In Defense of Mistakes

April 17, 2024 BY Dan Ariely

In a world that is hyper-brutal and punishing of mistakes, offenses, and missteps – small or large – on both social media and in real life, it might seem odd for me to promote making more mistakes. Yet, I want to make the case for making more and better mistakes.

I am an expert on mistakes. Not just in the purely theoretical or academic sense, but in the real-life sense. When I was nearly 18, an accident disfigured over 70% of my body with burns, removing nearly all functionality from my hands. I spent the next three years in a hospital missing out on many of the normal experiences of young adulthood. It could have filled me with rage, depression, or regret. Instead, it inspired my life’s work studying human behavior and trying to figure out what we can do to make our lives better. (It also inspired my signature half-beard.)

In my professional life, I have conducted countless studies that just didn’t work out the way I assumed they would. I have left positions under complicated circumstances. I had startups that failed. I’ve had interactions with colleagues that I wish had gone differently. Each of these experiences, while very painful at the time, were opportunities for observing myself and human nature. They became experiences of personal and professional growth.

I have also spent the better part of the past three years reliving a set of decisions I made and actions I took over a decade ago, around a now-infamous study of human behavior using car insurance data. Working in partnership with trusted colleagues, I did what was expected and right at the time. When the findings of the original study were called into question years later, we re-tested our assumptions, publishing results that put doubt on the original findings. When issues with the original data set were uncovered, we retracted the paper. Later we re-examined and replicated the findings, and in early 2024 published two papers that show that the effects of signing first matter (links to the papers are at the bottom of this post), but also that they matter in a more nuanced and complex way. Such is the scientific process. (See link to my official statement about this event).

As I was trying to understand what went wrong with the 2012 paper, people were very quick to criticize and question my professional judgment, casting a shadow over my life’s work. “Where did it all go wrong?” I have asked myself many times a day for the last few years. I have looked long and hard, but given that so much time has passed, I have come up empty-handed, and I simply don’t know for sure what went wrong. “Should I have done things differently?” Evidently. But as I examine all my decisions, I feel that I did the best I could at the time. And I’m okay with that.

Do I wish I did not make these mistakes? Of course. And, not at all. I obviously wish I did not make these specific mistakes, but in general, I accept these circumstances and continue to believe wholeheartedly that mistakes are essential to growth and evolution. Which brings me to my argument: We should all be making more and better mistakes.

What do I mean by that? To start, there is no reward without risk. Think about venture capitalists or investors in the stock market. As they approach their portfolios, they know that getting higher returns necessarily means taking greater risk. Risk, in the context of investing, is about investing in both sure things and in long shots.

Sometimes we also take risks to invest in ourselves or try something new – moments in our lives where we take a leap of faith and hope that things will work out. There is an expectation and understanding that some things will work out and some won’t, but overall, we know that we will be better off for having tried. Succeed or fail, the secret to success is charging forward boldly in new directions.

As a professor, I teach students about the logic, or lack thereof, in taking risks. We do case studies on Amazon’s fail-fast approach. We openly analyze past mistakes to learn from them. We talk about fostering cultures that will help us avoid another O-ring disaster.

There are mountains of self-help books and countless life coaches in the world, each telling us in their own ways that it is imperative to live in service of our desires, free of judgments of others and with more forgiveness for our shortcomings. “It’s okay to fall down. You just have to get back up.”

But the case for mistakes does not end here. It is not just about trying more and accepting more mistakes as the price of learning and success.

I am also advocating for better mistakes. What do I mean by better mistakes? We need to do the wrong thing the right way in order to maximize our learning. Specifically, we should aim to make more mistakes from bold action and fewer mistakes from inaction.

Popular wisdom says that when we look at our life in general, we will feel the most regret over the things we didn’t do. And yet, asymmetrical fear of regret leads us to fear mistakes from bold action more than mistakes from inaction, making us less likely to try new things – and more likely to do nothing.

