit, then the consumer behavior described would make a lot more sense.

Toward the end of the book, however, the author started digging into topics that did start to cut closer to the irrational, specifically on the topic of dishonesty. Via a variety of experiments the author shows how people's honesty can be nudged this way or that way by exposing them to different conditioning (like being told to think about the Ten Commandments before a test). Or how people are more likely to steal things rather than money, even if the value of the money matches the value of the item being stolen. The book demonstrates how stark economic assessments of cost and benefit can be fundamentally different from the way people actually view the world.

In the end I found this a readable and captivating book. I would recommend it to anyone with an interest in "popular economics", if you will. If you liked "The Undercover Economist" you'll probably like this book too.
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