Dan Ariely is the James B Duke Professor of Psychology and Behavioral Economics at Duke University. He is the founder of The Center for Advanced Hindsight and co-founder of BEworks, which helps business leaders apply scientific thinking to their marketing and operational challenges. His books include Predictably Irrational and The Upside of Irrationality, both of which became New York Times best-sellers. as well as The Honest Truth about Dishonesty and his latest, Irrationally Yours.
Ariely publishes widely in the leading scholarly journals in economics, psychology, and business. His work has been featured in a variety of media including The New York Times, Wall Street Journal, Washington Post, Boston Globe, Business 2.0, Scientific American, Science and CNN.
Question: Why do we do things, like smoking and overeating, that aren't in our best interests?
Dan Ariely: There’s lots of... lot of behaviors like this. So the basic essence is the trade-off between the short term and the long term.
Let me give you kind of a personal story about this. When I was in hospital a long time ago I got a liver disease from a bad blood transfusion, and for a long time they didn’t know what it was and from time to time I would get some liver infection, it was kind of bad. And about seven years after I got injured, I was already out of the hospital, I was in grad school, I had another flare up, I had to check myself into hospital and they found out it was hepatitis C. And there was an experimental treatment at that time called interferon, said, “Why don’t you try this?” I was very happy to try it, because, you know, who would want to die from liver cirrhosis? And I basically got these injections, I had to inject myself three times a week for a year and a half. And these injections basically symbolized for me the kind of the essence of the human condition. Here was an injection that could potentially be very useful for me 30 years later, but what happened is that it also had very bad side effects. So every time I would take an injection, I would be sick for about 16 hours. Vomiting, shaking, fever, nothing really terrible compared to liver cirrhosis, but for sure unpleasant and now. And here’s the question: liver, really important; injection, slightly important, but now and for certain.
And that’s basically a trade-off we have everything. It’s about saving: not for good for now; good for the future. Exercising: not good for now; good for the future. Dieting, not good for now, good for the future. Safe sex: not so good for now; good for the future. Lots of things have these trade-off and in turns out that when you face these trade-offs, we often do what’s called a present bias focus. We focus on the present too much and as a consequence, we undermine the long term, the long-term effect. This is the problem of Adam and Eve, when you could ask yourself, you know, who would ever give up eternity in the Garden of Eden for an apple? Well, if you ever texted and drive at the same time, you basically have done this mistake, right? And most people have texted while driving.
And why do we do it? It’s not because we weigh the cost benefit analysis and we say it’s a really good idea to text while driving. It’s because we’re tempted at the moment to do something that we realize is really stupid from the long-term perspective.
Now, back to my story. When I, after a year and a half, there were two pieces of good news, the first one was that my liver was working fine and there was no trace of the disease. The second thing that the doctors told me was that I was the only patient they ever had who took the medication on time. The question is, how could I do it? Do I have nerves of steel, am I not succumb to temptation? And the answer is, of course: we all succumb to temptation all the time, there’s no difference. But what I did was I found a trick. And my trick is that I love movies, if I had time, I would watch lots and lots of movies. So every Monday, Wednesday, and Friday on the way to school, I would stop at a video store, I would rent two or three videos I really wanted to see, I would carry them in my backpack the whole day, anticipating watching them. I would get home, I would give myself the injection, I would push a video in. I would get the bucket, I would get the blanket, I was already to the side effect, and I would start the video immediately. I wouldn’t wait for the side effect to settle in, I started immediately.
Now, you can ask yourself, did I really care about my liver and the answer is no. The fact is, that the liver is really important and me and all the other patients should have kept on taking our medication on time because of the liver, but it wasn’t strong enough. So what did I do? I substituted the liver with movies. Now, you might say, this is a stupid idea! Liver is really important, movie is not that crucial. If you ask me what do I prefer, movies or liver, you know, there’s no question. But because the liver is in the future, it was vastly discounted and because the movies were in the immediately, it was actually motivating me. And we call this "reward substitution." When I behave as if I care about my liver, by actually caring about movies.
And I think there’s actually a big lesson there. You can think about how do we get people to care about their health and money and longevity and so on, can we really get people to wake up every day and care about those things that will happen 30 years from now? The answer is, it will be very difficult, expensive, and unlikely, but can we find other reward substitutions. Can we get people to behave because of other things in a way that would make them behave as if they care about the thing that they’re doing for.
So why do people go to the gym, right? Do they really wake up every morning worrying about how they will look... feel like 30 years from now? Probably not, but can we get them to do something that is about the moment, to actually get them to behave because they do something that makes them care about, behave as if they care about something else. And I think that reward substitution actually provides a general answer to lots of problems in human behavior, we just need to find out what these rewards can be.
Question: Are there adaptive reasons that humans do things which aren't in our self-interests?
Dan Ariely: Absolutely! So if you think about the question of trust and revenge, that’s a great example. The fact is that we live in a society, we’re inherently social animals, unlike some other species and because of that, we need things that kind of connects us in a social way. So we have this social utility in which we just care about other people. Now, that creates lots of problems. For example, if you do a favor to me, I’ll like you more, and then it might put me in conflict of interest because I would want to reciprocate in some way, or, you know, trust and revenge and all of those things.
So, the fact is that there are some things that we are irrational and we would’ve liked to fix it, but there are some things where our irrationality is actually what allows us to live in a society. And if we lived as individual organisms that basically had no social ties and we’re just working each one of us separately, it will be a very different social structure. But we might want to actually have different strategies for our decision making, but because we’re inherently social animals, there’s all kinds of things that are irrational from the perspective of thinking that everybody’s a social, is a selfish maximizer, but nevertheless makes sense when you think about people as social animals.
The other thing, of course, is about processing information. So the fact is that we have a limited brain, you know, we’re kind of limited physically in many ways, right? We can’t jump very high, we can’t sustain cold or heat, I mean, think about all the stuff in the world that we do to make ourself more comfortable. We have chairs and clothes and glasses and headphones. I mean, lots and lots of stuff. It turns out our brain is also not perfect, right? In the same way that our bodies are not perfect, we can’t do everything we would like to, we’re not superman, our brain is also not perfect. Our brain processes information in a certain way and the reality that we experience is not out there, it’s in here. That’s what gives us, the brain gives us the world. Brought to us courtesy of our brain and its processing ability. And because the brain is not perfect, the way we get information and process it is also not perfect. And that’s just kind of functional, structural limitations to how rational we can be. And the fact is that we better recognize it, it’s really good to recognize it and the standard limitations and act accordingly. If we don’t, you know, we’ll just make more and more mistakes. We’ll just assume that we can be perfect, we’ll create a world as if people can be perfect and then we’ll just set us up to disappointment time after time.
Recorded on June 1, 2010
Interviewed by David Hirschman
The solution is from time to time to hire people you don’t think would work out.