Dan Ariely

Sad story out in the New York Times describing growing concerns about texting while driving. In Britain, a woman was sentenced to a 21-month sentence after it was found that she had been texting while driving, which resulted in the death of a 24-year old design student. In many ways, texting while driving illustrates a case in which tiny, individual irrational decisions can accumulate and cause widespread suffering, not only for the individuals who are texting, but their unsuspecting victims. Unlike cases of drunk driving, in which the driver’s decision making abilities are impaired, drivers who text are at their full wits to wait until they’ve pulled over to check their texts, and yet in the process they routinely underestimate the risk they impose to themselves and others.

Aside from being another example of a common irrational behavior (and who among us did not text or checked their email while driving), this leads me to wonder, what is the best way to solve this problem? While presently the issue is being hotly debated here in the US on a state-by-state basis, England has taken a tough national stance on texting while driving, which includes hefty minimum point penalties on the offending party’s license, and fines upward of 60P. If you watch the video in the linked article, you’ll also find a very graphic video depicting the carnage of a texting accident–shocking and informative public service announcements are yet another option. Alternatively, we can hope that cell phone companies are continuing to explore voice activation technologies that can read text messages aloud and also transcribe them from voice — thereby by-passing the problem altogether.

We have lots of irrational problems to deal with, and the realization that tiny, seemingly innocent little ones, like 10-second text messages, can cause so much damage should make us look around for more such problems.  perhaps ones that are not as obvious (think health care), but are potentially just as damaging.

Irrationally yours

Dan

How are people’s judgments affected when they learn of shocking news? How do they see the world differently? Gordon Closter, a student of mine, explores this topic in the latest Predictably Irrational Short Story. It can be found here.

Reflecting back on our recent economic history bring to my mind a two sad surprises.

Even as a behavioral economist who generally believes in the prevalence of irrationality in our every day life, I place some stock in the main mechanism that should have maintained the efficiency of the financial markets: competition. In principle, the drive for competition among individuals, banks, and financial institutions should get the actors in the market to do the right thing for their clients as they fight to outdo their competition. After the Wall Street fiasco, I expected and hoped that in the spirit of competition some financial institutions would change their way given the new information about the risks they were talking and self-impose restrictions on themselves. I did not expect that they would do so because they were benevolent, but because they wanted to get the business of those who have lost trust in the financial institutions.

Surprise one: Sadly, the forces of competition do not seem to have any effect on the functioning of our financial institutions and Wall Street seems to be back to is pre-fiasco structure.

We are now discussing the possibility of health care reform, which arguably is even more messed up than our financial institutions (about 18 percent of GDP, bad incentives, bad intuitions, and the leading cause for bankruptcy before the current housing problem). When I look at the health care debate, it seems to be fueled by ideological beliefs about the importance of competition and freedom of choice on one hand, and the evilness of regulations and limits on the other. As someone who loves data beyond theories, it is surprising to me how little we know about the effectiveness of different versions of health care, and how sure people are in their own beliefs — which makes it an ideological and not a very useful debate (this is just a small surprise).

But what is the most surprising to me is that the tremendously expensive lessons we have experienced about the efficiency of markets and self interest do not seem to carry to the health care debate. As a society, we still seem to be enamored with the ideology of free markets, and have not seemed to update our beliefs in their efficiency despite the evidence. On the bright side, it looks like behavioral economists will have a lot of work for the foreseeable future.

It’s hard to displace a global economic crisis from headlining the news, but the pigs did it. A n variant of the H1N1 flu virus, associated in our lore with the 1918 flu pandemic, has jumped species and infected humans. There are reported deaths (though numbers and details vary wildly) and cases appear to have spread globally.

The media jumped on this new new new crisis, the politicians around the world thanked Providence for something to distract voters from their ethical lapses and the opportunity to pad their budgets, pharmaceutical stocks rallied, airline stocks tanked, and the conspiracy theories are running wild. The Russians stopped importing pork, even though you don’t get the flu from eating pork.

On the positive side, a few more people started washing their hands. This is a rational response; hygiene is an innovation that works. (Purell and other hand disinfectants work in a pinch, but washing your hands for at least one minute, with a long rinse in running warm water is better.)

