This week we have the pleasure of hearing from Dan Ariely. In his own words:
“My immersive introduction to irrationality took place many years ago while I was overcoming injuries sustained in an explosion (here is a description of my experiences in the hospital). The range of treatments in the burn department, and particularly the daily “bath” made me face a variety of irrational behaviors that were immensely painful and persistent. Upon leaving the hospital, I wanted to understand how to better deliver painful and unavoidable treatments to patients so I began conducting research in this area (see picture below). After completing this initial research project, I became engrossed with the idea that we repeatedly and predictably make the wrong decisions in many aspects of our lives and that research could help change some of these patterns. A few years later, decision making and behavioral economics dramatically influenced my personal life when I found myself using all of the knowledge I’d accumulated in order to convince Sumi to marry me (a decision that was in my best interest but not necessarily in hers). After managing to convince her, I realized that if understanding decision-making could help me achieve this goal, it could help anyone in their daily life.
Predictably Irrational and The Upside of Irrationality are my attempt to take my research findings and describe them in non academic terms so that more people will learn about this type of research, discover the excitement of behavioral economics, and possibly use some of the insights to enrich their own lives. In terms of official positions, I am the James B. Duke Professor of Psychology and Behavioral Economics at Duke University and a founding member of the Center for Advanced Hindsight. (Click here for a short version of my bio, and click here for an extended version of my bio)
My free time is spent working on a guide to the kitchen and life—Dining Without Crumbs: The Art of Eating Over the Kitchen Sink—and of course, studying the irrational ways we all behave.”
The Slim Is Simple.org Non-Profit Nutrition Education Effort
[Audio Starts 00:23]
Jonathon: Hey everyone, Jonathon Bailor back with another bonus Smarter Science of Slim podcast. This is one of those shows where I am as excited to be a listener as I am to be a host, because today’s guest is someone whose work I’ve enjoyed personally for many, many years. His first New York Times best-selling book was Predictably Irrational. He recently released another one which also hit the list called The (Honest) Truth About Dishonesty.
He is the James B. Duke Professor of Psychology and Behavioral Economics at Duke University with a PhD in Cognitive Psychology. Because he had so much time on his hands, he went and got another one in Business Administration. So, two PhDs, a professor and three New York Times best-selling books, Dan Ariely, welcome to the show.
Dan: Thank you very much for having me.
Jonathon: Dan, for the listeners who are not familiar with your story, can you start us off by telling us what set you on this path to explore irrationality and general behavioral psychology — cool things, because that’s really what you do. You put a cool, interesting spin on behavioral psychology.
Dan: First of all, thanks for the compliments, and I should tell you that we have some evidence showing that when people give you compliments, you like them more. You think of them higher. You enjoy the compliments even if you know the compliments are not sincere.
In any case, my introduction to this field was actually not that happy. I was badly burned many years ago, and I spent a long time in hospital. That got me to think about a lot of aspects of human behavior, including lots of aspects of things we don’t understand very well.
I’ll give you one recent example. A few months ago, I was asked to come to the burn department because there was a car accident, and the father and the son got burned very badly. I went there that night and sadly, the father passed away. The family asked me lots of difficult questions about the kid, and he is 16. They asked me questions such as, “What does he want to know?”
In my mind, I went back to my early days in the burn department, and I was in the department for three years. I was trying to remember back to all the sounds and the smells and the pain and trying to kind of figure out what I wanted to know and not know. What gave me some comfort? I tried to describe that, and I tried to give them some advice about that. Then they asked me about giving him bad news. So of course, there was the bad news that his father passed away, but there was also other bad news about his own situation and so on.
The reality is, we just don’t know about that. This is something centrally important. Doctors have to break bad news to patients all the time, and we just don’t know how to do it. Usually, we just try not to break bad news, or we try to avoid it. But trying to understand how to do it well is actually crucially important.
I’m going to see this kid again later in the week. But it also makes it clear to me how little we know. We are living in a society that has all kinds of forces and all kinds of influences, and we have chances to inflict more pain or less pain and pleasure or less pleasure on people. The question is how do we do it. My whole interest in this field has been to try and figure out what are the things we do not so well, and how do we get them to be better. This is one example.
Where is this research? Now, I’m also thinking about how to do research on this and how to do research on how to break bad news. I don’t know what the answer will be, but it’s certainly something that we need to figure out.
Jonathon: Certainly, a lot of what you’ve done, Dan, is asking these tough questions and finding some surprising answers. Often times, you hear people say things like, “Oh, just do the rational thing,” or, “Let’s be rational people rather than emotional people.” As you know, on this show we talk a lot about eating and exercise and weight and health. Often times, there’s a lot of quote, unquote, irrational behavior taking place there, but fundamentally, being that we are predictably irrational, can you explain to the listeners what you mean by predictably irrational? If you could characterize humans on a spectrum from purely emotional/irrational, or if this is even a valid spectrum, and purely rational, where we would be and why.
Dan: Yeah. The idea of predictably irrational is the idea that we’re irrational but in systematic ways. We are irrational in ways that are similar to each other, and we’re irrational in ways that are predictable from one day to another. I think health and exercises all fall in the same category. These are all categories that we have high hopes for ourselves. We think that we want to be on a diet, and we want to be healthy and we want to exercise. We don’t want to get sick and so on. But we want this in principle, and we don’t behave in a consistent way with this view on a day-to-day level. Because on the day-to-day, we see a muffin and a croissant and something on TV, and running is too painful and so on. So we decide to do different things.
The idea that we’re predictably irrational means that we deviate from our long-term, desirable, rational goals in systematic and predictable ways. In terms of where we are on this spectrum, think about the spectrum all the way from Mr. Spock from Star Trek — this was somebody who was perfectly rational — to maybe Homer Simpson on the other side. If you think about the scale, we’re clearly somewhere in the middle. The question is where are we more connected to, to which side of it.
I think there’s actually another variable here, which is the size of the decision. I think that when the decisions are very small — maybe it’s about buying coffee or having another bite of cheesecake or something like that — we’re probably much more guided by our emotion than our cognition. After all, the cognitive part is complex and difficult. It has lots of computation and so on. The emotional one gives us an immediate input to what we should be doing.
Then I think when we move to middle-sized decisions — think about something like buying a stereo, a computer or buying a camera — I think there we become more rational. We can spend hours online searching and comparing and contrasting and looking at all kinds of differences and nuances and so on.
But then when we get to very large decisions, I think we go back to being very irrational. I think about very large decisions like decisions that end of life (??), or decisions about very difficult treatment or decisions about — even investment in our portfolios, where people clearly don’t spend enough time on this. Maybe decisions about marriage and kids would go into that category as well.
I think there’s an inverse U-curve where we are irrational in small decisions and irrational in very large decisions. We somehow have the sweet spot of trying to think more systematically and in a computational way — the middle level of the decisions.
Jonathon: Dan, have you find ways in your research where once we can understand — even what you just described I think can be transformative for a lot of people, because they can see and understand maybe why their mind works the way it does. Once we understand how we treat smaller decisions versus medium-size versus large decisions, are there things we can do once we understand how we’re predictably irrational to transcend that or to control that or to make our decisions more in line with our long-term goals?
Dan: Yeah, there are many ways, and they depend on the type of particular failure we have and the type of effort we’re willing to engage in. There’s one way to be rational and many ways to be irrational and because of that, we need very different solutions.
Think about something like long-term savings. Long-term saving is the same problem of dieting. It’s something that is good in principle, just not good to do today because today, we have all these wonderful things we might be tempted to buy. What is the biggest advance in long-term saving? Automatic deduction from our checking account. Why is that a good idea? The rational thing would be to wait until the end of the month. At the end of each month, see how much money you spend, how much money you have left, and then send that money that you have left to long-term savings. But we all know that if this were the case, we would never save for retirement. So what do we do? We eliminate our ability to spend that money. We take it out of our checking account or out of our salary in the beginning of the month. Therefore, it’s out of our thought and therefore we behave better.
That, basically, we call the Ulysses contract. Remember the story about Ulysses and the Sirens. Ulysses knew that if the Sirens would come, he would be tempted and he would follow them. So he asked the sailors to tie him to the mast and to put wax in their ears. In this way, Ulysses could hear the call of the Sirens, but he couldn’t act on it. The sailors couldn’t even hear the call of the Sirens. They basically couldn’t hear anything.
In some cases, you could say, “I know that I will be tempted to spend too much money, so let me eliminate my ability to spend money by just taking this amount of money away in the beginning.” You can think about all kinds of mechanisms you could use in that aspect.
Another very different approach is the approach of relying on habit. What is a habit? A habit is when we don’t rely on our decision-making ability, and instead we’ve created something automatic that purely executes something for us without thinking about it that much. When we create a habit, the habit is actually a tool against our thinking about something and failing. So you can think about how you can create a habit, and therefore you don’t question what you’re going to have.
Jonathon: Dan, it seems like in both of these examples — so the first is having — for lack of better terms — a physical intervention, which prevents us from needing to make decisions during which we may be predictably irrational. The second is either through that mechanism or through other mechanisms, having more of a cognitive tool in place where, again, we’re not making a decision each time. We’ve made one decision in the past. It’s become so engrained that, I mean, it just seems like the overarching thing is to be maximally rational for smaller, daily things, we can’t have to decide every single day.
Dan: I think that’s a great conclusion. If we rely on our own ability to make decisions every time, we are likely to fail every time. So what we need to do is we need to create the situation in which we don’t have to rely on our daily decision making, especially not in these cases where these are things that are about temptation and every time we have to fight temptation.
