Can you imagine being so severely burned that you are not able to speak to your nurses? You are a mute mummy, in horrible pain, wrapped in bandages with horrific burns all over your teenage body. When it comes to changing your bandages, the compassionate nurses intuitively believe that ripping the bandages off as quickly as they can will spare you some pain.
But you know that’s not the case. You know that slowly peeling off the bandages is less painful. You want to tell them but you can’t speak. So you anticipate and then experience the awful pain – a pain administered by kind people who want to help you but who’s best-intentioned intuition is wrong.
This true story is hardly a typical source of economic research but in the case of Dan Ariely, superstar economics professor, New York Times best-seller and a man widely tipped as a future candidate for the Nobel prize, it is such a source. He was, in fact, so severely burned he was unable to speak to his nurses.
When asked if a general lesson for economic policy makers lies in the nurse’s well-intentioned mistake about patient pain, Ariely responds:
”Yes, I hope so! It’s all about the inability to predict the right model. So it’s all about the limit to intuition but the amazing thing is that the nurses had the certainty about what the right thing to do was. It wasn’t as if they said we don’t know’, they had this tremendous confidence. So the issue is our inability to understand whether our intuitions are useful.”
Ever since, Ariely has been asking these questions. Why do people do things? How can we be influenced? Why do we take chances? And can we rectify our mistakes to make better decisions about the world around us?
His work explores the everyday: why are some people slow to buy rounds, why do we lie, why are some countries more happy to be organ donors and others not, why do people keep smoking, why do some gay men still not wear condoms at bathhouses, why do some advertising campaigns work and others fail spectacularly, why do we buy certain things and not others, why when faced with choices in life do we act against our own interest, and why do we keep making basic mistakes?
Four years ago, an American friend grabbed me and said: ”You simply have to read this book, it will change the way you think about everything.” That book was the New York Times runaway bestseller Predictably Irrational’ by Ariely.
Ariely is the James B Duke Professor of Psychology and Behavioural Economics at Duke University. One of the world’s leading experts in the new field of behavioural economics, he has numerous scientific publications and has published two other bestselling books The Upside of Irrationality’ and his latest The Honest Truth about Dishonesty’. His TED talks have had over six million views. He is co-founder of BE Works, a Toronto-based management consultancy firm applying behavioural economics to business problems.
He chatted recently with Dr Kevin Denny of UCD (one of Ireland’s foremost experts in behavioural economics) ahead of Ariely’s keynote address at Kilkenomics next weekend in Kilkenny.
Given that Ariely is tipped as a future Nobel prize winner, Denny asked him about the recent Nobel Prize given to three economists: Chicago economist Lars Hansen; Robert Shiller, a leading behavioural economist who spotted the bubble in the American housing market before most and the author of Irrational Exuberance’ and Gene Fama, a Chicago economist credited with the Efficient Markets Hypothesis – the notion that you can leave financial markets alone and they will always be right. This was the intellectual rock upon which the spate of deregulation of the past twenty years was founded.
Ariely has a fairly critical take on the state of economics at present and thought that this was reflected in the recent Nobel award.
His scepticism is hardly surprising when so much of traditional economics believes that people act rationally, yet all Ariely’s work is based on the fundamental premise that we are deeply human, deeply emotional, irrational – and about as far from the typical rational man that economists talk about but none of us have actually met in real life!
”I am not as generous as some people. I think it’s a confused discipline. So I think it’s not a great reflection. I think Shiller should have won. The others shouldn’t have. They added a lot to economic thought and they added a lot to dangerous, destructive economic thought. So I don’t think we owe them a lot”.
This public bluntness is refreshing from an academic because academics mostly criticise each other only in private while remaining more ambivalent in public.
Denny asked him whether the award of Nobel Prizes, to the psychologist Daniel Kahneman in 2002 and now Shiller would do much to popularise behavioural economics since it seems to be ubiquitous now?
Ariely was not optimistic at all:
”It’s beneficial but I don’t think the Nobel Prize is highly important. I don’t think the economics profession is going to change much. Behavioural economics is going to remain a small area. So it depends on what you mean when you say ”everywhere”. Yes it’s a victory in terms of public opinion but not much improvement in terms of economics. Are people studying economics now really studying something different? I think the answer is mostly no”.
Denny continued asking him about this uncharacteristic academic pessimism from such a normally optimistic person:
”It’s the way academic journals work. The allure of simple theories is too high. It’s very hard to fight this. Imagine you are a PhD student: economics is partly a religion and when you go to an economics department, you get indoctrinated.”
This rigid, narrow gauge and pre-ordained route to academia is in stark contrast to Ariely’s own journey where a near death and permanently scarring experience led him to ask why people behave as we do.
Ariely’s new book is about dishonesty and at Kilkneomics he will discuss it in the context of bankers and the financial industry. Denny pointed out to him that in Ireland the narrative is that bankers were greedy and reckless, and asked if he thought dishonesty was a better way of thinking about bankers’ behaviour?
”I think it’s important to separate the person from the act so that when we say it’s a dishonest act we are not having a judgement about the person. That’s crucial that when we see conflicts of interest; it doesn’t mean the people are terrible. If you think of the financial crisis, you don’t want to point the finger and say that these were bad people. You want to understand in a deeper way why they did what they did. It’s a wishful blindness”.
In recent work Ariely had shown that financial bonuses do not improve performance despite the claims of the banking industry that they were essential to attract talent.
Did this go down badly when he presented it to financiers on Wall Street?
”Absolutely! The thing to realise is that people have tremendous blindness around their own motivations,” evoking the famous Upton Sinclair observation that ”it is difficult to get a man to understand something, when his salary depends on his not understanding it”.
Behavioural economics takes its cue from psychology by using mostly small experiments and Ariely has recently moved into areas not normally associated with economics, such as the study of obesity.
Does he think that behavioural economics has much to contribute to combating the obesity epidemic?
”I actually think it’s crucial. The things that don’t work are the things that have to do with information alone. There is a recent survey of the effects of financial literacy and sadly there is no evidence that it improves behaviour. Information alone doesn’t do anything. We need to find what does matter and it needs to be some kind of intervention. I can teach you a lot about finance and hope that you remember and apply it or I can create an electronic wallet that will do things without you having to think too much about it. This will be much more successful.”
Asked by Denny if this meant a role for the ”Nudges” popularised by Cass Sunstein and Richard Thaler and adopted by British and other governments, he affirmed: ”Yes, but these small interventions are often not sufficient: we need more powerful interventions.”
Ariely is a new breed of economist who believes that governments have an obligation to try to change the public’s behaviour. This new type of economist looks around the world and asks why people do what they do and whether we can change their behaviour in a way that will benefit not just them but all of us.
Next weekend in Kilkenny you have the chance to meet and listen to the funny, irreverent, brilliant and curious Dan Ariely, who when I asked him to come to Kilkenny in Ireland to speak at an economics conference where stand-up comedians grill the economists, he replied ”sure that sounds like fun and you’ll probably get more info out than a typical academic one. Count me in. Where is it again”?
As well as giving the keynote address, Dan is available for a more intimate economic agony aunt session where you can ask him that economic question you’ve always wanted answered but never had the opportunity to ask. Ariely will also award the first ever Young Economist of the Year prize in Ireland on Friday November 8 in Kilkenny.
Dan Ariely will be at Kilkenomics, November 8-10. Book now at kilkenomics.com
im not gonna mention Glass Steagall
oooops
subscribe:)
I work in the industry and had the unfortunate experience of attending the Web Summit per obligations. (ps The tickets cost e920 for the two days!) Anyway, it was utter nonsense. More deluded people there than in an asylum. Complete waffle. Terrible business concepts. They were all flogging solutions addressing imaginary first world problems. “Need to organise your wardrobe?” “Need to make a cheap online video?” The last one was the heralded Viddyad that scooped the prize, with project growth of 1-2$billion. Seriously, this was deemed the best of all the BS on show? Are these people completely cluelessly mad?
Financial bonuses do not improve performance . People have tremendous blindness to there own motivations , upton Sinclair hits the nail on the head when he says it’s hard to get someone to understand something when his salary depends on not understanding It, this one sentence of Sinclair goes to prove why most Irish economists opt for the status quo . I totally disagree when he says it’s important to separate the person from the act surely If the act Is dishonest then so Is the Person. This kind of bastardizing of the English language In my view has led… Read more »
“economics is partly a religion and when you go to an economics department, you get indoctrinated” “We need to find what does matter and it needs to be some kind of intervention” The major problems for the economy and society in general are on the one hand too much intervention and on the other hand a lack of enforcement of regulation supposedly designed to protect the public from fraud and manipulation. The intervention is basically from the elite families controlling the money system. We have foisted upon us a fiat paper money product that is issued as debt at interest.… Read more »
Expecting economics from Shiller’s “Animal Spirits” is like expecting growth from chimps. Behavioral economics makes monkeys of all, chimps. Those going to Kilkenomics should realize you are being monkeyed with. What is it that the Brutish always must monkey with humanity? Well it keeps them docile, ready for the cull. Now, we had all that before in 1846. Ariely belongs to the troupe around Obama who organized Obamacare, a cull cult. Obamacare is applied behavioral economics from Peter Orzag and Ezekiel Emanuel – known as Ez-kill Emanuel. Behavioral economics kills. Degenerates Surround A Nero-Like President; Who Controls Them? “Note by… Read more »
“As well as giving the keynote address, Dan is available for a more intimate economic agony aunt session where you can ask him that economic question you’ve always wanted answered but never had the opportunity to ask. Ariely will also award the first ever Young Economist of the Year prize in Ireland on Friday November 8 in Kilkenny”.
Behavioral economics can get intimate alright. I’m sure it would not be a pleasure for “Agony Aunt” to be a total pain and ask about that “research” with college students, presumably young economists.
Economists claim they are validated by scientific inquiry, yet never use it to test their theories outside the Spreadsheet Lab and the Jargon Factory. If they did create meaningful feedback loops between their absurd alogrithms and lived, consensual reality, they’d crumble into existential crisis. So they remain teflon-coated, suited and booted, furiously loading up more Powerpoint blizzards to try and prove the earth is still flat after the Great Financial Apocalyse of 2008 . They formulate a map of theories then apply it, but “the map is not the territory”. If they were genuine students of how genes, dreams, memes… Read more »
Track record for prediction in economics is a fat zero. The behaviour I want to understand is why we keep looking for oracles on what is patently unpredictable.
Not one innovation or it effects or its related discoveries or impact to society Has ever been predicted. And the same goes for the way we use recent history to explain it all – retrospective bias and selective evidence
We need to listen to the ancient greeks. They had it all sussed.
Hello Dan Ariely, excuse the elephant shit I have no idea how it gets here, there is so much of it underfoot you would have to conclude that there is an herds of elephants about but no one claim to have seen any?.
Dan! My question – could you please tell us why economists don’t debate the creation of money as debt – clearly it is mathematically unworkable and the evidence to prove this is all around us… here in Kilkenny too?
The Jenvons Paradox!
The Jevons paradox! – N! – it’s a realty, like other elephants that needs real debate…
“yet all Ariely’s work is based on the fundamental premise that we are deeply human, deeply emotional, irrational –” Really? DMcW is being groomed to make monkeys out of his followers. Through questionnaire after questionnaire, Kahneman and Tversky would prove that people’s “choices” were regularly irrational, as Kahneman and Twersky define reason. Hence the book of their follower, Daniel Ariely of MIT, “Predictably Irrational.” Here is one of Kahneman’s questionnaires: You must deal with a public health epidemic threatening 600 people. First question: One course of action would save 200. The other has a one-third chance of saving 600, and… Read more »
For those who would rather check what DMcW is promoting, have a look at a brief overview of behavioral economics :
The Daniel Kahneman, Amos Tversky Swindle
Thaler, in addition to being an economics professor at the University of Chicago, is still on the board of the Russell Sage Foundation, which also houses the vaunted Consortium of 29, the Behaviorist Economics Roundtable, founded in 1992. Thaler, Obama and Sunstein crossed paths at the Uni Chicago. That’s what’s in the White house right now.
It is clear that DMcW wants to be in with Obama’s gang and the British Fabian Society.
But closer to home, as I am sure DMcW knows full well : What Is Their Secret? On April 8 2009, Tory shadow Chancellor (Treasury Secretary nominee) George Osborne, suddenly “bore witness,” at embarrassing length, to the genius of behavioral economist-kooks Richard Thaler, Robert Cialdini, Dan Ariely, and others, who have been travelling to London to advise the Tories. Osborne described the behaviorists’ so-called experiments, and pledged himself to various pathetic “behavioral economics” schemes to improve personal behavior, for instance, by encouraging recycling of garbage and by discouraging impulse buying. Whatever any of this might have to do with reversing… Read more »
Has DMcW gone to the dogs? Cass Sunstein, DMcW’s nudger, published “The Rights of Animals, A Very Short Primer”. He starts his essay quoting Immanuel Kant, Jeremy Bentham, and John Stuart Mill on animal rights. He quotes Bentham: “The day may come when the rest of the animal creation may acquire those rights which should never have been withholden from them but by the hand of tyranny. A full grown horse or dog is beyond comparison a more rational, as well as more conversable animal than an infant of a day, or a week or even a month…. The question… Read more »
I’ll bet a silver dollar that the behaviorists have a way to convince, nudge us, into believing dog food is quite tasty, as they herd us into responsible sustainability. But highest on the list is nudging euthanasia as good for your finances. The trivia of obesity, nudge, wink, is really the war on longevity, oops expectations.
