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 17th 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.
---------------------------------------------
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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