Why Anxious Societies Spend Less

Question: How are behavioral economics detrimental to the economy?

\r\n

 

\r\n

Dan Ariely:     So, you know, think about this economic recession. There’s a question of what is really causing us this slowdown and part of it is real and part of it is psychological and there’s no question about that. So think about somebody like me, I’m a tenured professor. There’s a very little chance I’ll lose my job, my income is basically fixed. In fact, I’m more popular now than I was before the recession because all of a sudden people realized that irrationality is more central to our life than they thought before.

\r\n

What I should be doing rationally speaking is spending more money, everything is cheaper. Vacations are cheaper, good wine is cheap, there are no lines at restaurants, right. It’s a good time for somebody like me to go spending, but that’s not what I do, and the reason I don’t do it is because of the emotional component. I worry, I’m concerned, like everybody, right. We open the news and the news are designed to trigger our emotions. Trying to tell us terrible stories about individuals who lost their homes and lost their jobs, these are really touching stories that they’re really terrible, and they touch our emotional part and that really changes our behavior.

\r\n

So we don’t say, “Statistically, where am I standing, what are my cost and benefits?” We look at our emotions, we’re frightened, we’re concerned, we’re worried, and we can’t bring ourselves to spend money and that basically escalates in getting the economy to become much worse.

\r\n

 

\r\n

 

\r\n

Question: How is fear of layoffs affecting our society?

\r\n

 

\r\n

DAN ARIELY: Now the other issue is of course with individuals and their fear about their jobs, and I think people are really afraid of losing their jobs. Particularly in times like these and this is not the ultimate loss aversion. Because of that people are just not doing anything interesting and you can ask whether there’s more herding behavior, whether people are doing more what the majority is doing, whether they’re do it, taking less risk, doing less interesting stuff, because they’re kind of in a stagnation mode, catatonic mode of kind of just fear and not wanting to lose their jobs.

\r\n

 

\r\n

Recorded on: July 29, 2009

\r\n

 

\r\n

 

He blames human emotion for the sinking economy.

A dark matter hurricane is crashing into Earth

Giving our solar system a "slap in the face"

Surprising Science
  • A stream of galactic debris is hurtling at us, pulling dark matter along with it
  • It's traveling so quickly it's been described as a hurricane of dark matter
  • Scientists are excited to set their particle detectors at the onslffaught
Keep reading Show less

Are we all multiple personalities of universal consciousness?

Bernardo Kastrup proposes a new ontology he calls “idealism” built on panpsychism, the idea that everything in the universe contains consciousness. He solves problems with this philosophy by adding a new suggestion: The universal mind has dissociative identity disorder.

We’re all one mind in "idealism." (Credit: Alex Grey)
Mind & Brain

There’s a reason they call it the “hard problem.” Consciousness: Where is it? What is it? No one single perspective seems to be able to answer all the questions we have about consciousness. Now Bernardo Kastrup thinks he’s found one. He calls his ontology idealism, and according to idealism, all of us and all we perceive are manifestations of something very much like a cosmic-scale dissociative identity disorder (DID). He suggests there’s an all-encompassing universe-wide consciousness, it has multiple personalities, and we’re them.

Keep reading Show less

California wildfires death toll climbs to 50

Firefighters in California are still struggling to contain several wildfires nearly one week after they broke out.

(Photo by Elijah Nouvelage/Getty Images)
Politics & Current Affairs
  • Hundreds of people are still missing after three wildfires spread across Northern and Southern California last week.
  • 48 of the 50 deaths occurred after the Camp Fire blazed through the town of Paradise, north of Sacramento.
  • On Tuesday night, a fourth wildfire broke out, though it's mostly contained.
Keep reading Show less