It’s strange, but am I the only poster of anything about DMcW’s invited guests? All my posts are to the point, and on topic. Those who imply “over the top” have no heads!
Of course a human intervention into economy, Glass-Steagall, is not the expectation of behaviorists already gone to the dogs. Glass-Steagall means standing up on two feet!
Between Nightmare and Graveyard: Europe Is a Ship of Fools
Are ye all headed to Narragonia. Who would have thought it really was Kilkenny?
What made me think of this; “Never argue with a fool, onlookers may not be able to tell the difference.” this may be a bit vain and also we don’t want the fool to believe his unchallenged foolishness makes sense or that the foolishness become the norm…the norm is only the norm because it has not challenged.
Interesting behavior from the person with the handle “bonbon”. I’m reminded of the quote from Sam Goldwyn:
“Don’t pay any attention to the critics – don’t even ignore them.”
(Accessed from http://www.brainyquote.com/quotes/quotes/s/samuelgold100100.html#13UgEpdRZQHu1gg0.99)
Sam was obviously a better man than I.
It’s just that all I read is… ad hominem, ad hominem, (ad infinitem it seams). Sorry for all the latin, but it’s at least concise.
By the way, in Computing circles, comments to forums that are not constructive are generally listened to (read) but ignored if found to be without substance.
“His scepticism is hardly surprising when so much of traditional economics believes that people act rationally, yet all Ariely’s work is based on the fundamental premise that we are deeply human, deeply emotional, irrational – and about as far from the typical rational man that economists talk about but none of us have actually met in real life!” There is no deny that! it just goes to prove how important the policing of the money system is and how the fundamentals of our money supply needs parental controls… Debt as money is like a sweet shop to a kid or… Read more »
Russell Brand’s latest missive: http://www.theguardian.com/commentisfree/2013/nov/05/russell-brand-democratic-system-newsnight Even by writing that article he’s doing something good – he’s got a large reach and people (especially young people) listen to him – who knows who he might inspire? I’d vote for him and I’ve been saying on here (since Brand was in shortpants(!)) that voting is an utter, UTTER waste of time. People who say ‘you can’t have an opinion on democracy because you don’t vote’ can f*ck right off – I can and will have an opinion on whatever I want. That’ what democracy is – not putting an X beside one… Read more »
A Chairde
Inspirational stuff David. There is nothing better
than hearing about someone who has come back after
life in hell.
The most amazing things of all in this world is the
human spirit. It never cases to amaze me.
Thanks for sharing this story.
Hope Kilkenomics 2013 is a success for you.
Might make it next year and myself, Adam and the lads can
put the world to rights in an old Dublin bar. (provided we
can all stay cool and off the kool aids)
Mise le meas
‘Hide and Q’
“What a piece of work is man…
http://www.youtube.com/watch?v=V–v5Ba_cx8
Speaking of things Kilkenomics I was disgruntled, nay perturbed even, where in a previous episode of KR, Max K was ‘analysing’ the performance of his ol’ buddy Michael Noonan. He claimed in said episode in a previous incarnation of Kilkenomics I believe that he was conversing with young people who claimed that we, the irish had a ‘moral obligation’ to stand over these odious private bank debts… which is complete bunkum Who was the Youngster in question? A nephew of the Mickster? that’s about the only plausible explanation. Some members of ÓGRA FG? Such was my disgruntlement I was of… Read more »
That’s ‘Bite ‘ my tongue… :)
your local dealer says that gold is being monetized in Turkey and elsewhere and it is or will be a global trend. *Mark O’Byrne at GoldCore… Turkey’s gold imports jumped more than threefold in October to 15.98 metric tons, from 4.8 tons in September, according to the Istanbul Gold Exchange’s website. That’s the highest since July, the data shows. Turkey has already imported 251.4 metric tonnes in 2013, year to date, meaning that it will come very close to or surpass the record import year in 2005 when 269.5 metric tonnes of gold were imported. Year to date imports are… Read more »
I am in agreement with Ellen Brown
“Ireland could fix its budget problems by leaving the Eurozone, repudiating its blanket bank guarantee as “odious” (obtained by fraud and under duress), and issuing its own national currency. The currency could then be used to fund infrastructure and restore social services, putting the Irish back to work.”
http://www.huffingtonpost.com/ellen-brown/ireland-ground-zero-for-t_b_4202292.html
Also repeal the legal tender laws and open the currency to competition by monetizing silver coins
Kilkenomics is a brilliant production but it will lead you down the road to servitude and deprivation
Get some real solutionproviders to present their case David. Other wise it is a waste of time.
