Testing the limits of human reason: A review of 'Predictably Irrational'
14 May, 2008
‘What a piece of work is a man, how noble in reason, how infinite in faculty!’ Ever since Hamlet declared his belief in human reason, economists and philosophers have joined the Bard in championing man, the rational animal. Adam Smith’s Wealth of Nations postulates an ‘invisible hand’ that ensures markets are driven by rational self interest. Indeed all classical economics is based on the view that humans understand their goals and make informed choices to achieve them.
Yet somehow, even Shakespeare must have sensed that our emotional incontinence and limitless capacity for self deception mark us out as a particularly irrational species. One way to study this subject is to talk to behavioural economists who examine how people are subject to emotional and cognitive forces in their decision making. Dan Ariely is one such specimen and his new book Predictably Irrational offers an engaging study of our susceptibility to unreason.
Ariely’s thesis is that humans are not just often irrational but predictably so. We keep making the same mistakes because we assume that our decisions are our own and that we can control the emotional influences that bombard us. As he puts it: ‘We usually think of ourselves sitting in the driver’s seat, with ultimate control over the decisions we make (but) this perception has more to do with how we want to view ourselves-than with reality.’
Through a series of ingenious experiments, conducted mainly on American undergraduates, he provides convincing evidence of how our reasoning processes are often skewed by our expectations and emotional commitments.
In one chapter Ariely focuses on procrastination. We are all familiar with people who constantly put off long term goals for short term cravings: the dieter who can never resist that tempting cheesecake; the employee who delays his pension payment to go on holiday; the student whose social life constantly intrudes on the impending dissertation. In each case, our rational quest to fulfill our goals is affected by the ‘lava flow of hot emotion’ represented by temptation.
For one experiment, Ariely gave three groups of students a set number of assignments for a semester. One group was given complete leeway to choose deadlines, a second group was given fixed deadlines while a third group was asked to set their own deadlines for submission, but with penalties for late submission. Subsequently, the group with the dictated deadlines received the best grades while the group with the most leeway (and no self imposed deadlines) did the worst. The solution to procrastination, says Ariely, is precommitment, where people ‘have the opportunity to commit up front to their preferred course of action.’
Elsewhere he uses experiments to test the truism that what we experience is directly affected by our expectations. Students were offered two samples of beer, one a Budweiser and the other an ‘MIT brew.’ The latter concoction consisted of Budweiser with several drops of Balsamic vinegar. Most students picked the MIT brew but what Ariely found was that if they did not know about its added ingredient, they were fairly satisfied with the taste.
However, when they were given foreknowledge of the vinegar, they turned up their noses and requested the Budweiser. Even more interestingly, when the students drank the vinegary beer and were later told about its added ingredient, they claimed to like the beer even more. Such experiments appear to provide clear evidence of how our expectations can influence our sensory perception.
This idea is particularly pertinent in his discussion of the placebo effect. The modern world is awash with alternative health remedies for every ailment under the sun, from homeopathy to flower essences. Yet very few of these treatments have evidential backing and are only effective because people believe they will be. Ariely takes this argument one stage further. People’s expectations of efficacy seem to be linked to the price of the remedies.
In one study a group of human guinea pigs were administered a series of electric shocks and asked to record the intensity of the pain. Prior to being given a second series of shocks, they were given a $2.50 pain relief ‘pill’, which was actually a carefully disguised capsule of Vitamin C. Despite the fact that the shocks were of identical intensity, almost all participants experienced less pain the second time after they had taken the dud pill. However when a second group were tested with the shocks, the pain relief pill they took was marked ‘10c’. This time, only half experienced the pain reduction the second time round, proof perhaps that ‘what you pay is often what you get.’
But if Ariely has provided us with a counsel of despair, it would be wrong to give up on humankind. Despite his shortcomings, man is capable of rational activity from building space shuttles to writing a symphony to producing a treatise on human weakness. Unlike the rest of the animal kingdom, our behaviour is not dictated by instinct nor are we permanently trapped by our mistakes. Learning from experience is one of the clearest signs of how rational we really are. By the end of his book, Ariely has reached the same conclusion.
The book is engaging and witty, and by omitting arcane detail and technical jargon, has a down to earth feel. One downside is the author’s US-centric approach which means that the book is dotted with illustrations taken from American life. Warning: if you are unfamiliar with baseball and American TV, you may be slightly put off. But this is a minor criticism for a book that triumphantly blends psychological analysis with astute social observation.Post to Delicious