Predictably Irrational by Dan Ariely


Dan

I am currently taking a 6-week course with Coursera conducted by the author, Dan Ariely. This book is a part of a list of required reading assignments.

If only all my textbooks were that much fun when I was in school, I would have aced everything. Like the book, Dan, the author and my lecturer, is just as much fun, starting his lecture every week with a joke, but that’s another topic altogether.

This book is under the subject of social psychology and behavioral economics. Why do people behave the way they do even if their behaviors seem irrational? How do we, if possible, correct this behavior? The book takes a look at ordinary behaviors and attempts to explain the ‘rationality’ behind it.

Some behaviours the book questioned are:

1) Why we often pay too much when we pay nothing? Are things really free as claimed? How marketers attract consumers with ‘free’ concepts.

2) Why we are happy to do things for free but not when we are being paid to do them. This explains why we are happy to water the plants for our neighbor when they are away but will we do it if they offer to pay us a token sum (say$3) to do the same deed? What is the difference between free sex and paid sex to a woman?

3) Why company have return policies with no question asked?

4) Why do we procrastinate?

5) Why we are dishonest and how we rationalize this dishonesty. Would you take $0.10 from the petty cash till in the office versus would you bring home a pencil (or some cheap stationery) from the office for your child?

6) My favourite – the pain of paying.

The author’s goal is to help the readers fundamentally rethink what makes people around you tick.

Before I started with the book, I consider myself rational and then I answered this question: which would you choose, a free $10 Amazon free gift certificate or a $20 gift certificate for $7? If like me you chose the free item, you are irrational. Okay, I am a sucker for free stuff and free things make me irrational, and that’s why I often spend more just to get that free token, either a free tote bag to add to my clutter, or that free mug if I spent $100 or more.

Consider this scenario. At the end of a meal, do we each pay for what we ordered? Or split the bill evenly even if you ordered tenderloin and a glass of wine while I only had salad? Unlike in Western society like what my sister often describes in Germany, Dan’s solution, like what I usually practice with my group of friends is to take turns paying and free us from the pain of paying. If I find that I have been paying consecutively for a few meals and that friend has not been paying, that friend is not worth keeping and I am better off not having a meal with her (it happened in real life and we stopped asking her out for meals). Unlike in Western society, Asian meals are communual so splitting the bill equally is not a problem either but custom dictates and we rarely practice this among close friends, but we do so among friends that rarely meet, like an annual school reunion.

Another scenario described by my sister living in Germany is the habit of gift giving. (She is obviously suffering from a cultural gap.) She was given a bottle of wine unexpectedly at a dinner one month after her birthday and was wished happy birthday. So even though she was not the one to call for the dinner, her friend expected her to foot the bill, which under normal circumstances would be split. The pain of paying was felt deep in her belly.

The pain of paying can also explain why when someone else foot the bill, the bill appears cheap, compared to when you foot the bill, that it feels expensive even when the amount is less. My good friend Bee often says, money taken from other people’s wallet is always cheaper compared to when taken from our own.

There are many topics discussed in this book and it makes a wonderful read, if not for understanding other behavior, then at least my own irrationality.

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About vickychong

Just an ordinary woman.
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