Predictably Irrational. The Hidden Forces that Shape Our Decisions – Dan Ariely

Economics is generally viewed from the rational point of view. The assumption is that when faced with decisions, people are capable of thinking about the value of the different options they face before they act. It argues that our rationality steps in for important decisions and this is what makes markets effective at finding value.

“Somehow, the basic ideas of economics and the belief in overarching rationality have become so ingrained in our understanding of the social world around us that people from all walks of life seemed to accept them as basic laws of nature”

Many economists disregard the relatively new field of behavioural economics which draws on aspects of psychology and economics. Presenting human behaviour in a far less rational light than accepted economic theory assumes.

Here Dan Ariely uses social experiments to demonstrate that we’re not only irrational in our behaviour, we repeat this behaviour systematically and predictably. These experiments are based on what people actually do when they make real-life decisions.

Whilst this all sounds a bit dry, his wit and the ease at which he flips from the lab scenario to real life and broader social questions makes it not just an interesting read, but you (well at least me) start to consider how these behaviours and scenarios have affected you and how you might think a bit differently in the future.

What interest is this to anyone who works in the creative industries? Well that’s pretty simple, I think. Advertising and marketing can sometimes have a tendency to make similar assumptions about human behaviours as the economists – or at least view consumer behaviours in a rational way – and there’s scope with these experiments here to see beyond the economics.

How many times have you read very detailed and extensive research into consumer behaviour commissioned by a brand which has ultimately resulted in a proposition that your gut feeling tells you is at best – wrong? It’s logical, it fits and even some of the early research might well have some good insights, but sometimes at the point the brands assets are woven into the plan the whole idea  becomes either so contrived or safe it doesn’t work. But it must be right because we’ve fully researched the behaviour it’s based upon and it’s rational.

Transposing Dan’s approach to human behaviour over to the creative industries leaves you with a few thoughts. Why don’t we use psychology more in our understanding of consumers?, they are after all, humans before they are consumers, and consuming is a behaviour.

Take the results explored around the cost of free. Ariely and his colleagues conducted a number of experiments which demonstrated that free is one of the most powerful ways to trigger a behaviour. Humans are loss averse – when something is free there’s no possibility of loss so we take it, we even queue for it. When choosing something we consider the up and the down sides, if it’s free we forget about the downside. The choice of getting better value for a small cost over getting something for free doesn’t even sway us – we don’t do the calculation, we take the free option.

From a marketing point of view then, we should see free as powerful. It appeals to a predictable human behaviour – so is there an argument for not spending a fortune on research to acquire new customers? – give them something for free and our behavioural instinct takes over.

The book is full of behavioural insight that can be applied to marketing or advertising, but aside from that it shows an approach to things based more from social norms and less from market norms clearly gives you creative scope.

If I was putting together my creative dream team, Dan (or someone like him because I guess he’s busy and not that into advertising) would be on the list. In advertising I’m not sure if behavioural planning is a discipline – but maybe it should be.

Ariely’s journey to behavioural economics began after an accident left him with 70 percent third-degree burns. The next three years in hospital left him so removed from society he began observing activities as if he was an outsider. I recommend your journey, like mine, begins by reading this book. It might not change your mind if you’re an economist, it might not change your working practice if you’re a creative but it will make you start to think about human behaviour in a different way if you’ve not been exposed to psychology before.

Dan on Ted.com

Predictably Irrational Website

Title | Predictably Irrational. The Hidden Forces that Shape Our Decisions
Author | Dan Ariely
Publisher | Harper
Publish Date | 2009
ISBN | 978-0-00-725653-2

Reviewer | Steven Bennett-Day

Buy from Amazon: Predictably Irrational: The Hidden Forces That Shape Our Decisions

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