dan ariely quotes – Mutual Responsibility

Merriam-Webster dictionary defines “labor” as:

a : expenditure of physical or mental effort especially when difficult or compulsory.
b (1) :human activity that provides the goods or services in an economy
(2) : the services performed by workers for wages as distinguished from those rendered by entrepreneurs for profits.”

But, says Prof. of Behavioral Economics, Dan Ariely,

On an intuitive level most of us understand the deep interconnection between identity and labor… ‘What do you do?’ has become as common a component of an introduction as the anachronistic ‘How do you do?’ once was—suggesting that our jobs are an integral part of our identity, not merely a way to make money…”

Here is Ariely describing the psychology behind how we view labor:

Like Rats In A Maze?

As mentioned in a previous post, behavioral economics differs from standard economics because it doesn’t assume that people are strictly rational. Ariely describes this difference in the perception of labor:

… the basic economic model of labor generally treats working men and women as rats in a maze… all the rat (person) wants to do is to get to the food with as little effort as possible. But if work also gives us meaning, what does this tell us about why people want to work?”

Blogging As An Example

In his book, The Upside of Irrationality: The Unexpected Benefits of Defying Logic at Work and at Home, Ariely looks into what motivates so many people to write blogs:

… blogs have two features that distinguish them from other forms of writing. First, they provide the hope or the illusion that someone else will read one’s writing… Blogs also provide readers with the ability to leave their reactions and comments–gratifying for both the blogger, who now has a verifiable audience, and the reader-cum-writer. Most blogs have very low readership… but even writing for one person, compared to writing for nobody, seems to be enough to compel millions of people to blog.”

From a rational perspective, we should make only decisions that are in our best interest (“should” is the operative word here)… and choose the option that maximizes our best interests… Unfortunately, we’re not.”

This is where behavioral economics enters the picture. In this field, we don’t assume that people are perfectly sensible, calculating machines. Instead, we observe how people actually behave, and quite often our observations lead us to the conclusion that human beings are irrational.”

The above and subsequent quotes are taken from Dan Ariely’s book, The Upside of Irrationality: The Unexpected Benefits of Defying Logic at Work and at Home. Ariely is a Professor of Psychology and Behavioral Economics at Duke University and author of other works on behavioral economics.

Standard Economics Vs. Behavioral Economics: A Matter Of Perspective?

… there is a great deal to be learned from rational economics,” he says, “but some of its assumptions—that people always make the best decisions, that mistakes are less likely when the decisions involve a lot of money, and that the market is self correcting—can clearly lead to disastrous consequences.”

Social And Market Forces

The Financial Crisis

… think about the implosion of Wall Street in 2008 and its attendant impact on the economy. Given our human foibles, why on earth would we think we don’t need to take any external measures to try to prevent or deal with systematic errors of judgment in the man-made financial markets?”

This is where behavioral economics veers far from standard economics, because it seeks to look at human evolution and psychology in addition to standard economics, in order for social and market forces to be able to exist in balance:

Essentially the mechanisms we developed during our early evolutionary years might have made perfect sense in our distant past. But given the mismatch between the speed of technological development and human evolution, the same instincts and abilities that once helped us now often stand in our way. Bad decision-making behaviors that manifested themselves as mere nuisances in earlier centuries can now severely affect our lives in crucial ways.”

The Need To Address Human Nature

Ariely argues that this dichotomy between social and market forces, and some of our technological developments existing in discordance with our evolutionary development/nature, holds ramifications far beyond the credit industry:

When the designers of modern technologies don’t understand our fallibility, they design new and improved systems for stock markets, insurance, education, agriculture, or health care that don’t take our limitations into account (I like the term “human-incompatible technologies,” and they are everywhere).”

Behavioral economists want to understand human frailty and to find more compassionate, realistic, and effective ways for people to avoid temptation, exert more self-control, and ultimately reach their long-term goals. As a society, it’s extremely beneficial to understand how and when we fail and to design/invent/create new ways to overcome our mistakes.”

All quotes taken from Prof. Ariely’s book, The Upside of Irrationality: The Unexpected Benefits of Defying Logic at Work and at Home.

Image of Prof. Ariely courtesy of his most recent Pop Tech Talk on Adaptive Responses [21 min.]

Tag: dan ariely quotes

Meaningful Labor Explained By Prof. Dan Ariely