When it comes to making the case for better mistakes, it means that we should be bolder and a little more fearless, by making a particular effort to make more mistakes from action. Taking calculated risks with a clear objective and having the courage to dust ourselves off if these risks don’t pan out. And try again.

Take, for example, the recent testimony of the three university presidents in front of Congress and the rest of the world. There is no question that this was a tragic performance that set academia back years, at a cost of public opinion that will take decades to rebuild. My sense is that these three university presidents should have dusted themselves off and worked even harder to tackle head-on the violence and hatred on their campus. This of course is a tall ask, and some of their efforts, particularly the more novel and creative ones, might have backfired. Yet, they should have taken more risks and tried different and novel approaches that might have contributed to their universities and to our understanding of how to help people to live in peace and civility with each other.

Sadly, the reactions to their testimonies prompted universities to do the exact opposite. Instead, universities now seem to be working hard to do as little as possible in order to fly under the radar. They seem to be largely motivated by a hope that students, faculty, trustees, and donors will soon forget about this particular war, and maybe even stop paying attention to anything that happens in the world altogether.

If we did more of the opposite of doing nothing and instead took bolder risks, would we more frequently experience the pain of erring, hit ourselves over the head, and say, “Why did I do this?” Sure, we would. But by accepting the downsides of bold action, we also increase the chance that we will learn something useful about how to move forward. If universities took bolder risks, maybe they would have lived up to their social mission and helped all of us better understand how to reduce hate, improve dialogue, and more.

At the end of the day, the progress of society and the success of any individual is made based on the totality of actions. And the biggest enemy of progress is fearing mistakes so much that we end up doing nothing.

To be sure, society can’t function without rules, boundaries, and consequences, but they should be proportionate. We must change the way we judge one another, to allow room for rehabilitation, reconciliation, or recompense. We must promote safer environments for failure, growth, and learning. Otherwise, we will motivate subterfuge among those who try and fail, and instill fear among those who might’ve tried but couldn’t stomach the potential aftermath.

For my part, I am planning on many more years of mistakes. I don’t intend to let fear and regret drive my decisions. I want to keep learning and growing. I intend to continue to make my own mistakes, and I even hope to normalize making more of them. I am optimistic enough to believe that as a culture, we can find a way forward that encourages people to take risks, fall down, and then get back up.

In the words of the famous philosopher, Yoda: “Pass on what you have learned. Strength. Mastery. But weakness, folly, failure also. Yes, failure most of all. The greatest teacher, failure is.”


Irrationally yours,


Links to the papers

Link to the paper “How Pledges Reduce Dishonesty: The Role of Involvement and Identification“: https://tinyurl.com/ycpumrtk

Link to the paper “I Solemnly Swear I’m Up To Good: A Megastudy Investigating the Effectiveness of Honesty Oaths on Curbing Dishonesty“: https://tinyurl.com/53mbn5ws and see also a link to a discussion about this paper: https://youtu.be/AjQ58irCZGg

Predictably Irrational is 16 years old

February 19, 2024 BY danariely

Predictably Irrational was published on this day (Feb 19th), 16 years ago — 2008. This was just the beginning of the financial crisis of 2008, when we were all trying to understand what went wrong and what are the limits of human irrationality. Predictably Irrational came out at a good timing to help us rethink human irrationality.

I suspect that the crisis of misinformation and polarization that we are facing these days is even more severe and with consequences that are even more dire. Although the damage that we have caused ourselves in this misinformation and polarization crisis (not with bad intention, just by not understanding our human nature) is much slower-moving and not as clearly observable. Which translates into a relatively calm nonchalant approach, where we are not yet in the panic mode we should be in. This time too, I just wrote a book about these topics – Misbelief.

I know that it might seem that my books predict important breaking points in society, but this is not true. I had a few books in between these two that did not coincide with any large-scale crisis.



The Irrational, Episode #1: The Pilot

January 27, 2024 BY Dan Ariely

The Irrational is a TV show on NBC that is loosely based on my life and my research (very loosely). See a link to the show HERE.