“When the indomitable Irish spirit is awakened, organized and mobilized, the country could become the poster child not for austerity, but for economic prosperity through financial sovereignty.-Ellen Brown
The end game
http://truthingold.blogspot.ca/2013/11/the-us-governments-totalitarian-creep.html
I don’t know how long that will take, but I see that the Government’s pace of implementing totalitarian control is moving along a lot more quickly now than it was 10 years ago when I first starting thinking about the end game.
Dave from Denver
http://www.arabianmoney.net/gold-silver/2013/11/05/abu-dhabi-islamic-bank-launches-capital-protected-silver-notes-with-potentially-huge-upside/
Hi all,
It seems JP Morgan Chase are not only dodgy bankers but also hopeless liars when it comes to capital controls.
http://www.silverdoctors.com/chase-bank-initiates-capital-controls-limits-cash-withdrawals-bans-international-bank-wires/
Is this the bank David that Max Keiser suggests we should crash JP Morgan and buy silver to squeeze their massive silver short position?
Pressure must be building David.
Control capital and squeeze more fees out of the customers by upgrading them to a higher account to allow them to transfer larger amounts of THEIR money.
We are Borg – I am Human with capital H: It’s a pity there was finally a topic that merited debate even if it was part publicity or promotion. Then there was ad hominem used as excuse to act ad hominem towards the accused. The indomitability of humans – but whom else! We are human, as that is the name we have giving to we, ourselves, the problem is with the definition of the word human and what it has come to denote or connote. The headline above says ‘we are all too human’ as if human is connoted as… Read more »
Finance Writer Ellen Brown Demands Passage of HR 129
Her solution comes at the end of her piece and she leads with the demand to “Restore the Glass-Steagall Act separating depository banking from investment banking. Support Marcy Kaptur’s H.R. 129.” The full text of her posting can be found here.
Strange the Tiger avoidance of actually commenting on DMcW’s behaviorists. It seems anything other than the theme is game.
Skittish, not Scottish, I would say !
The corporations and others are well aware that they can’t fight fire with fire so they simply remove the source of the fuel supply. They do this by employing vocal people to play the part of an activist the likes of Brand and Keizer dilute the anger/passion ; it’s not a full sexual release that achieved but more like masturbation but it takes the edge of the anger and helps to keep the baying mob sated. These paid activists are the obvious ones, well at least they should be, there is also the bono types that do the f*’#king sucking… Read more »
The current scenario in Greece is cranking up too.
Drive by killings of a couple of Golden Dawn members hot on the heels of the left wing guy at that café.
The clips of darkened IMF vehicles being shepherded hurriedly out of town! At a quick glance they might have been fleeing a scene from a suburb of Damascus.
24 hour General Strike in train.
http://www.bbc.co.uk/news/world-europe-24832847
The sands of time are running out on this Powderkeg.
I should more appropriately have said the ‘troika’ were whisked out!
How about this for indominatability! Apart from the bump on the noggin bit.
http://www.grindtv.com/lifestyle/culture/post/joy-johnson-new-york-city-marathons-oldest-female-competitor-dies-the-next-day/
Why didn’t she go to the hospital? She said she wanted to die running… Be careful what you wish for!
http://bullionbullscanada.com/
Gold Standard: the Perfect Prescription
Jeff Nielson
Everyone needs to read this three times and drill it into their head.
All else is bullshit and a waste of time. GS is Gob Shite
We are not all too human we are all too damn stupid the comprehend the truth. Too doped up on a debt based fiat Ponzi scheme.
WAKE UP, SOBER UP, DETOX It is your life so take control of it.
“Man, I see in fight club the strongest and smartest men who’ve ever lived. I see all this potential, and I see squandering. God damn it, an entire generation pumping gas, waiting tables; slaves with white collars. Advertising has us chasing cars and clothes, working jobs we hate so we can buy shit we don’t need. We’re the middle children of history, man. No purpose or place. We have no Great War. No Great Depression. Our Great War’s a spiritual war… our Great Depression is our lives. We’ve all been raised on television to believe that one day we’d all… Read more »