Wednesday, March 09, 2011

Review: Predictably Irrational

You simply have to go out and read Predictably Irrational by Dan Ariely. Why? Allow me to explain.

You frequently make bad choices. And so do I. In fact, us humans, as Ariely explains, all do. Or, to put it in terms the book might use: given a situation, if we were totally rational we'd choose A - instead, we choose B. Two unexpected things about B: (1) it's not the best choice (A, the rational one is) and (2) humans consistently choose B.

Let's talk a specific example. Suppose you see a book on sale for a $1.00. Tempting to pick it up, right? Now, say it's free. As the Ariely explains, our brains are effectively hard wired to find this free offer vastly more appealing than even a $1.00 or a $0.01 book. At a $1.00, we might consider, am I really every going to read this book? At free, we just grab it and go.

Seems reasonable, right? But think about it - if the two choices were $2.00 and $1.00, you wouldn't find the $1.00 optionally particularly exciting. Yet, between $1.00 and free, our logic goes out the door.

And, like most examples of irrationality in this book, this poor decision making can be used against us. You may be looking at two different car options, only one has free oil changes for life. Wow, you think, how sweet is that. Never mind that in the scheme of things, the cost of the oil changes are negligible. They are free, and our brains can't help but see the offer as valuable.

Of course, this is just one example of about a dozen common irrational the book talks about. You need to read this book because you should at the very least be conscious of the kind of whacky decisions you'll make. Naturally, if you're in the business of manipulating people (all you marketers out there, I'm glancing at you), this is probably a must read, too.

So, you make bad choices and this book will warn you about them. But, it does go one step further. It also challenges the reader to consider that these irrational choices may be used to help as much as they hurt.

Want to convince people to get mammograms and colonoscopies? You guessed it, make them free. Of course, that doesn't guarantee that people will get these tests done, but it does use people's own quirky behavior to their advantage instead of their harm.

In fact, this last point about using our own behavior for good, does get one into some pretty awkward territory quickly. Take the new health care law. There are those who are up in arms about its demand that everyone get health care. Surely, it should be the individual's choice, right? How dare the government force people to do this. Ariely, though, would probably argue that this is exactly the kind of choice most people get wrong. That is rather than taking the rational point of view (Yes, I'm 22 years old - but it's still quite possible that I'll get sick or in a major accident), they take the irrational one (I'm 22 and invincible - getting cancer is for everyone but me!). A health care mandate is one of those times when you're potentially taking a decision that people can so readily flub up, out of their hands.

Should the government be in the business of doing this frequently? Of course not. But, for something as major as health care, I'm inclined to say yes*. And after reading this book, I'm further inclined to say there's scientific data to back that up.

At the end of the day, this book is all about embracing our unique humanity. Quirks and all.

*Remember, the government is only saying that you need health insurance. It does not not say which doctor you get it from, or which private insurance plan you need to subscribe to. I think those are important distinctions.

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