The Upside of Irrationality: The Unexpected Benefits of Defying Logic

Why this book?

This is my third year of college but I have been only taking economics and business classes all the time until this semester. And a decision to enroll into Social Psychology seemed like a very adventurous idea. And I regret nothing!

After the first class, when I found out that everyone else in there is a Psychology Major, my self-verification (my desire for others to see myself the way I see it: as not a stupid person) gave me a hint that even the laziest student from everyone around me definitely knows more about psychology than I do (Swann & Hill, 1982). And the sign-ups for the book were scheduled to be very soon, so in order not to feel completely lost, I was looking for the business related material. There were two books that I really liked, both by the same author Dan Ariely: Predictably Irrational, Revised and Expanded Edition: The Hidden Forces That Shape Our Decisions and The Upside of Irrationality: The Unexpected Benefits of Defying Logic. I opened Amazon to look at the customer reviews and have immediately noticed that the second work by Ariely has been published in paperback on the 17^th of May – which is my birthday! Here the “numbers version” of the name-letter effect (idea that people tend to like things and places that start with the same letter as their name) worked its way and helped me to make a final decision (Nuttin, 1985).

Author:

            Dan Ariely was born in New York but when he was three, his family moved to Israel where he was growing up. He always planned to major in physics and mathematics, but throughout his educational path switched to psychology. He holds M. A. (1994) and Ph. D. (1996) in cognitive psychology from the University of North Carolina in Chapel Hill and a doctorate degree in business administration from Duke University. For several years he has taught at MIT but currently he is a professor of Psychology and Behavioral Economics at the Duke University. Dan Ariely has also given TED talks, written several books and hosted a weekly podcast show on behavioral economics.

In between the covers:

The topic of behavioral economics can be quite boring, however, I think that Ariely managed to present it in a great way that is easily understandable by the reader, using a lot of examples and experiments that have been conducted related to the topic.

He starts the book by presenting the viewers with a very touching personal story. Many years ago a large magnesium flare exploded next to him causing the loss of 70% of the skin to third-degree burns. He was fortunate enough to get recovered from the burns, but during one of the blood transactions he got a serious liver virus. For months doctors could not even tell what exactly it was, so they offered him a painful treatment that he had to inject himself three times a week over the next year and a half. The injections would give him headache, nausea and fever every single time. But in the end of this 1.5 years he was the only patient to never miss a single injection. And this torturous experience inspired him to come with the ways of how to deal with the fact that “frequently we fail to make short-term sacrifices for the sake of our long-term goals” (Ariely, 2010). I now feeling really bad for not being able to take my berry-flavored vitamins just two times a day. A piece of advice that Dan gives is to always consider and concentrate on the long-term benefits and award yourself for doing something unpleasant. For example, when he had a liver infection, he would watch a movie after every injection he had to take (Ariely, 2010).  I use this principle on myself every time I have to do my homework: I reward myself with getting a snack or watching an episode of a TV show. And it definitely helps!

The way Ariely structures the organization of his arguments is first of all, he introduces an easily-understandable example, usually based on some experiment and then explains how the same principle works in the world of Economics. For instance, Dan describes the experiment that was done in India. Participants were asked to play 6 different easy games (Simon, Labyrinth, Recall last three numbers, Packing quarters, Dart Ball and Roll-up). To first third of the participants, they offered a small bonus (equivalent of their daily-pay), to the second group – an equivalent of about 2 weeks pay at their rate and to the third group – an equivalent of what they would get for about 5 months of working - for just showing an excellent performance playing these games. The results of the experiment prove the overjustification effect (a tendency for our performance in any type of activity to become lower when we are expecting to get an award for that (Leeper, Greene & Nisbett, 1973). Ariely states that the higher bonus was offered to the participants, the lower their performance was (Ariely, 2010).

Dan compares the results the experiment to real-life situation by applying the same concept to bonuses at the work place. If it is someone who is making hamburgers at McDonald’s, making $9 an hour, adding a bonus to their payment is very likely to motivate them to do a better job and work faster. But what happens on the higher level of management in big companies is that the bonuses they are offered are often enormously huge (they probably wouldn’t agree with me, of course), but the point is that in many cases it actually lowers the performance of CEOs (Ariely, 2010).

I remember how I have experienced a similar situation when I was in middle school. I have always had a very high proficiency in procrastination, so even back then I would finish my homework really late. My parents never had a problem with that, but one week my mom decided to come up with an award-system for me: if I was done with school work by 9PM every night of the week, she would take me bowling over the weekend. And that sounded like such a great idea! However, that week turned out being terrible! I would think about bowling trip all the time and all of a sudden homework that would take almost no time previously, seemed very complicated and time-consuming. I went to bed way after 9PM every single day that week. And I find it fascinating that a 13-year old middle school student and a CEO of multinational corporation can have similar problems.

I promise I was not paid for this:

In my opinion, an author did an excellent job showing that all the principles we live by and our brain functions by are completely applicable to the field of business and economics. And while traditional view of modern economics is based on the fact that all the players in the market are completely rational and they always make logical decisions, Ariely proves that it does not matter what area of life we interact in, we are still humans and very often our decisions are very far from being rational. For example, sometimes in a stressful situation a CEO can choose a wrong way of dealing with a problem. And even though the pressure is gone in a few days and he/she probably can make a better choice now, they get caught up in their emotions and tend to still pursue the same approach, because according to cognitive dissonance theory we feel comfortable keeping a consistent behavior (Festinger, 1957). And even though the book is intended to talk about economics, it helps the reader to better understand human behavior as a whole.