Each episode is based on some basic psychological forces, and here I will elaborate on the psychology that is part of the action in Episode 1: The Pilot.

The main theme of this episode is: False Memories

The main psychological principle in this episode is memory; specifically, false memory.  As Elizabeth Loftus has shown, we tend to think that our memory represents our experience in a perfect way. That it works like a camera and that it records events exactly as they took place. But, in fact, our memory includes not only things that happened to us, but also things we imagined, things that other people told us happened, and things we learned about in other ways – and all of these can become mixed with the things that happened to us.

In this episode Alec says one of my favorite sentences: “Memory is the great con man of human nature.” This sums up the idea that we overestimate our memory’s accuracy despite its unreliability.

For more information about False Memories see: https://en.wikipedia.org/wiki/Elizabeth_Loftus


The main social science terms used in this episode are:

The cocktail party effect
The cocktail party effect takes place when the brain zeroes in on a specific stimulus, typically auditory, while disregarding other stimuli. The standard case is when a partygoer engrossed in one conversation amidst a lot of chitchat can suddenly hear their name (or the word fire, or sex) when it comes from a discussion that they are presumably not hearing.

Surprisingly, the cocktail party effect suggests that this selective attention takes place after the meaning of the auditory signal is processed which means that at some level we hear the words, but actively suppress them before they arrive at our full consciousness.

For more about the cocktail party effect see: https://en.wikipedia.org/wiki/Cocktail_party_effect

Guilt is an emotion that takes place when a person feels badly about compromising their own standards of conduct. It is an outcome of first internalizing the standards of society (don’t litter, don’t lie, etc.). Next, we judge ourselves relative to these social standards, and finally we feel bad — guilty — when our own behavior falls short relative to these social standards.

It is also interesting to contrast guilt and shame. The main difference is that shame takes place only when someone else is watching (or might be watching), and the shame comes from the feeling of being judged by another person.  Guilt on the other hand is independent from anyone watching, which means that guilt means that a person is their own judge.  From this view, we can think about guilt as a more evolved and more desirable emotion, where a person internalizes the values of society and judges themselves relative to those standards independent of anyone else watching or not watching.

For more about Guilt see: https://en.wikipedia.org/wiki/Guilt_(emotion)

The identifiable victim effect
The identifiable victim effect is the tendency of individuals to offer more help when a specific, identifiable person (“victim”) is in need of help, as opposed to a large, vaguely defined group with the same need.

This idea is captured by quotes from both Mother Teresa and one attributed to Joseph Stalin.

“If I look at the mass, I will never act. If I look at the one, I will.” ― Mother Teresa

“A single death is a tragedy; a million deaths are a statistic.” ― Joseph Stalin (possibly)

The identifiable victim effect is based on two components. The first is that people are more inclined to help an identified victim than an unidentified one. The second is that people are more inclined to help a single identified victim than a group of identified victims.

Although helping an identified victim is commendable, the identifiable victim effect is considered a bias, because it causes us to take less action when we don’t know much about the person in need, and because it causes us to act less as the number of people affected by a tragedy increases.

For more about The identifiable victim effect see: https://en.wikipedia.org/wiki/Identifiable_victim_effect

Memory is often thought of as an information storage and retrieval system. But we should think about it more like an informational processing system with explicit and implicit functioning consisting of a sensory processor, short-term (or working) memory, and long-term memory. Importantly, while we often place a lot of trust in the accuracy and validity of our memory, the reality is that memory is an imperfect repository of information, and its constructive processes change memories over time. In short, memory is less reliable than we think it is. Of course, with the increase of Alzheimer’s disease diagnoses, we are made more aware of the importance of a good functioning memory. We also worry more about losing this very important part of ourselves – a part that is at the core of who we are.

