Dan Ariely

In my mind we have learned three main lessons in these two sub-fields: 1) that the environment has a large, yet unrecognized, effect on our behavior, 2) that our intuitions about what drives our behaviors are flawed, 3) and that emotions play a large role in our decision making. Let me give some examples.

The environment has a large, yet unrecognized, effect on our behavior
One of my favorite graphs in all of social science is the following plot from an inspiring paper by Eric Johnson and Daniel Goldstein. This graph shows the percentage of people, across different European countries, who are willing to donate their organs after they pass away. When people see this plot and try to speculate about the cause for the differences between the countries that donate a lot (in blue) and the countries that donate little (in orange) they usually come up with “big” reasons such as religion, culture, etc.

But you will notice that pairs of similar countries have very different levels of organ donations. For example, take the following pairs of countries: Denmark and Sweden; the Netherlands and Belgium; Austria and Germany (and depending on your individual perspective France and the UK). These are countries that we usually think of as rather similar in terms of culture, religion, etc., yet their levels of organ donations are very different.

So, what could explain these differences? It turns out that it is the design of the form at the DMV. In countries where the form is set as “opt-in” (check this box if you want to participate in the organ donation program) people do not check the box and as a consequence they do not become a part of the program. In countries where the form is set as “opt-out” (check this box if you don’t want to participate in the organ donation program) people also do not check the box and are automatically enrolled in the program. In both cases large proportions of people simply adopt the default option.

You might think that people do this because they don’t care. That the decision about donating their organs is so trivial that they can’t be bothered to lift up the pencil and check the box. But in fact the opposite is true. This is a hard emotional decision about what will happen to our bodies after we die and what effect it will have on our those close to us. It is because of the difficulty and the emotionality of these decisions that they just don’t know what to do so they adopt the default option (by the way this also happens to physicians making medical decisions, and also to people making investment and retirement decisions).

The organ donation issue is just one example of the influence of rather “small” changes in the environment (opt-in vs. opt-out) on our decisions. The more general point is that the environment has a large effect on our behaviors-suggesting that if we want to have a validly descriptive model of human behavior we must incorporate the environmental variables into our models.

Our intuitions about what drives our behaviors are flawed
Using the organ donation example again, think for a minute about whether you are willing to accept the idea that you yourself would be influenced by the opt-in or opt-out framing of the form at the DMV. It is easy to accept that those funny Europeans would be influenced by such small things, but it is incredibly difficult to accept that we ourselves would behave differently in these two scenarios.

This in my mind is another important lesson that psychologists have learned-that our intuitions about what drives our behavior are not always correct. This understanding is important for the way we think about economics (which is based on intuitively appealing psychology) and for the role of experiments in psychology.

The moment you realize that your intuition about your own behavior might be wrong it is clear that you need another, more objective input. This is what experiments are all about. We could have never intuited the opt-in opt-out effect, nor could we have intuited the magnitude of this effect and this is why empiricism is so important.

This lesson is also important for policy. If our intuitions are fallible, and the only way to know things for sure is to try them out in an experiment, shouldn’t we ask the government to first test its ideas before it invests billions of dollars of our tax money into particular programs (for example the most recent 153 billion dollar stimulus package)?

Emotions play a large role in our decision making.
A third important lesson we continue to learn about concerns the role of emotions in our decisions. We used to think about decisions as cold calculated, detached, computations that examine the costs and benefits, but recently we have gained a higher appreciation for the role of emotions in our decisions and for the fundamental ways in which they change us.

One example of this is a fantastic paper by Paul Slovic in which he asks the question of why we care about baby Jessica (Remember her? The cute kid that got stuck in a well 20 years ago) but don’t seem to care as much about genocides such as the one in Rwanda (where 800,000 people were murdered in about 100 days, while the world watched and did nothing). Of course there could be many reasons for the difference but it is rather amazing to realize that baby Jessica got more CNN coverage than Rwanda. Why? One of the emerging reasons for this seems to be that we are called into action by emotions-we see a cute toddler in trouble, and our hearts go to her but numbers and statistics numb our emotions and reduce our motivation to act.

Joseph Stalin expressed this sentiment when he claimed that “One man’s death is a tragedy. A thousand deaths is a statistic.”

Albert Szent Gyorgi had a related observation: “I am deeply moved if I see one man suffering and would risk my life for him. Then I talk impersonally about the possible pulverization of our big cities, with a hundred million dead. I am unable to multiply one man’s suffering by a hundred million.”

It turns out that we are numbed by numbers much quicker than Stalin and Gyorgi suggested. For example, it turns out that describing one starving child in Africa creates higher emotional responses than describing two starving children using an equivalent amount of information. The single child creates a higher emotional response and, as a consequence, people donate more money to the one child compared with the two. It also turns out that describing one starving child creates more emotional reactions (and donations) relative to a situation where the same child is described but this time with additional information concerning the magnitude of the hunger problem (3 million kids in Malawi are facing hunger …).

Emotions are an integral part of who we are, a part that represents our evolutionary history, a part that is a basic and necessary component of our behavior. We are learning more and more about emotions and their effects on us all the time, but it is also clear that we need a greater understanding of emotions if we want to understand and predict human behavior.