Dan Ariely, PhD, ends his emails with a signature sign-off: "Irrationally yours, Dan." It's a valediction any one of us could use. If there's one thing Ariely has learned in his years studying behavior, it's that humans make some bizarre decisions.
Ariely says he first started thinking critically about human behavior as a hospital patient. As a teenager in Israel, he was severely injured in an explosion. He sustained third-degree burns over 70 percent of his body and spent most of the next three years in hospitals and receiving painful medical procedures.
"I saw all kinds of things in the burn department that I didn't like. I thought my doctors were not doing things the right way — not because they weren't good people, but because the procedures were just not suited for patients," he says. Nurses woke him at 5 a.m. for the sake of a daily schedule, no matter how late he'd been tossing and turning. They pulled off his bandages quickly, even when Ariely argued that removing them slowly was less painful. And often, he says, staff talked about him as if he wasn't in the room, rather than involving him in the decision-making process.
After he was released, his first instinct was to become a physician. But his hands had been too damaged to go through medical training. "So I started studying psychology, and I learned that social science is a wonderful tool to help people do better," he says.
Ariely went on to earn one PhD in cognitive psychology from the University of North Carolina, and, at the urging of Nobel laureate and psychologist Daniel Kahneman, a second in business administration from Duke University. After more than a decade at MIT, Ariely returned to Duke in 2008 as a professor of psychology and behavioral economics, where he specializes in studying the irrational ways we make decisions. He's also the founder of the Center for Advanced Hindsight at Duke, where he and his colleagues work to translate academic research into accessible tools to help people make better decisions about finances and health.
Ariely is also known for his frequent public presentations and TED talks, and his advice column for The Wall Street Journal — all projects undertaken with the goal of helping people do things a little bit better, one decision at a time.
How do you define the field of behavioral economics?
I think of it as applied social science. Economics has a descriptive side (here's how people behave) and a prescriptive side (here's how to do things). From that perspective, economics and psychology are very different. Psychology doesn't have a prescriptive aspect. How many cognitive psychologists look at their goal as improving health care or improving savings? Not many. With a few notable exceptions, psychology as a field has basically been interested in understanding human behavior rather than figuring out how to design institutions or interventions.
I think behavioral economics is trying to be the prescriptive side of social science. People in all kinds of disciplines are discovering all kinds of knowledge, in economics and psychology and philosophy and theology and history. Behavioral economists don't care so much where ideas come from. We want to figure out which scientifically valid methods will get people to do a little bit better.
Much of your work has focused on irrationality and dishonesty — not exactly our proudest traits. Why are you drawn to these aspects of human behavior?
I do look at the downsides of human nature, but it's really about trying to figure out where we go wrong and how to fix it. I think this is one of the benefits of looking at things from the perspective of social science rather than economics. Classical economics assumes human beings behave rationally. But if you believe everyone is rational, and you look at humanity and see how much misery there is in the world, then you have to conclude that this is the best we can do. From a social science perspective, you could say people are myopic and vindictive and emotional and dishonest and make mistakes — but the world isn't like this as an outcome of the decisions of eight billion rational people. It's like this as the outcome of eight billion irrational people. That means we can do much better. I do look at the downsides of human nature, but it's really about trying to figure out where we go wrong and how to fix it.
Do you have a favorite example of human irrationality?
Texting and driving. Almost everybody admits they've done it, and it's not about lack of knowledge. I've never had someone say they just didn't know it was dangerous. I think this behavior embodies the way we're capable of doing things that can kill us without thinking about the long-term consequences.
How can we use our knowledge of irrationality to do better?
One thing we know is that just teaching people about the downsides of their decisions is not going to work. Think about obesity. Giving people information about calories has done very little to improve eating. Over the last 30 years, we got people to wear their seatbelts. Why? It was a combination of annoying beeps from the car, heavy fines and kids in the backseat screaming if their parents didn't put their seatbelts on. If you can't get people to do it for the right reasons, get them to do it for the wrong reasons.
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.
Another approach is to create rules for behavior. With Alcoholics Anonymous, for example, the rule is no drinking whatsoever. If the rule was drink only half a glass a day, all of a sudden there would be a market for really big glasses. We need to create rules that help us figure out where we are at each moment. If we have a rule that says I never pick up the phone while I'm in the car, we're less likely to fail.
Have you made changes to your own decision-making process?
Absolutely. When we moved to North Carolina, we thought about where we would want to live. The research on commuting is clear: It makes people unhappy. So we decided to live very close to the university.
I also make rules for myself. I've been traveling a lot in the last eight years, and traveling comes with eating lots of bad foods. So I created a set of rules: I have to exercise at least three times a week, and I specified exactly what exercising means. I can only eat dessert on weekends. Also, I created these rules with my cousin, and she adheres to the same rules. We agreed that we will report to each other, so we added a layer of social responsibility. There's something incredibly powerful about both the rules and the social mechanism that, for me, is working very well.
Understanding human behavior can help us make better individual decisions. Do you think behavioral economics can also help address bigger societal issues?
Yes. For example, we are doing experiments now to understand incentives for saving money among people in poverty in Kenya and also among people with lower incomes in the United States. The research we're trying to apply is not just for people that are well educated and well off. More and more, we're trying to apply our findings to people who live more challenging lives.
Why have you chosen to spend so much time engaging with the public?
I've always had the rule that if someone asks for my help, I'm happy to give an hour or two if I think the topic is useful and important. Even though I work at a private university, our grants are funded with taxpayer money. It's very hard to say my sole obligation is to do research, and someone else can work on the translation. I think that's not taking my position seriously.
I have a few rules for the talks I give. There are some places I never say no to. One is hospitals because as someone who was in the hospital a long time, I want to help physicians do better. Physicians often see patients who are suffering tremendous cognitive stress. Because of that, there has to be a tendency for patients to just accept whatever decision the physician has made. I try to get physicians to think about their roles not just as healers, but as decision aids.
I also never say no to giving talks in Muslim countries. Because I am Jewish and Israeli, I don't say no to an opportunity to meet people from Muslim countries and remind them we're all the same (and tell some Jewish jokes). The final one is government. Every time I am approached by a government, I go. Governments create big changes for a lot of people. If we can get them to make changes that are slightly more informed by social science, that will be good news.
What are your goals for the Center for Advanced Hindsight?
Right now, we have two focus areas: financial decision-making and health. We're trying to hire a group of designers and engineers to create blueprints for how people could think better about how they spend their money. Housing is a big decision, for example. Existing computer interfaces look at the question of the maximum amount you can borrow [for a mortgage]. But that's not the right question because in reality different housing options give people different happiness. Some people like bedrooms, some like kitchens. Some want to live near a park, some don't. Buying a house is also making a tradeoff with other things in life. We want to design things like Web and smartphone interfaces to help people understand the complexity of those big decisions. We're doing similar things to help people make better decisions about their health. We're trying to develop tools to help people create habits and rituals for better health. Another project is looking at how to make treatment side effects feel less negative.
In both of those areas, finances and health, so much of the misery is manmade. Why can't we help it? I can just see the stupidity of what we're doing to ourselves, and I want to stop it.