Paradoxical persuasion
Paradoxical persuasion starts with the very simple observation that convincing anyone of anything is incredibly difficult. Just think about the last five years and ask yourself how many people have you been able to convince during that time? Similarly, ask yourself how many times over the last five years somebody else has convinced you that you were completely wrong about something? The reality is that when we engage in an argument we start counterarguing even before the other person has finished their sentence (they of course do the same thing), which is why at the end of a conversation in which two people try to change the other’s opinion, they are often even more steadfast in their own opinion because instead of listening, they have been engaged in arguing for their opinion. Paradoxical persuasion approaches arguments differently by asking people to think about the minute details of their argument. With this approach people often realize that they have not thought carefully about their own opinions. While the person that has considered their position more carefully doesn’t become convinced that they were completely wrong, they often realize that they shouldn’t be as committed to their original opinion as they were before.

For more about Paradoxical persuasion see: https://www.pnas.org/doi/10.1073/pnas.1407055111

Post-traumatic stress disorder (PTSD)
Post-traumatic stress disorder (PTSD) is a disorder that develops in some people who have experienced a shocking, scary, or dangerous event. While it is natural for people to feel afraid during and after a traumatic situation, PTSD is a disorder where the “fight-or-flight” response that was evoked during the initial traumatic event keeps on appearing in the person’s life a long time after the event has passed.  People with PTSD have intense, disturbing thoughts and feelings related to their experience through flashbacks or nightmares and they continue to experience a version of the trauma and are unable to put the traumatic event behind them.

For more about PTSD see: https://www.psychiatry.org/patients-families/ptsd/what-is-ptsd

Reciprocity is a fundamental driver of human behavior. It is the idea that individuals tend to respond to the actions of others in a manner that mirrors the positive or negative nature of those actions. When other people are nice to us, we feel a need to be nice to them back. When other people are mean to us, we feel the need to act in kind. Reciprocity is also a social norm, meaning that beyond our need to reciprocate, we also feel a kind of social pressure to reciprocate.

What reciprocity means is that in our daily lives we are frequently much nicer and much more cooperative than the self-interested view of human nature would predict.

For more about Reciprocity see: https://thedecisionlab.com/reference-guide/psychology/reciprocity#

Sense of control
How much control do you feel you have over your life? You may feel we have a lot of control, or you may feel you have very little. Having the right amount of feeling of control is what helps keep us balanced. Feeling that we have no control can lead to anxiety, depression, and learned helplessness. And, as I argued in Misbelief, feeling out of control is a main driver that leads us to seek out stories that blame someone else for our problems as a way to help us make sense of our situations.

For more about Sense of control and its damaging effects see: https://misbeliefbook.com (Chapters 3 and 4)


My favorite quote from this episode: “Memory is the great con man of human nature.”

My favorite psychological advice from this episode: When we have a negative experience that stays in our memory and we just can’t shake it out, one approach is to try and replace it with something else. We can try to imagine that something else – something specific – happened and do this every day for 100 days. Eventually, the bad memory will fade and be replaced by the better one.

And for fun, here are a few pictures from the set.







I just made up a term — Anachronistic Prejudice

January 25, 2024 BY danariely

Anachronistic Prejudice is a term I recently made up to describe a situation where we use current norms to judge something that happened long ago or to judge someone who lived long ago. The other element of Anachronistic Prejudice is that while we use the wrong norms, we don’t fully realize that we are doing so.

In my mind, this is one of the worst biases of our time in terms of its negative impact on society and on individuals.

How might we fight such a bias?  Here is one way: When you find yourself judging people for something that happened five or more years ago, stop and think about how you behaved during that timeframe. For example, think about your sense of humor 15 years ago. Then think about how likely you would have been, in the same timeframe, to make the same mistake as you are judging them on. Next, add a 50% chance because you are likely to have an overly positive opinion about yourself.

Now go ahead and judge.

Inherent Goodness or Badness: A Reflection

January 16, 2024 BY Dan Ariely

An ancient question has been whether human nature is inherently good or inherently bad. From as early as I can remember, I thought that the right view is that human nature is inherently good. Over the years, my professional experience in social science gave me further support for that view. Why? Because if you consider that the main lesson from social science — that the environment matters! — you have to also believe in a deep disconnect between the potential of people and their ultimate behavior. You put people in one environment and they behave as angels, but put them in another environment and the same people can act in much much worse ways.

