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 No economist can afford to miss this ( paulalynncraig )
Today's mainstream economics is largely based on assumptions of rationality. Ariely shows that such assumptions are completely wrong. This has large implications for running an economic system that achieves a good life for people. People are constantly trying to improve their lives by buying more "stuff," but within very short time periods they find themselves dissatisfied again. The most common measure of economic prosperity used by mainstream economists is the GDP--which essentially counts up what people spend on stuff. Is it any wonder that GDP statistics do not correlate well with quality of life? No economist can afford to miss reading this book. For more on this, see The Loss of Happiness in Market Democracies and Beyond Growth: The Economics of Sustainable Development.
One of Ariely's fascinating findings is that most people would not steal money directly from someone else, but that if the fact that one is stealing is disguised even slightly, most people will do it. This principle is in my opinion why pollution, deforestation, and exhaustion of resources are so difficult to control. We wouldn't steal a fisherman's wallet, but dumping a half-gallon of chemicals in a stream seems different to us, even if the effect on the fisherman's income is the same.
I was especially intrigued by Ariely's analysis of the power of "free". Ariely doesn't mention this, but free parking is a fantastic example. One form of destructive government subsidy that many people don't know about is local regulation requiring the provision of certain numbers of parking spaces around businesses and residences. Most American localities have such regulations, which are known as parking requirements. The idea behind parking requirements is to make sure that free parking is always available. Unfortunately, the effect is to favor automobile travel over other forms of transportation, like walking, that don't require all that vehicle storage space. It's a form of enforced inefficiency. U.S. building codes also favor the automobile in other ways, such as by requiring very wide streets. Parking requirements are one of the main reasons why housing is so expensive in the U.S. The cost of parking requirements in the United States is in the hundreds of billions of dollars per year. For more on this, see Donald Shoup's book The High Cost of Free Parking.
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Insightful quick read ( jmpx2 )
In this book, Dan Ariely describes some of the ways people act and react to various real life economic situations. He provides great insight into context of why we do some of the things we do and supports his conclusions with examples of some of the research he has performed with other researchers.
Incredibly well written and a quick read.
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 Great Read for Communicators ( galaxygolden )
I found this to be a pleasant and thought-provoking book. I recommend it to anyone who wants to understand the fundamental underpinnings of human behavior. All of Ariely's observations are research-based and are presented in an extremly accessible manner.
One chapter of the book struck me as particularly important for communicators. "The Cost of Social Norms" explores the benefits and the risks of creating a social versus a purely business relationship with customers.
Done well, the social approach develops longer-term deeper relationships between the customer and the business. The customer acts on a sense of connectedness in the business and sustains the relationship through continued interactions and transactions.
Done poorly, the social approach can create a break-up with all the animosity of a nasty divorce.
This one is staying on my bookshelf.
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Amazing read! ( junk35205 )
This book suprised me with its deft mix of accessible reading and intelligent summary of research. The author's conclusions are easy to understand, easy to believe considering his research, and easy to apply to all sorts of areas of life. Applying his observations can improve a person, business, or a country economically, socially, and emotionally. You simply have to read this book to understand it. And it is well worth it.
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Figure Out People By Identifying Patterns
In writing and speaking on the subject of human behavior, I often remind people the secret to dealing with a person's explosive anger. Although the anger may be unexplainable, the explosions are quite predictable.
Such is the framework of a relatively new discipline called behavioral economics, which is featured in Dan Ariely's book, "Predictably Irrational-The Hidden Forces That Shape Our Decisions." Where standard economics presumes humans to be rational beings, Dan Ariely and the theory of behavioral economics portend we are not only fundamentally irrational, but that we make the same mistakes over and over.
Ariely has plenty of fascinating research to back up his claims, including information on procrastination, a suggestive language technique called priming, a marketing technique referred to as "decoy pricing" and why, as a society, we steal from our own employers.
Stealing is a crime, so it's especially intriguing to learn that it's easier for most people to justify stealing when the pilfered item is one step removed from cash such as supplies.
Employee-related theft and fraud in the workplace costs American businesses around $600 billion annually. By comparison, all robberies, burglaries, larceny and auto theft cost about $16 billion in 2004.
There's a name for what people do when they buy clothes, wear them and then return the garments for a refund. It's a type of stealing called "wardrobing" and it costs retailers $16 billion per year.
This information has far-reaching consequences. The author is convinced that our irrational consumer spending habits can errantly convince someone that he is affluent.
Noting that Americans regard uniqueness as a positive character trait, Ariely notes that people with a need for uniqueness are sometimes willing to sacrifice personal utility for "reputational" utility.
One might think the concept of predictable irrationality to be rather depressing, but the author offers many suggestions for improving our situation, including self-control credit cards and a program called, "save more tomorrow," that allows employees to save a percentage of future salary raises.
It seems as though Ariely performs the bulk of his research on college students, who one might argue are even more irrational and less predictable than the rest of us.
"Predictably Irrational" is read by the Simon Jones in his great British accent. Socrates said, "The unexamined life is not worth living." Marketers, business owners and anyone who examines human behavior will find this book a very worthwhile read. -Michael Angelo Caruso, www.EdisonHouse.com.
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