Three of our predictable irrationalities give the swine flu story much more impact than it should have — and in this case, it would be better if we were more rational.

One: Unlike the agents in economic models, we have limited memory and limited thinking capacity; to manage it we shift our attention depending on outside information. Or, in non-academese, we pay attention to what’s happening now: things that are recent and things that are repeated often get more attention, even if they are not that important. Because the news focus on the negative (it’s their business model) we keep hearing about the cases discovered, and not about the millions of people who were exposed and didn’t get sick. Which gets us to point two:

Two: We overweigh new risks relative to comparable risks we are accustomed to. Around 100 people per day died in US roads in 2008, an enormous improvement over previous years but still. People obsessing about spending 5 minutes in elevators with others (an infinitesimal chance of contagion) will blithely cross the street against the light to have a artery-clogging triple cheeseburger with fries and then smoke a pack of cigarettes. These things have much higher risks, but because we have grown accustomed to them, we don’t think of the risks. They are not, in the technical term, salient; but they are much more dangerous. Still, their dangers are dry statistics and people are not good with statistics, which gets us to point three:

Three: Brains are wired to work well with stories. And there are many stories one can make from the news reports: pandemics amplified by airport air recycling and global travel; mass extinction followed by anarchy and mayhem; terrorism taking advantage of the burden on the health system; the flu as prelude to alien invasion from Alpha Centauri. Ok, the last one only works around the MIT Media Lab. But we love stories, and forget that the plural of anecdote is not data. Statistics, dry as they may be, give a lot more information than stories.

It is not that this problem is not real and important, I just don’t think that relative to our other problems, it is as big as we are making it to be.

What can we do: as the British said during the Blitz, keep calm and carry on. Take appropriate precautions, wash your hands, and if you’re sick get help and keep out of crowds.

CDC page on this flu

There’s a phrase we hear all the time, and one that suggests something about our psychological makeup: we’re not just concerned with actions, but with their attendant mens rea – or lack thereof – as well. If it wasn’t intentional, then it’s not as painful.

And, as it turns out, that is quite literally true: Harvard researchers Kurt Gray and Daniel Wegner recently found that we experience greater pain when we perceive it to be deliberately inflicted, rather than by accident.

In their clever experiment, they had volunteers perform a variety of tasks, including an assessment of discomfort. This involved receiving electric shocks and then rating them on a 1 to 7 scale. When participants thought their “study partner” (who was actually a research accomplice) had selected the task for them to complete, they rated their perceived pain as higher (Mean ratings = 3.62) than when they were told the selection was computer-generated the pain was lower (Mean ratings = 3.00).

What’s more, deliberate pain was not just more acute, it also lasted longer: whereas participants rated the unintentional shocks less and less unpleasant as the experiment progressed, the intentional shocks remained just as painful.

So next time you are at the doctor try to think that he or she really cares about you.

Here’s a very interesting piece from the New York Times’ Review of Books: “Drug Companies & Doctors: A Story of Corruption.”

The basic story is that whereas only a few decades ago physicians generally lacked any lucrative ties to pharmaceutical companies, these days such conflicts of interest permeate the field, and debase it.

Take the example of Dr. Charles B. Nemeroff, the psychiatry department chair at Emory University. He received a NIMH grant to study drugs made by GlaxoSmithKline AND at the same time he also got $500,000 in fees from GlaxoSmithKline. Talk about a conflict of interest!

That’s not the only egregious case – there are many.  As it turns out a recent survey found that about two thirds of academic medical centers hold equity interest in companies that sponsor research within the same institution… And here is another one:  Of the 170 contributors to the most recent edition of the American Psychiatric Association’s Diagnostic and Statistical Manual of Mental Disorders (DSM), ninety-five had financial ties to drug companies.  The top dogs aside, many physicians accept hefty salaries to consult for drug companies, and most accept pharmaceutical gifts like pens and free lunches.

So the medical profession is teeming with conflicts of interest – but it doesn’t stop there. Look at politics, wall street, consulting — it is everywhere and I worry that unless we  understand just how big this problem is,  we are not going to deal with it.