What this means is that behavior, good and bad is not a direct reflection on the goodness or badness of human nature and instead, it is to a large degree an outcome of the environment.

As someone who has internalized social science into everything I do, including my basic beliefs and approach to life, my conclusion was ended up being that people are inherently good and with the right environment this goodness can come out. Everything we see that is not great is an outcome of mistakes, bad information, a bad environment, and so on.

Recently, however, the images and stories from the brutal attacks of Hamas on Israel forced me to stop, think, and reflect, and that’s precisely what I have been doing. Should I change my belief about the basics of human nature? Should I update it?

I went over all kinds of evidence in the news and in social media — information that is impossible to reconcile with the idea that people are inherently good. But, even though I struggled with lots of evidence, at the end of the day, I decided that I’m not yet ready to accept that human nature is evil, and I am going to keep on holding onto the belief that people are inherently good.

Yes, it’s true that the evidence for people being inherently evil is much more powerful than I had imagined, and every day I see more and more examples of unbelievable brutality. But, I’m not yet ready to make this shift. Much like Jean Piaget’s approach to child development and their stages, I think that for me too, the evidence is there, but I’m not yet ready to move to a different developmental stage and to admit that maybe people are not as good as I once believed.

Or, maybe I just need to hold on to the goodness view for the sake of my own motivation. I know that we will all keep on revisiting this question over and over in the near future and I hope that in time we will find more reasons to view the world and the people in it in a more hopeful and positive way.

The human catalyst

December 28, 2023 BY Dan Ariely

A strong Human Capital Factor ignites growth.

“I only want to invest in fundamentals.” Such is a common statement from financiers. Yet these self-proclaimed ‘fundamental investors’ are people who regularly ignore a key aspect of a successful business.

The term ‘fundamental’ is used to describe financiers who back companies only when the hard financial data available to them looks positive. While the approach might sound sensible, it is limited – because the available data is insufficient and inadequate.

One of the fundamental predictors of growth that goes largely unquantified is human capital – the people power within a firm that drives it forward. Human capital is a sort of free energy for businesses. When harnessed, it acts like a perpetual motion machine, igniting growth by making companies more innovative, creative, productive, efficient and agile. But, because analysts have struggled to measure it, it is challenging to consider as an input for investment decisions. Irrational Capital is trying to change that with a new metric: the Human Capital Factor™(HCF).

The Human Capital Factor

Irrational Capital mines a plethora of disperse data to create the HCF. Sources include company survey data and publicly available assessments, including reviews on recruitment sites, such as Glassdoor. Some sources are relatively nascent. For example, Glassdoor is a household name now, but only came into existence in 2007. Yet it has been possible to back-test the performance of companies with a high-HCF versus the market benchmark. The results are illuminating.

To analyze the HCF, JP Morgan used the MSCI USA Index, which comprises more than 600 stocks. It formed and tested two share portfolios for the years between 2009 and 2020. As of 31 December in each year, it placed a concentrated portfolio of 30 stocks with the highest HCF scores in the long-HCF portfolio. The 30 stocks with the lowest HCF scores were assigned to the short-HCF portfolio. The portfolios were weighted and regularly rebalanced, to ensure a fair comparison.

The results tell a clear story. The high-HCF portfolio achieved an annualized return of +20.9%, compared to just +13.3% for the MSCI overall. When the high-HCF portfolio was rebalanced to make it ‘sector-neutral’ – reflecting the sectoral composition of the MSCI benchmark – the difference remained profound. The sector-neutral high-HCF portfolio showed an annualized return of +19.2%, substantially higher than the Index benchmark (see Figure 1).

