Sunday, March 19, 2017

Book Review of "Predictably Irrational - by Dan Ariely"

Whether you are into behavioral economics or not, whether there are better books than "Predictably Irrational" out there or not, it is still a must read I feel. For one, it is less economics and more behavioral psychology (this would be considered good or bad depending on your expectations though). Two, about 50% of the experiments that the Author carries out and talks about at length in the book are fascinating and eye-opening. The rest of them, not so much. Three, the book makes you realize how complex human beings are, how the behavioral and emotional complexity makes us both more and less reasonable, both more and less predictable and hence effectively vulnerable as compared to the 'rational thinking human being' that was envisioned in classical economics. 

The good :
- Chapter about why and how we repeatedly choose middle path given several options.
- Clever decoys in marketing pertaining to "free stuff"
- Social norms vs market norms and how deceptively it affects us all !

The bad:
- Over-generalized, far-reaching conclusions based on small sample sizes. This was actually my pet-peeve with Freakonomics as well. I understand that it is very difficult for Behavioral Economists to run experiments on people from different cultures, different ethnicities and different countries. But "behavior" I believe, is tied closely to one's culture, upbringing, where they currently reside & work etc. What is "normal/rational" for an American consumer might be very different than what is normal for an Indian consumer - even though both have equal buying power. 

Overall, I would say Predictably Irrational is an insightful read. Not quite great, but good nonetheless. 4/5 from me.

No comments: