Predictably Irrational: Landmark Application of Psychological Insight

Predictably Irrational, Dan Ariely ***** / 5 of 5 stars
Enjoyable Reading: 5/5
Applicable to Business: 5/5
Behavioral Insight: 5/5

Consumers will drive 20 minutes across town to save $7 on a $20 pen, but won’t drive 20 minutes across town to save $7 on a $500 suit. Isn’t seven dollars, seven dollars?

Restaurant patrons will be less satisfied with their dinners if they’ve ordered aloud within a group of friends than if they place their orders privately. Why do we sacrifice a sensual experience for the projection of our image to our friends?

Consumers will spend an additional $20 on a second book that they weren’t going to buy in order to get free shipping, but won’t spend that extra $20 if the shipping cost is reduced to $0.20 instead of being completely free. How rational are we really?

In Predictably Irrational, Dan Ariely takes a significant step forward in the application of insight from behavioral economics to ‘real world’ issues. Ariely details the systematic ways in which humans behave irrationally, but he doesn’t stop there (as is so common with psychological science). Ariely begins to bridge the insight/application gap by elucidating consequences and numerous applications of our new knowledge in behavioral economics that can be used to help humans behave more rationally and shape social policy. In this way, Predictably Irrational becomes much more than an interesting recounting of all the funny ways that people behave, but rather transcends into a must read for marketers, policy makers and researchers who need to understand what motivates behavior and why people do what they do.

From detailing the fundamental psychology of the way in which expectations shape our actual experiences, Ariely explains why Pepsi wins blind taste tests, but Coke is preferred when brands are revealed prior to taste testing. This explanation provides marketers with real value, because it reinforces the power of branding, but more importantly it provides a fundamental reason behind the behavior (expectational influence) and this should empower marketers, social policy makers, even parents with more ammunition to fight for their cause. Influencing expectations, through investing in brands or establishing the ground rules for the game ahead of time, can have a significant impact on the actual experience of the target audience when finally exposed your products, services, brand or ideas.

Ariely demonstrates a mastery of this kind of insight application throughout book. By exposing the mechanisms behind procrastination, Ariely makes practical suggestions on how self-control credit cards could be used to improve the US savings rate and how insurance companies could overcome natural human tendencies to procrastinate to improve the health of our citizenry. He forces the issue on the ‘war against drugs’ and abstinence as an ineffective birth control approach by exposing how ‘just say no’ is not a realistic prescription for curbing adolescent drug or sexual behavior in the heat of the moment.

While the depth of Ariely’s explanation and the extension of his ideas into real world issues is groundbreaking, this is also the area where the work could be improved even further. The primary place where Predictably Irrational falls short is in the periodic lack of depth in the level of explanation. Periodically the reader is left with a question mark: so why do we behave in this way exactly? For example, the explanation offered by Ariely on why we are unable to close down our options in the short-term even in favor of long-term more rational gain is “that we’re just wired that way”. Shoot. There’s a lost opportunity for the practical application of psychological science into “the real world”. It’s tough for a marketer to take that level of explanation and do anything tactical with it.

We would have preferred an explanation demonstrating that the reason we are often unable to resist short-term temptation in favor of long-term rational values, is due to the unconscious activation of short-term goals by stimuli in our environment, which motivate us to pursue the those goals via the activation of positive approach emotion or negative avoidance emotion. This is a deeper level of explanation of what is going on in the “hard wiring”. The idea here is that if we know what the mechanisms are that are driving behavior, we can influence the activation of those mechanisms in our target audience in order to move behavior in our desired direction.

TRANSLATION: marketers (or anyone interested in influencing behavior) need to understand the most important goal that their product, service, brand or idea serves for individuals in their target audience. If the goal is truly important to the individual, making the goal salient and providing a tool (e.g. product, service etc.) to help the individual realize the goal will evoke emotion in the individual which in turn will move behavior in the direction of your product, service, brand or idea. If you can activate those goals unconsciously, provide solutions that are highly emotional, and then follow up your emotional hook with conscious reasons that can rationally justify behavior in your direction – you have a winning campaign (see Obama ’08 for a nearly perfect illustration).

Even though we would have liked some deeper explanations in part of the book, this doesn’t take away from the groundbreaking nature of this work. In fact, we need more work like this of Ariely’s. Academics can take a page from Ariely’s book on how to make their very important work even more impactful. The sooner we can get insight out of the lab, out of the journals and into the hands of practitioners, the faster we can move forward as a people through a deeper understanding of what drives behavior.

We rate Predictably Irrational with 5 stars out 5 because it’s the best we’ve seen so far in terms of practically applying psychological insight to real world issues.  Admittedly, we may need to make this scale “go to six” stars if we find something that tops Ariely, but this is the best we’ve seen yet, and and Dan has set the bar high.