Because there is no perfection:

One thing I did not like about the book, however, is the way Ariely describes the experiments. On certain points he goes way too deep into an explanation of what has been done, but misses out on the important factors. For instance, in the experiment with games in India that I have mentioned earlier, he devoted a whole paragraph to telling the readers that while the researchers from America were shipping the games to India, the darts were stopped at the customs until they paid an extra fine. However, he does not say how the participants were chosen for the experiment. And whether they had a chance to talk to each other before the next participant was invited. Those factors would definitely matter to anyone familiar with the field of psychology, and the fact that the important pieces of information are missing probably does not work in Ariely’s favor, however, people who are reading the book as a leisure time will probably not pay attention to those pieces missing. Overall, I think that this book will definitely be more interesting to the readers looking into the business side of it, rather than psychology.

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  Ariely, D. (2010). The Upside of Irrationality: The Unexpected Benefits of Defying Logic. New York: HarperCollins Publishers.

Festinger, L. (1957). A theory of cognitive dissonance. Stanford, CA: Stanford University Press.

Lepper, M. R., Greene, D., & Nisbett, R. E. (1973). Undermining children’s intrinsic interest with extrinsic award: A test of the “overjustification” hypothesis. Journal of Personality and Social Psychology, 28, 129-137.

Nuttin, J.M. (1985). Narcissism beyond Gestalt and awareness: The name–letter effect. European Journal of Social Psychology, 15(3), 353–361.

Swann, W. B., Jr., & Hill, C. A. (1982). When our identities are mistaken: Reaffirming self-conceptions through social interaction. Journal of Personality and Social Psychology, 43, 59-66.

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"Advertising is legalized lying." (H. G. Wells)

              The book Influence: The Psychology of Persuasion by Robert Cialdini is considered one of the greatest business books ever written. It talks about key principles of how you can influence people, for instance, make them buy whatever you are selling, even if they don’t need it (Cialdini, 2007).

Being interested in business, I pay attention to what companies offer to attract customers. There are so many of them who are great at making you forget that you are spending money. And think instead that you are the luckiest person in the world for getting this limited offer/getting a discount/saving elephants in Africa because 10% of your purchase go to charity.

I have discovered one of these beautifully managed companies during the first week of this semester, when I received the textbooks I’ve ordered from chegg.com. In the box with my books I also found a nicely-designed coupon for 20% off and free shipping for the first order from the website that sells shoes and accessories (JustFab).

As soon as you open it, they say that in order to use a coupon, you have to take a short survey, and enter the e-mail. You feel committed to it - since you’ve already spent this much time and provided them with an e-mail, you wouldn’t mind going through their web-site and considering buying something. According to Cialdini (2007) it works because we like being congruent and consistent with anything we commit to (Cialdini, 2007). Also, by sharing our e-mail, we provide the company with a small favor and later we are more likely to continue agreeing to their terms because we enjoy maintaining our behavior (Cialdini, 2007).

Another principle that Cialdini (2007) talks about is scarcity: when we are told that something is limited, we tend to overvalue it (Cialdini, 2007). And as soon as you finish the survey, the window pops up that presents the scarcity principle - it starts a 12-hour countdown to using the “VIP MEMBERSHIP”. And this feeling of being appreciated by a company who seems to really care about you and offer you all these amazing opportunities within the next few hours definitely pushes you towards buying something from them. 

Besides, the e-mails they send to me almost every day - their topics are just great and most of the time personalized with my name! I’d never think that something like “Get Gorgeous, Ksenia!” or “Afraid of the dark, Ksenia?” could be from a shoe-company. I send their e-mail to the junk folder, but don’t unsubscribe. I keep an eye on what else they will come up with. =)

P.S. And you would guess that after thinking through all of these points I would never buy anything from there. But I am actually writing this post right now while wearing a pair of boots from them. In other words - well done, JustFab! :) --------------------------------------------------------------------------------------------------------------

Cialdini, R. B. (2007). Influence: The psychology of persuasion. New York: HarperCollins.

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No Pain - No Gain

              Until I was 9 years old, I was the only kid in a great and loving family with 2 parents, 4 grandparents and 6 aunts and uncles with no cousins! Can you guess I was spoiled? But then, on the 18^th of March, 2003 my life of endless pleasures had come to an end… My parents brought home a little human being… my sister. Well, it was terrible!!!

              Absolutely everyone adored her, gave her compliments, bought her new awesome toys and clothes, and talked about her all the time. What was so fascinating? – she was lying down and screaming all the time, waking up and falling asleep whenever she wanted - and that is it. And I was 9, all of a sudden left completely unnoticed, having to do everything on my own and sleep to the sounds of her screaming. I still clearly remember the next two years after Anastasia was born as the worst time in my life.

              However, I am 20 now and I couldn’t love anyone more than I love her! She is the person I miss the most, she is the person I think about the most and she is my pride, joy and daily inspiration! I am extremely happy with the way it’s turned out, but now, learning social psychology, I am thinking about what could have been the reason for it.

              According to Festinger’s (1957) theory of cognitive dissonance, we tend to behave in ways that do not contradict with our attitudes. And whether forcefully or voluntarily we do something that is not consistent with our views, we always feel very uncomfortable (Festinger, 1957). But to protect ourselves from suffering, we start to enjoy and love what we have suffered for. So, even though having a little human being at my house was very annoying, I have gone through so much already, that the solution to all my problems was learning to love her. And to this day I think it might have been the best decision I’ve ever made! 

Hm… I kind of love you a lot because I used to hate you a lot. But… still miss you a LOTtle! <3

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Festinger, L. (1957). A theory of cognitive dissonance. Stanford, CA: Stanford University Press.

 

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