Because with this, every time it will be [indiscernible 12:49]. Actually, in health — think about the difference between smoking and dieting. In smoking, you know when you’re a smoker or not a smoker. All you need to smoke is one cigarette, and you’re a smoker. In dieting, it’s not really clear where the boundary for dieting passes. You never know. Dieting is always about another forkful, another spoonful, another piece of something. Because of that, it’s very hard to have a rule that tells you where you are. Therefore, it’s harder to enforce yourself to be in a good behavior.
If you have to think every time, another spoonful or not another spoonful, that is something that we’re very likely to fail on. Therefore, we need to think about how we bypass those decisions.
Jonathon: In bypassing those decisions, Dan, now I understand why some of the approaches that are effective for people are effective. Let me give some examples, and tell me what you think. Regarding the — physically take the need to make the decision out. A lot of people who are healthy long-term talk about — they do food preparation ahead of time. They have healthy foods readily available potentially in Tupperware containers. Just like literally grab it and go, and it’s there and it’s ready, so what’s for breakfast? No decision needs to be made; it’s that. What’s for lunch? No decision; it’s that. What’s for dinner? No decision; it’s that. Is that an example of a physical intervention when it comes to food to avoid being predictably irrational?
Dan: Yeah. This is basically about making one path of decision, the easiest path of the decision much easier and therefore more likely to take place. There’s one other approach that is worthwhile mentioning, which we call reward substitution. Reward substitution is — the idea is the behavior by itself might not be sufficient, but we can connect something else to it that together would make them appealing.
I’ll give you a personal story on this. When I was in hospital, one of the things I got was a bad blood transfusion with a liver disease. It took a long time to figure out which liver disease I had, but about seven years later, we figured out I had hepatitis C. At the time when we figured this out, the FDA was running a test to see whether a medication called interferon was going to be an effective remedy for hepatitis C. They asked me if I wanted to join the trial. I joined the trial, and the problem was that each one of those injections was incredibly painful. I would get headaches and fever and shaking and vomiting. This would basically be a really miserable night, and I had to take this medication three times a week for a year-and-a-half.
Three times a week for a year-and-a-half, I had to have this really tough self-control problem. Do I want this miserable night tonight with the hope that I would not get liver sclerosis in thirty years, or do I want to have a fun night tonight and change my probability of getting liver sclerosis.
Anyway, I took this medication. When I finished the protocol, the doctors told me I was the only patient on the protocol that took the medication on time, and the question was how did I do it. Do I have better self-control than other people? Do I like myself more? Do I care more about my liver?
The answer was none of those. The answer was that I created reward substitution. I basically had a deal with myself that said that every Monday, Wednesday and Friday, which were injection days, I would inject myself and then I would immediately start watching a movie. I love movies. So basically what I did was instead of caring about the liver or instead of focusing on my liver or instead of thinking to myself about how important this medication is, I bypassed it. I basically said I really want to see movies, and the way to see movies is to get an injection. So I did the right behavior, taking the injection, for the wrong reason — to see a movie.
This is what we call reward substitution. It’s another approach. I think it’s an approach that lots of people practice in all kinds of ways. So the Ulysses contract, people practice by not buying cake and chocolate and so on. The reward substitution we practice by saying, “If I exercise, I’ll watch something fun on TV,” or “If I do this, I’ll give something else to myself.”
I think it’s another important direction of how to think about what else would motivate us, and how do we function in the world where we think that the healthy behaviors themselves are not sufficiently motivating, but we need to tie them together to something else that would motivate us to behave well.
Jonathon: It sounds like that reward substitution is so profoundly helpful, Dan. At least one of the reasons is because it bridges that gap, as you mentioned, between these healthy behaviors or these injections you were taking. Certainly, or very likely, will accrue wonderful benefit in the future, but our brain biases towards the present. So by using reward substitution, maybe saying, “If I can make healthy decisions this week, I will go buy that new pair of jeans I liked on the weekend.” We can bring that reward into more shorter-term — for lack of better terms — tide us over until we can get the real long-term benefit.
Dan: That’s right. That’s the key. The key is to bring it to the short-term, the immediate grasp. So we’re tempted by it, and by working toward this immediate reward, we do something which is good for us and for the long reward.
But what is important here is to go back to the discussion we had about rules and doing something that is incredibly clear. Right? So if my rule for injection was that 50 percent of the time when I give myself the injections, I watch movies, and 50 percent of the time I can watch movies if I don’t give myself the injections, this would not work well. The rule really has to be deterministic and clear, and we have to be very clear about when we’re on the right side of the rule and when we’re on the wrong side of the rule.
