Book review: Predictably Irrational
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“Predictably Irrational” is a perfect book for lazy summer days on the beach or, in this case, while enjoying a beer from top of Oslo’s tallest office building.
Dan Ariely is on a bit of a crusade against traditional economics, with it’s idea of rational behavior from everyone in the marketplace. Instead of this (strawman) economics, he uses experiments to explore what he calls “behavioral economics”. The book is focuses particularly on how our behavior often is not at all rational.
The book is enjoyable, and Dan Ariely’s style is easy to digest. However, the free online videos of him talking are even more enjoyable.
Some of my favorite sections:
The Context of Our Character
The experiments that first made me aware of Dan Ariely is those that explore what makes people cheat more and what makes people cheat less. This is the subject of a great TED-talk, titled “Why we think it’s OK to cheat and steal (sometimes)”:
The Cost of Zero Cost
The Cost of Zero Cost talks about how “zero” is a very special price. The experiment: If you let people choose between a good chocolate at 14 cents and a cheap chocolate for free, traditional economics predicts that preferences will be the same in a choice between a 15 cent good chocolate or a 1 cent cheap chocolate. Ariely demonstrates how this is not the case.
The effect of zero cost has been discussed lately by the likes of Seth Godin and Malcolm Gladwell. This particular discussion springs out of Chris Anderson’s recent book Free.
The price of zero has been one of YouTube’s great strengths. However, as Malcolm Gladwell points out, it is also carries a slight downside: YouTube doesn’t make any money.
The Verdict
The book was a pleasant little read, but ultimately, disappointing. Let me explain:
Before I bought the book, I watched all the videos I found about the subject on YouTube. After having seen these, the only area which the book gave me any further insight was that of zero price.
Ironically, the book suffers from Malcolm Gladwell’s skepticism about “Free”: Giving away information for free will give you a lot of attention, but might undercut the reason for people to give you money.
If you want a pleasant read on the beach, “Predictably Irrational” might be for you. If you just want to learn about “behavioral economics”, watch Dan Ariely’s videos instead: