Sunday, September 26, 2010

The Upside of Irrationality

Ian Ayres

Crosspost from Freakonomics:

Another pleasurable summer read for me was Dan Ariely’s The Upside of Irrationality. Put simply, the book is an impressive achievement. It interweaves Ariely’s compelling personal narrative with what seems like dozens of his own super-interesting academic experiments. Ariely explains how his own struggle with being severely burned as a youth put him on the path to being one of the world’s premier behavioral economists.

His previous book, Predictably Irrational, relied a bit on his burn story to motivate some of his academic studies. But Upside is more revealing. It lets you see what makes Ariely tick, and how he comes up with testable hypotheses. The fact that he could write this book without the help of a gifted writer like Dubner makes the accomplishment all the more stunning. It’s one thing to have somebody else profile how you think. But it’s a higher degree of difficulty to write about yourself — especially if you’re an economist. Gearheads normally can’t write interesting analytic autobiographies. But Ariely has.

I’m not, however, a fan of the title. Ariely says that the book is going to show how irrationality is sometimes a good thing. He argues, for example, that we irrationally mispredict the true trauma of divorce: “[A] divorce is often less devastating to a married couple than either member might anticipate.” (Kindle 2410) If we were more rational, more people would split up. The upside of irrationality to society, he suggests, is that it keeps us together more than hyper-rationality would.

The book isn’t a sustained or thorough exploration of circumstances where irrationality leads us to make better decisions. There are still plenty (I’d even wager a majority) of stories where irrationality leads us astray. The best reason to read this book is to experience how an interesting mind works and read about experiments that might change the way you organize your life. If the hidden objective of SuperFreakonomics is to save lives, the hidden objective of Upside is make us happier.

For example, Ariely draws practical conclusions from fascinating experiments that were conducted by Leif Nelson and Tom Meyvis. Since humans’ happiness quickly adapts to new situations (like divorce), these scholars asked: how does interrupting unpleasant or pleasant tasks disrupt the adaptation process?

They ran a lab experiment in which one set of subjects had to listen to a noisy vacuum cleaner for five seconds. A second set of subjects had to listen to the vacuum for 40 seconds, and a final set of subjects had to listen for the same 40 seconds “followed by a few seconds of silence and then an additional burst of five seconds of the annoying sound.” (Kindle 2468).

The researchers then asked each group to assess how annoyed they were by the last five seconds of the noise. Somewhat surprisingly, they found that the group that had to listen to just five seconds was a lot more annoyed (by the last five seconds) than the group that was able to adapt for 40 seconds. But the kicker was that the annoyance rushed back for those in the third group who took a break and had to listen again.

Here’s an example where humans are again predictably irrational. “You may think that taking a break during an irritating and boring experience will be good for you, but a break actually decreases your ability to adapt, making the experience seem worse when you return to it. When cleaning your house or doing your taxes, the trick is to stick with it until you’re done. ” (Kindle 2494).

The flip side of the interruption principle is that we should look for opportunities to interrupt pleasurable experiences. Ariely describes a parallel experiment (of Nelson and Meyvis) in which one group of subjects received a continuous three-minute massage, while a second group was massaged for 80 seconds followed by a 20 second break, and then was massaged for another 80 seconds. The second group was massaged 20 seconds less than the first group but said they enjoyed the total experience more: “As it turns out, those who underwent the shorter massages with the break not only enjoyed their experiences more but they also said they would pay twice as much for the same interrupted massages in the future.” (Kindle 2495)

To be sure, Ariely is not the only one to suggest that you might be happier spending money on things where adaptation is less likely (because it is more interrupted). That’s why some people argue you’d be happier spending your money on a few vacations instead of a new car or a couch. The idea is that a nice couch is too easy to get used to. Because it provides uninterrupted pleasure, it drifts into our cognitive background. In contrast, a short vacation is almost by definition an interruption of the routine. This simple idea that you should interrupt pleasure and avoid interrupting the necessary annoyances in life is news that, on the margin, I have been trying to put into practice.

Beyond adaptation, Ariely has important things to say about the effectiveness of incentives (a topic of a future post), and why we value things we make more than things we buy, and the role of looks in the dating market. In each and every case, his observations are driven by controlled experiments that serve to simultaneously motivate his theories and ground them in real-world observations.

I’m also attracted to Ariely’s innovation of adding biographies of his coauthors as a special appendix. With social science studies, which often have multiple coauthors, it’s a bit unwieldy to repeatedly mention “X and Y showed this” or “X, Y and Z then calculated that.” But Ariely pulls off such references with a grace at which I can only marvel. As a sometimes writer in the general genre, I could do worse than going to school on this fine book.

Older Posts
Newer Posts