Jonathon: I think it’s also very helpful to be clear, Dan, to ensure that these rules and that these rewards don’t counteract the action we just did. It may be a silly example, but in your case, if you did three shots of bourbon to help reward your liver after taking something to try to help your liver, it might not be helpful. But how often do we reward ourselves for going to the gym by going to get ice cream afterwards?
Dan: Yeah. That’s, of course, the problem with it. Temptation is all around us. By the way, if you think about it, the commercial environment around us is incredibly tough from the temptation perspective. So one of the principles in behavioral economics is that we are an outcome of the environment that we’re being placed in. We think that we make our own decisions, but the environment we’re placed in has a lot of say with what decisions we’re going to make.
What’s the environment in which we’re being placed? Is that an environment that worries about our long-term wellbeing or about us spending time, money and attention right now? Of course, the answer is that it’s about time, money and attention right now. If you think about it, every aspect of our environment wants us to spend time, money and attention now, right? Facebook wants you to go back into Facebook again, and your phone wants you to go back and check your email again. Dunkin’ Donuts wants you to buy another donut today. Almost nothing in our environment is about long-term health and long-term benefits. Because of that, we have a harder and harder time succeeding in overcoming these self-control problems.
We fail to a higher degree, so these lessons that we need to learn for ourselves, and methods and having to adopt them are becoming much more important. One hundred years ago, what were the temptations around us? There were not that many. Now the temptations are much, much higher, and they’re only getting worse.
Jonathon: Individuals can learn these tools and these approaches through your fabulous work which, folks, I would say step one is, of course, become aware of this problem, which Dan has expressed so well here. Also, pick up a copy of the fabulous book, which I have read and enjoyed thoroughly, Predictably Irrational, as well as Dan’s most recent book — just came out this past June — The (Honest) Truth About Dishonesty. Even if you don’t consider yourself an avid behavioral economics or psychologist expert, understanding your own psychology and how your mind works and how you make decisions — really, as you’ve seen today just in 20 minutes — can empower you with a toolset that you can do to then make your mind work more like the way you want it rather than seemingly in this irrational way where it’s just like constantly trying to get it back on track.
Dan, you’ve done so much obviously with the PhDs, your incredible personal triumphs with your hospital story — which listeners can learn more about in your books — and your two or three New York Times bestsellers. What’s next for you?
Dan: What’s next for me? Right now, we’re working on a couple of big projects trying to help very poor people save a little bit of money. We’re doing this right now in Africa. Imagine that you live basically at the level of your income. You live hand-to-mouth. Let’s say you have a goat, and for one month your goat is sick. Now you have to borrow money, and you borrow money at, let’s say, 15 percent interest a week. At the end of that month, even if your goat fully recovered, now you’re almost two months behind. You have no money and really, there’s no way for you to catch up. So the importance of having a little bit of money for a rainy day — this is not for retirement, but for a rainy day — is incredibly important because otherwise, there’s this negative spiral people can get into. So trying to figure out how to help poor people save money is incredibly important.
The trick here, which is connected to what we talked about, is if you make the money fungible and you give it to them, they find lots of wonderful things to spend it on. If you were relatively poor and I gave you a little bit more money, would you save it for a rainy day or would you buy slightly better food? You would probably buy slightly better food. I’m not talking about wasting money, even using it for good purposes. They have lots of good purposes. So the trick is how to create money that is on one hand available when they need it but is not available all the time, so they don’t spend it on things that they would otherwise spend it, which is just increasing quality of life.
So we have all kinds of mechanisms we’re trying out, and we are doing some things in very poor areas in Africa trying to figure out which one of those approaches would work better. So that’s one big project we’re doing.
Another big project we’re doing is — my last book, as you said, was about dishonesty. I tempt people to steal money from me, and I see when they steal more and when they steal less. In this particular project, we’re now running around the world trying to look at cultural differences and how different cultures think differently and react differently to dishonesty. This is still ongoing, but it’s another interesting and exciting project.
Jonathon: Brilliant, Dan. Listeners, a take-home message that really is hitting home with me is this is yet another example of it’s not about just trying harder. It’s about using science to act and think smarter. That’s really, really exciting.
Well Dan, thank you so much for all that you do to help us to live better and smarter lives. It certainly impacted me, and I know it will impact our listeners as well.
Dan: Thank you very much.
Jonathon: Listeners, I hope you enjoyed this fabulous conversation as much as I did. Our guest today is Professor Dan Ariely, who, if you have not read his wonderful books, Predictably Irrational, The Upside of Irrationality and The (Honest) Truth About Dishonesty, I can recommend them highly. Please also check out his website where you’ll find a bunch of awesome videos. I’m not sure I’ve ever found a man who has as big of a brain as well as a big sense of humor as Dan does. You’ll find some very delightful videos on his website, danariely.com.
Please remember, this week and every week after, eat smarter, exercise smarter, and live better. Chat with you soon.
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