March 13, 2008
Books: Why choosing rationally might not be so easy
Dan Ariely is an MIT professor who served beer in a brewery and dressed in a waiter's outfit as part of his research into decision making. A leading behavioral economist, Ariely has heightened abilities to observe what's going on around him, from tiny details to the big picture. His uncommon findings and their wider applications are presented in "Predictably Irrational: The Hidden Forces that Shape Our Decisions" (HarperCollins). Recently the book debuted on The New York Times Best-Seller list at No. 5.
Ariely has written an engaging book of social science with an eclectic, original approach. His work draws on psychology and economics, and he leads readers through the back-stories of his research. His personal back-story, which he alludes to in the book's introduction and elaborates on in an interview, is unforgettable.
When he speaks of human irrationality, Ariely means the distance from perfection. He looks at why people are usually tempted by two-for-one specials when only one item is needed, might steal an occasional pencil from the office, have trouble turning down second helpings even when dieting or get stuck trying to eliminate possibilities in order to make decisions.
In his research, Ariely examines how people make decisions in daily life, and he shows how mistakes are both systematic and predictable, repeated over and over again. His method is to carefully watch people, pick up on the errors they're making and then take these observations back into the lab for measurement and study. With colleagues, he conducts clever experiments that probe habits of shopping, eating, saving money and procrastinating, along with temptations to do small-scale lying, cheating and stealing. He then relates his findings to everyday life, and suggests how they might be applied -- taking into account how people really behave -- on a larger scale to social, political and financial policy.
"Social science is about us. I'm fascinated by mysteries so close to ourselves," he said in an interview late last month, on the day before the book's official publication.
The Alfred P. Sloan Professor of Behavioral Economics at MIT's Sloan School of Management and at the Media Lab, where he heads the eRationality research group, Ariely is also a researcher at the Boston Federal Reserve Bank. He wrote this book while he was a fellow at the Institute for Advanced Study at Princeton. The 40-year-old author is affable, energetic and thoughtful, with a worldview that's somewhat unorthodox.
In one experiment, Ariely and two colleagues used chocolate to look at how people made choices when something was offered to them for free. Their tools were Lindt Truffles and Hershey's Kisses, offered at reduced prices. When both were offered at a small cost, most people chose the more expensive truffles, but when the truffles were offered at a further reduced price and the kisses were free, most chose the kisses.
He explains how most transactions have an upside and a downside, but when something is free, the downside is easily forgotten. The idea of something being free provides a kind of emotional charge, so it seems even more valuable than it is.
Ariely ties the interest in "free" to the fear of loss -- there's no possibility of loss, or the sense of having made a bad decision, when something is free. He suggests that the concept of free can be applied to social policy, by making certain medical tests free to encourage people to take them, and by eliminating registration fees for electric cars to encourage people to drive them.
Ariely traces his career interests, and his particular skills in observation, back to a horrific accident in Israel. As an 18-year-old new soldier who had just joined a Nahal unit, he was with another soldier in the apartment of his commanders, who had left ammunition there, when a flare -- the kind of bomb thrown to light up a battlefield -- exploded. Ariely was very close to the flames and was badly burned in a matter of seconds; he backed up, only to have to run through the flames to escape. More than 70 percent of his body was seared with third-degree burns.
For the next three years, Ariely was hospitalized, with repeated surgeries (some without anesthesia because his heart and lungs weren't functioning well), painful daily treatments to replace the bandages and intensive physical therapy. Toward the end, he could leave Tel HaShomer Hospital on occasion, dressed in an elastic suit and mask that attracted many stares.
Through all of this, he was keenly aware of everything going on around him, wondering why certain decisions were made about his treatment and that of the patients around him, noticing which nurses were most gentle and which weren't and trying to anticipate their schedules. And he read medical journals.
"I was trying to gain some control back," he says.
Feeling separated from society he began to observe what were once daily routines as though he were an outsider.
When he was able to leave the hospital for extended periods, he enrolled at Tel Aviv University, although over the next five years he had to return frequently for additional surgery and treatment.
Wanting to understand how to better deliver painful and unavoidable treatments to patients, he began doing research. At first, he thought about becoming a doctor, as he had seen "great models and those who completely missed the mark" and felt he would do well. However, he was advised that he wouldn't be able to operate and that it would be very hard to serve as a doctor while facing his own medical challenges.
In 1993, he came to the United States to attend graduate school, and went on to receive a doctorate in cognitive psychology from the University of North Carolina at Chapel Hill and a doctorate in business from Duke University. He explains that his work is now somewhere in between those two disciplines.
Looking back, he says that the injury was a "powerful, painful and prolonged experience, but it has also provided one of the most central 'threads' of the way I understand myself and others -- and it has also sparked many of my research interests."