How to Avoid Behaving Irrationally

Blogging, dan ariely, happiness, humor, lessons learned, technology, Wall Street Journal 4 Minutes

Dan Ariely has written several books about irrational decision making, including Predictably Irrational and The Upside of Irrationality. His books are both enjoyable and educational. In addition, he has a regular column in the Wall Street Journal called Ask Dan, which has been the basis for many of my blog posts over the past five years.

One of Ariely’s main points is that we often make irrational decisions; here are some examples from his research:

  • Relative thinking: When contemplating the purchase of a $25 pen, the majority of subjects would drive to another store 15 minutes away to save $7. When contemplating the purchase of a $455 suit, the majority of subjects would not drive to another store 15 minutes away to save $7. The amount saved and the time involved are the same, but people make very different choices. Ariely tells us to watch out for relative thinking; it comes naturally to all of us.
  • The “endowment effect”, which refers to the situation that when we own something, we begin to value it more than other people do. Ariely and Carmon conducted an experiment on Duke students, who sleep out for weeks to get basketball tickets; even those who sleep out are still subjected to a lottery at the end. Some students get tickets, some don’t. The students who didn’t get tickets told Ariely that they’d be willing to pay up to $170 for tickets. The students who did get the tickets told Ariely that they wouldn’t accept less than $2,400 for their tickets. This example highlights three fundamental quirks of human nature. We fall in love with what we already have. We focus on what we might lose, rather than what we might gain. We assume that other people will see the transaction from the same perspective as we do.
  • The power of price: Ariely and his team of researchers made up a fake painkiller, Veladone-Rx. An attractive woman in a business suit (with a faint Russian accent) told subjects that 92% of patients receiving VR reported significant pain relief in 10 minutes, with relief lasting up to 8 hours. When told that the drug cost $2.50 per dose, nearly all of the subjects reported pain relief. When told that the drug cost $0.10 per dose, only half of the subjects reported pain relief. The more pain a person experienced, the more pronounced the effect. A similar study at U Iowa showed that students who paid list price for cold medications reported better medical outcomes than those who bought discount (but clinically identical) drugs.
  • Texting and driving: Almost everybody admits they’ve done it, and it’s not about lack of knowledge. He’s never had someone say they just didn’t know it was dangerous. He believes this behavior embodies the way we’re capable of doing things that can kill us without thinking about the long-term consequences.

So how do you avoid acting irrationally?

Well, that’s where Dan’s current WSJ column comes in handy. Who better to tell us to behave properly than an expert on behaving irrationally?

Here is one of the questions he was asked this week:

As a teacher in an executive education program, I give my students a lot of advice about how to avoid bad habits and biased thinking. But I find that I often fall victim to these things myself, even though I’m aware of the dangers. Do you find that being a behavioral economist makes it easier to behave rationally? —Madison

Dan’s answer:

Behavioral biases affect everyone, including those of us who study them. Biases are like optical illusions: Even when we know what we’re seeing isn’t real, we can’t help seeing it. In my experience, the best strategy is to recognize that I will behave in predictably irrational ways unless I make it easier for myself to act the way I want to.

For example, I want to eat more vegetables, and I know that I’m more likely to actually do it if I find them ready to eat when I open the refrigerator. So I make sure to clean and prepare vegetables in advance, in order to not give myself an excuse to eat something quick and unhealthy instead. Similarly, I know that I’m more likely to go for a morning run if I make an appointment to run with a friend. Designing the right environment for ourselves is the best way to control our own bad tendencies.

Simple, but powerful advice.

Ariely notes that the moment temptation exists around you, it’s very hard to imagine you’ll be able to fight it.

This is applicable in the area of texting and driving. The easiest thing to do would be to create technology that helps us fight temptation — so, for instance, your phone wouldn’t get a signal when you’re in the car.

He also offered a personal example.

When he and his family moved to North Carolina to teach at Duke, he notes that they gave some thought about where they would want to live. The research on commuting was clear: It makes people unhappy. So they decided to live very close to the university.

Those are two great examples of creating the right environment to produce the desired behavior.

I’ll have to think of how to create the right environment so that I am not constantly checking my blog stats, which I recognize as totally irrational behavior. It seems like taking the WordPress app off of my phone is not practical, since I may need the app to do a quick edit to one of my posts.

Hmmm…. what would Dan do…

*image from Industrial Distribution

Published by Jim Borden

A 60-something guy trying to figure out the world, and his place in it. Happily married for 40-plus years, three wonderful sons. Accounting teacher, fitness enthusiast, blogger, reader.

