FiveBooks Interviews

Dan Ariely on Behavioural Economics

We can all be more aware of our surroundings and our decision-making process, says the professor of psychology and behavioural economics. He recommends five books to help us maximise our prosperity and well-being

I have just read some of the books you’ve chosen, and I found them almost impossible to put down. It’s fascinating how people behave in these experimental situations – whether they’re eating huge quantities of soup without realising it, or failing to see a gorilla. I was wondering, more broadly, what you are trying to get at with this choice of books?

For me, it’s very interesting to try to figure out where we go wrong. In my general approach to life, I think of myself as a social hacker. Life has been designed around us in a way that is not necessarily the best way to maximise our health, our well-being or our prosperity. If we understand where things are going wrong, we can also figure out how we can fix them. That’s my first concern.

Social science is incredibly interesting because it’s the science of everything we do. We used to think that the big mysteries in the universe are the stars, or maybe molecular biology – things that are outside our reach. But the more we get into it, the more we realise how little we know about the things around us, which can include eating a bowl of soup or what’s happening to us at work. So there is an element of self-improvement in these books, but there’s also a fascination for its own sake about what’s going on around us. Each of us can become more of a social scientist by being a bit more aware and a bit more thoughtful.

Let’s go through the books, and you can tell me what’s important about them and why you like them. The first one on your list is The Invisible Gorilla: How Our Intuitions Deceive Us, by Christopher Chabris and Daniel Simons.

These are the guys who did one of the most important pieces of research in social science, which is to show how little we actually see in the world around us. The basic demonstration of this is a movie in which there are two groups playing basketball. One group is wearing white t-shirts and the other group is wearing black t-shirts. They are passing the ball, and the viewer is asked to count how many times the people in white t-shirts pass the ball to each other. What then happens in the background is a gorilla passes through. He stops right in the middle and thumps his chest. When the clip is over, the viewer is asked, “How many times did you see the people in white t-shirts pass the ball?” Sometimes they get it right, sometimes they get it wrong. But when you ask, “How many of you saw the gorilla?” it turns out very few people saw the gorilla.

I didn’t see the gorilla.

There’s also another demonstration in the book that I really like. This involves going up to someone on a campus with a map and saying, “Excuse me, can you help me figure out how to get to the student centre?” They take the map from your hand and start explaining it to you. While they’re explaining, two people in workmen’s clothes come between you with a door. For a moment, they obscure your view. What the person you’ve asked for directions doesn’t know is that you’re going away. You’re walking off with the door and a new person is standing in front of them. The question is, do people notice this change? And the answer is, again, no.

These are findings that are incredibly powerful and important. We think we see with our eyes, but the reality is that we largely see with our brains. Our brain is a master at giving us what we expect to see. It’s all about expectation, and when things violate expectation we are just unaware of them. We go around the world with a sense that we pay attention to lots of things. The reality is that we notice much less than we think. And if we notice so much less than we think, what does that mean about our ability to figure out things around us, to learn and improve? It means we have a serious problem. I think this book has done a tremendous job in showing how even in vision, which is such a good system in general, we are poorly tooled to make good decisions.

Can you give an example where you think this failing has been particularly important?

If you think about the financial crisis, it was to some degree caused by conflicts of interest. You pay a group of people a lot of money to see reality in a distorted way, and lo and behold they are able to do it. Now you would think that in the case of people working for Lehman Brothers, for example, that the firm wanted them to see reality correctly. But they paid them to see reality incorrectly. What ended up happening is that people saw reality as they wanted to see it, not as it really was. This is an example of this issue coming into play in a big, important and quite devastating way.

I also liked the chapter about how someone being very confident is often not a sign of skill.

Yes, and this again is partly because we have such a hard time learning. Because we have a hard time figuring things out and learning from experience, the connection is not that good. We’re going through reality, but nothing we do ever registers, and so we never know that we are wrong. I’m exaggerating, but that’s the basic idea.

Your next choice, Robert Cialdini’s book Influence, is all about persuasion techniques. I loved how he even managed to apply his principles to the Watergate scandal. A group of people were persuaded to go ahead with what was really a very stupid and pointless plan to break into Democratic National Committee headquarters, just because of the way it was presented to them.

The Cialdini book is very important because it covers a range of ways in which we end up doing things, and how we don’t understand why we’re doing them. It also shows you how much other people have control, at the end of the day, over our actions. Both of these elements are crucial. The book is becoming even more important these days. Firstly, because electronic communication now gives us the ability to tailor messages. We have more ways of reaching people. Secondly, because we need to persuade people to start behaving differently – for example by saving energy. There’s a very nice company called Opower, which prints out information about your energy bill. They are trying to use the Cialdini principles to get you to behave slightly better.

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About Dan Ariely

Dan Ariely is an Israeli American professor of psychology and behavioural economics at Duke University. He is the author of two New York Times bestselling books, Predictably Irrational and The Upside of Irrationality, and a popular blog

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