2008, Books, Economics, Non-Fiction

Predictably Irrational (2008) by Dan Ariely

This is a fascinating and sometimes amusing exploration of behavioural economics through descriptions of experiments that the author has conducted, and some he’s read about. It’s a pretty good introduction to behaviourial economics and social psychology.

A number of these experiments were unfamiliar to me and some of them are really illuminating. I’m particularly interested in the experiments about honesty, for the potential to improve out institutions, through the use of oaths, or the problem of how to get people who do not handle currency directly to be more trustworthy. But all of them are pretty interesting and, if you’re not familiar with behaviourial economics or social psychology, will be illuminating to you. (Also, death to traditional economics already. It’s well past time.)

Ariely’s style is appealing enough, though he is less funny than the jacket says so, but it’s his personal story which is really fascinating. I don’t always love when authors of social science insert themselves into their books, but Ariely has had a hard life, and it’s illuminating.

The one issue I have with the book is that, despite his criticism of naive psychology, Ariely seems to hold some traditional beliefs which may not hold up. For example, he invokes Freud multiple times. Though I do not know whether or not some of Freud’s ideas have accidentally proven to be true, Freud was not exactly known for his scientific rigour (by today’s standards). And it’s hard to see what Freud has to do with behavioural economics, unless someone has gone out and demonstrated that, yes, indeed, Freud was correct about, for example, the superego.

But aside from that, this is well worth your time if you’re wondering why economic models constantly fail or why people do irrational things. After reading about these experiments – or, really, any social psychology experiments – you will no longer believe in the myths of the rational utility maximizer.

8/10

Check out Dan Ariely’s Irrational Game

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