Heavy hitters

One fascinating element of HCF is the way it cuts across all branches of the economy. When we set about quantifying HCF, we’d expected it to be a major factor in the so-called knowledge economy – capital-light firms such as Google and Meta. We had anticipated it to be a less important factor in sectors like manufacturing. The surprise was that HCF is as vital for capital-heavy industries as for capital-light sectors. Why is this? One example might shed some light.

I met Joe, an engineer who worked at a pipe company. The company is unable to use oil as a lubricant when manufacturing its pipes, so it uses molten glass. The raw glass was sourced from recycled car windshields from a major car maker.

The pipe-maker had a problem: a greater proportion than expected of its pipes were cracking and failing, and nobody knew why. Out of an interest in and devotion to his job – not because he had been asked – Joe took it upon himself to do some detective work.

After about two years of self-driven investigation, Joe solved the problem. Car companies were incorporating metal into their windshield glass so the windshields could double-up as integrated radio antennae. The ratio of metal to glass was tiny, but sufficient to make the pipes inordinately prone to cracking. Mystery solved.

One man’s personal mission to solve a critical problem led to huge productivity gains for his company. Its high HCF was evident.

The happiness paradox

Many would assume that the pipe-maker detective, Joe, was self-motivated because he was ‘happy’ in his job. Yet the idea of happiness is over-egged and frequently misused in business. Most humans derive happiness from leisure, not work. Many of us would be truly happy in the moment we found ourselves sitting on a tropical beach, cooled by a pleasant breeze, sipping on a well-mixed mojito. Happy, but unproductive.

Rather, a high HCF comes from a combination of task satisfaction, feeling appreciated, psychological safety, and the degree to which companies provide the conditions where employees can align their own utility with that of the company and its stakeholders. This combination is more related to meaning than happiness. Task satisfaction is the reward one gets from completing a challenge: say, running a marathon, rather than an undemanding leisure activity, such as drinking a cocktail. Psychological safety, meanwhile, is usually derived from a healthy company culture. It gives employees the confidence to challenge decisions, the agency to influence the direction of their company.

Joe expended excess time and energy on an investigation because he wanted to do it. He had intrinsic motivation – and he enjoyed the psychological safety of knowing that he would be listened to when he challenged the use of materials from a longstanding supplier.

Psychological safety is also an antidote to groupthink, a strong predictor of inertia and restricted growth. Rather than being a function of momentary happiness, it gives employees the internal strength to express their real feelings and ideas, and even their dissatisfaction with some aspects of
the company.

When Joe investigated the supply chain and found the weak point, it was not easy news to share, but, because of a high HCF at his company, he felt empowered to do something about it. His company appreciated his efforts and, by changing a policy based on his evidence, benefited commercially from them.

The motivation formula

Intrinsic motivation is like a perpetual motion machine for companies, an invisible, free fuel for growth that can be nurtured in all workers, provided the conditions are right.

Remember the last time you visited a large, branded store and the sales assistant went out of his way to help you? He might have checked the stockroom when the product you wanted was absent from the shelves. He might have called other local branches to check whether it was in stock nearby. That experience is likely to have added to your loyalty with that chain; it added indirect value to the company by making it less likely that you will choose its competitors in future. It also potentially added direct value – by making it more likely that the chain would make another sale. When we think about it, it is easy to visualize equivalent examples, where employees across the board have added value through their own acts, in every sector of the economy.

So, what drives intrinsic motivation? When we explored the factors that contribute, some key findings emerged. It transpires that absolute benefits tend to have only a marginal effect at best: for example, the level of one’s salary is a lesser factor than fairness in the salary structure; the scale of one’s retirement benefits is also a lesser factor than the degree to which those benefits are seen to be distributed equitably. Other factors, such as low levels of bureaucracy and a general feeling of being appreciated by one’s colleagues, are better predictors of intrinsic motivation than financial rewards. Together they drive a key pillar of high HCF – goodwill.

