Books of 2011: 2. The Upside of Irrationality, by Dan Ariely

Dan Ariely is one of my favorite non-fiction writers, so I was excited to find out that he'd come out with a new book, The Upside of Irrationality, and frustrated that I had to wait so long for it to be available at my library. But it finally came in, and I tore through it in two or three days.

Following on the heels of Ariely's first book, Predictably Irrational, The Upside of Irrationality charts ways in which we humans are not the rational, careful beings economists tell us we are. Ariely's goal is twofold: first, to get us to recognize our irrationalities and how they affect our lives, and second, to show us how we can use these irrationalities to help us once we've recognized them.

The first half of the book relates roughly to irrationalities in the work world. The first chapter, "Paying More for Less: Why Big Bonuses Don't Always Work" explains that, contrary to our intuitions and all CEO bonus plans, bigger bonuses don't improve performance for anything other than simple mechanical tasks. It's a topic that's been covered at length by Dan Pink in his book Drive. Other topics I was less familiar with: chapters three and four describe how we value (or even overvalue) objects and ideas when we've made them ourselves. That's why you're so attached to your amateurish IKEA bookshelf or shaky watercolor, or why you're much more likely to endorse an idea when you've thought of it yourself. (Or when you think you've thought of it yourself, as salespeople have known for ages.) In this first section, Ariely also tackles revenge (companies could save a lot of money if they really understood the value of a sincere apology) and meaningful work (even well-compensated people will get depressed if you ignore their work or make it appear useless).

The second half is on relationships, both romantic and otherwise. Ariely first discusses a counter-intuitive finding (which I discovered through Dan Gilbert's Stumbling On Happiness) that people adapt much more effectively to circumstances than they'd expect. Both paraplegics and lottery winners tend to revert to a baseline happiness after a while. So if you want to be happy, space out or interrupt your happy experiences (don't outfit your new apartment all at once, but buy one thing at a time after the thrill of the last one has faded) and plow through your bad experiences all at once (don't take breaks when you're paying taxes, cut your extra budget items all at once).

Also in the second half, Ariely discusses the dating market. He explains why attractive people tend to date other attractive people, but less attractive people tend to value other qualities, like "sense of humor." He also shows how online dating doesn't at all account for human limitations or tendencies. As an experiment: get your friends and acquaintances to describe themselves in the check-box-like manner of dating sites and see if you can figure out, just based on those criteria, which ones you like and which ones you don't. People tend to connect best when they're sharing experiences rather than just talking about themselves.

Ariely also describes how we're much more likely to respond to the concrete need of one person, especially someone close to us, than the abstract need of many. (Compare how much money you'd give to a neighbor with cancer who lost his job compared to millions of kids with malaria in Africa.) He also discusses how our emotions affect our decisions, and how these decisions can impact us long after the emotion has faded away. (Imagine you're in a good mood and bring flowers to your mother-in-law's. The next time you visit, you may bring flowers again, because you've set the precedent. Sadly, this also works for decisions made under the impact of negative emotions.)

All told, I loved this book, as I expected I would. Ariely's a great writer, and I love reading about behavioral economics and human irrationalities. A great read.