Sunday, March 01, 2009

Dan Ariely, Predictably Irrational

I finished Dan Ariely’s book on behavioral economics Predictably Irrational: The Hidden Forces That Shape Our Decisions in three days, it’s that easy to read. The subject and style remind me of Freakonomics. I like this one better though, partly because all the chapters revolve around experiments that Ariely took part in himself, but mostly for his engaging and reflective personal touch.

The book leaves me with the impression that behavioral economics is more psychology and sociology than economics, more engineering than science. In any case, Ariely’s insights are certainly eye-opening for this novice, and each useful. But the most memorable moment for me was when Ariely moved away from his experiments and drew on his experience and hopes as an empathic, apparently apolitical Israeli Jew*:
So what about our football fans and the game-winning pass? Although both friends were watching the same game, they were doing so through markedly different lenses. One saw the pass as in bounds. The other saw it as out. In sports, such arguments are not particularly damaging—in fact, they can be fun. The problem is that these same biased processes can influence how we experience other aspects of our world. These biased processes are in fact a major source of escalation in almost every conflict, whether Israeli-Palestinian, American-Iraqi, Serbian-Croatian, or Indian-Pakistani.
In all these conflicts, individuals, from both sides can read similar history books and even have the same facts taught to them, yet it is very unusual to find individuals who would agree about who started the conflict, who is to blame, who should make the next concession, etc…We like to think that sitting at the same table together will help us hammer out our differences and that concessions will soon follow. But history has shown us that this is an unlikely outcome…
Ariely’s prescription is to find a neutral third party “who has not been tainted with our expectations”—useful advice when such a third party is available. In the meantime, setting aside the past and focusing on the present and future may be useful. Just look at East Asia now, giving the lie to the claims of so many experts who placed their bets on the history issues during the Koizumi administration.

* Incidentally, I wonder how often we see the word Israeli being used without an implicit assumption that it actually means Jewish Israeli? For that matter, how often do we see something similar in other ethnic, religious, and cultural contexts? And how does that affect public discourse? It’s probably worth looking into.

2 comments:

Janne Morén said...

Freakanomics was frustratingly good. What I mean is, it started with some really captivating, thought-provoking examples of counterintuitive situations described in economic terms. Then, when you expect to get the meaty models and analysis that put the anecdotes on a sound theoretical footing, the book ...the book ends. The thing is great, but it's basically just the introductory first section to the real (yet unwritten?) treatise on the subject.

As for "Israeli jew", well, it makes sense; the prototypical Israeli citizen is jewish after all. "Israeli arab", on the other hand, is frequently used, and needs to be as Israeli citizens of arab descent is a small minority. Likewise you can use "Asian-American" or "Jewish-American", but not "Christian-American". The prototypical US citizen is christian so it'd be redundant.

I'd say it's the other way around, in other words. The use or non-use of qualifiers says a lot about how we collectively see various groups. This, after all, reflects not just the speaker's assumptions and prejudices; for it to be understood the listeners too need to be broadly in agreement with the view it implies. So would people talk about "Nakagawa, who is a male nurse", or "Nancy Pelosi, the female speaker of the house", it implies the speaker (and presumably the listeners) do not find males and females, respectively, to be typical, expected or common in those roles.

That may not indicate any kind of prejudice, by the way, but just an acknowledgement of the factual state of things now or at least recently. After all, most nurses are still female; most Israeli citizens are jewish (by birth, if not by religious belief) and high political office has up until very recently been completely dominated by men in our societies.

Jun Okumura said...

Then I think you will be similarly frustrated by Predictably Irrational. In fact, that’s why I said that it was more engineering than science. (Perhaps I should have said more “arts and crafts”.) But it’s less mercenary than Freakonomics. And it’s a damn good read.

The CIA World Factbook—okay, it’s the CIA—says that the Israeli population is “non-Jewish 23.6% (mostly Arab) (2004)”. Does that make Israeli Arabs “a small minority”? Does that mean “most Israeli citizens are jewish”? By the same token, Iraqi Kurds (15-20%) and U.S. Hispanics (15.1%) and African-Americans (12.85%) would each be “a small minority”. And of course assuming that there is a one-to-one correspondence between Israelis and Israeli Jews may or may not “indicate any kind of prejudice”.