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54 thoughts on “How to Avoid Behaving Irrationally”

  1. Great choice of topics today, Jim. I know you’ve talked about Dan Ariely many times before, and now I’m convinced that I need to give him a more serious look. I love the title of the first book—Predictably Irrational. One of the things that show my irrationality is that I usually am quite calm in a high stress, crisis type situation. On the other hand, I waste too much energy getting worked up about small things that most people wouldn’t worry about. Sometimes I have to remind myself not to sweat the small stuff.

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  2. He’d decide to keep the app so he can be inspired to new ways of torturing himself and other human beings. What would Jim do to get a good nights sleep and be ready for the new day during a pandemic?

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  5. It seems to me like this could apply to sales. Maybe some successful sales people are those who are good at diplomatically pointing out our irrational reasons for resisting a purchase. That makes it more likely we’ll buy. Then again, maybe others are good at recognizing our irrational reasons for wanting a product, and then exploiting that.

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  6. Good post! We definitely do irrational things, that is for sure! I do believe though that I did give you advice for your obsession with stats. 🙂
    So is it irrational to care more about the color of a vehicle, than the price? Don’t answer that! LOL!

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    1. you may have to remind me about the advice regarding my stats; and caring more about the color than the price is completely rational, just like sending staples through a fax machine… 🙂

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  9. This is interesting, Jim. I think it boils down to discipline. Most people are not disciplined and that is why the behave the way they do. There are also few consequences for going against convention. If the rule was that if you have an accident and a cell phone is found in your hand or close proximity, you don’t get medical treatment but are left to die, people would behave differently. If the rule was that if you don’t vaccinate your child and he/she get’s that particular illness, you don’t get any treatment from the hospital for that illness, you would think a lot more about your decision. Just saying.

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    1. I agree that there needs to be consequences for our decisions. But at the same time, there are ways to help us make the right decisions, such as the car beeping until we put on our seat belts.

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  10. Another very thought provoking post! I’m not sure I “get” all of it. Creating the right environment is certainly important. I think I might like Dan’s second book about the upside of irrationality more than the first one.

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    1. another example he used is that people could be taught all about the value of wearing a seat belt, but they may still opt to decide not to wear one. So they may need a bit of a push, like your car beeping until you put on your seat belt. Both books are great..

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      1. I’m sure I act irrationally at times according to Dan’s definitions. These thoughts will help correct some of that. I’m also looking forward to the post on the second book, which I hope makes me feel better about the times when I do act irrationally. 😊 Great post.

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  11. You have piqued my interest and I am now setting out to recognize my own moments where I perceive things in a less than rational manner. As you said, we all do it. And I think knowing the situations that you are prone to lean into irrational thought or behavior has got to be the first step in seeing and thinking about things differently. And if checking your stats all the time is irrational, then at least I know where to start my own research. Great post, Jim!

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  12. A really interesting post, and I think I need to take a better look at Dan’s work. I don’t think I’m especially irrational, but I wonder if friends and family would say the same!

    As for temptation, I tend more towards Oscar Wilde’s approach…

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  13. I think your song could be, “if checking my stats is wrong, then I don’t want to be right.” (at least make a t-shirt).

    interesting post – I think this is the concept behind what makes a successful salesperson, recognizing these human weak spots, and playing on them

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  15. I think a lot of my self-improvement decisions are boosted with exactly this. I do things like clearing the house of junk food, preparing my exercise clothes the day before, and leaving my writing notebook in plain sight just so it’s that much easier to engage in (or avoid) said activities. Thanks for this, Jim!

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    1. I’m the same way; if there’s no junk food in the house, it’s pretty easy to avoid it. The problem is when it is there – I give in often more than I should.
      And it’s much easier having exercise equipment at home as opposed to having to go to the gym…

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  19. Great post! Makes sense to me! If we combine the “endowment effect” and the power of price…it totally explains what happened to the toilet paper during the pandemic…People were paying $48 on Amazon for a $12 pack of TP. I didn’t, I waited and paid higher than normal at CVS when they had some there, but not gouging prices. Capitalism at its worst!

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      1. It’s crazy. Paper towels have been short the past few weeks and the most devastating shortage (nonexistent) is the Bakers Dark Chocolate for dipping strawberries. Been almost 3 months that’s been out! 🤪

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      5. Yes…the hoarders! At least now, Publix has a (2) per item limit now. Not on the chocolate, because there isn’t any on the shelf. This price gouging wouldn’t be so “in your face” if we had a different president. Okay, I’m done venting. 🙂

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