Jessica Gross | Longreads | November 2016 | 14 minutes (3,711 words)
“It’s astonishing to me how some ideas endure even when it’s obvious that they are no longer relevant,” Dan Ariely writes in his latest book, Payoff: The Hidden Logic That Shapes Our Motivations. A professor of psychology and behavioral economics at Duke University, Ariely relentlessly examines our assumptions about ourselves—and finds they’re often totally misconstrued. We think, for example, that money is our main motivator in the workplace. But not only are “a sense of connection, meaning, ownership, and long-term thinking” often more effective, it also turns out that monetary bonuses can work against us, undermining our commitment to the work itself. In one study, workers at a semiconductor factory were offered rewards of a pizza voucher, a compliment, money, or nothing on the first day of a workweek. That first day, the voucher and the compliment boosted productivity more than the bonus, but all three motivated people more than the control condition (getting nothing). But as the week went on, people who’d gotten the bonus that first day began to perform worse than people who hadn’t been rewarded at all!
Please excuse the exclamation point, but it’s hard to describe an Ariely finding without one. His work often so directly counters our common understandings that it’s startling, even funny. This also has a lot to do with Ariely himself. His tenacity as a researcher is matched by his commitment to sharing his ideas with the public, in plain language and often with a dose of humor. He’s written a slew of popular books, including Predictably Irrational, The Upside of Irrationality, and The (Honest) Truth About Dishonesty, and given a number of TED Talks. (Full disclosure: I wrote about Ariely for TED last year.) We spoke by phone on a mid-October morning, and Ariely was professorial in the best way: no jargon, tons of examples, and committed to helping me understand.
Your field is behavioral economics. What is that, exactly?
There are two ways to explain it. The first one is in opposition to standard economics. In standard economics, we assume all kinds of things about people: that they know their preferences, that they always make decisions that are in their best interest, that they don’t have emotions or limitations of time and attention and thinking capacity. Based on those assumptions, economists go ahead and make recommendations on how to design our lives, how to do our tax and education and healthcare systems.
Behavioral economics just doesn’t start with any assumptions. Rather than saying, “People are perfectly rational,” behavioral economics starts by saying, “We just don’t know.” Let’s put people in different situations and see how they behave. And when you put people in different situations, people often behave very differently than most rational economists would expect. Because of that, the recommendations that come from behavioral economics are very different.
The second definition is that behavioral economics is really, for me at least, an applied field of social science that is designed to figure out how we actually make decisions and how to make things better. Now, not everybody is interested in the “better” part, but it’s an analysis of the true forces that influence us in our day-to-day lives and how we harness those forces to improve our ability to make decisions. Read more…
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