Goodwill is the range between the minimum effort required by an employee to keep her job and the maximum effort possible by that employee if she is fully engaged in her role. The most illustrative study on the factors behind goodwill (Bareket-Bojmel, Hochman and Ariely, 2017) reveals that non-monetary appreciation, such as verbal or written praise, led to productivity increases in the study group – microchip production workers. By contrast, gold did not glitter: monetary bonuses led to a long-term decline in productivity.

The fundamentals of HCF

Goodwill is imperative for a high HCF, yet it is just one of two key building blocks. The other is utility alignment – the willingness of employees to execute tasks that are aimed at the wider benefit of the company. An employee with high levels of goodwill will not achieve her full potential if she is unaligned with the goals of the company (see Figure 3).



Let us return to our branded store by way of an example. Imagine the chain employs several beauticians to sell its makeup. The beauticians offer free makeup consultations for customers. Their hope is that at the end of each makeover, they will sell the makeup they used.

One day, a beautician notices that the customer could benefit from a face cream that is manufactured by the company, but is unavailable at the makeup counter. It is stocked elsewhere in the store, in the skincare department.

The beautician asks the customer to wait and visits another corner of the store to bring the product in question to the customer. Because the product is stocked by a different department, the beautician gains no commission from the sale. Indeed, if the customer buys the other product they likely spend less on makeup. While the beautician makes no financial gain from the sale, it is nevertheless beneficial for the company and its customer. The beautician recognizes this and acts accordingly. This is what utility alignment is all about.

As Figure 3 shows, when either goodwill or utility alignment are lacking, value is neutral. Where both are lacking, value is destroyed. Yet, when both goodwill and utility alignment are present simultaneously, a lot of value is created. The workforces of companies with high HCF are clustered in this quadrant.

The future bottom line

Traditional accounting considers human capital an ‘intangible’ – something that cannot be measured. Yet Irrational Capital is putting a dent in this traditional practice. Not only can it be measured, it can also be invested in. Through Harbor Capital we offer three exchange traded funds that comprise high-HCF stocks: HAPI, HAPY and HAPS.

The main point is that human capital is not an ethereal factor. It is real and calculable. As we have shown, it is possible to quantify HCF and demonstrate its effect on company performance and value over time. The data that informs the quantification – both public and private – has only become available in the last few years; it is continually being expanded and should become rapidly richer and more extensive.

As it relates to measuring and reporting human capital, traditional accounting is
somewhat limited. The Human Capital Factor is the opposite of intangible. It is demonstrating the ability to make a former intangible tangible; something you can reach out and touch – and invest upon. One day, companies might start reporting on their human capital in their financial statements – and so-called fundamental investors might at last recognize the true fundamentals of business success.

Originally posted on December 1st 2023 here https://dialoguereview.com/the-human-catalyst/

The human catalyst

Corrosive information, Shibboleth, Ramaswamy and my new book: MISBELIEF

September 26, 2023 BY Dan Ariely

A few weeks ago, David French wrote a very compelling and troubling OpEd in the New York Times, under the title: “The Articulate Ignorance of Vivek Ramaswamy.”

The main point focused on a response that Vivek Ramaswamy gave during the Republican debate to the question of whether Mike Pence did the right thing by certifying the presidential election on Jan. 6, 2021. Ramaswamy’s response was that if he was in Pence’s shoes, he would have “pushed for a new federal law to mandate single-day voting, paper ballots and voter identification.”

French then goes on to explain that this is “a crazy, illegal, unworkable idea on every level,” which of course it is. French then continues to wonder how can anyone make such an impractical and impossible statement. This is where French, and I suspect most people, miss an important shift in the current political communication landscape – a shift toward shibboleth.

What is shibboleth? As I explain in my new book MISBELIEF, the modern term shibboleth is based on a biblical story where two tribes, the Ephraimites and the Gileadites, pronounced the word shibboleth differently. After a bloody war between them, when someone tried to cross the river, they asked them to pronounce shibboleth and if the pronunciation was different from their own pronunciation, they person in question was killed. The way that social scientists use the term shibboleth is as a kind of linguistic password that identifies people’s belongingness to a group. This is also the key to better understanding our modern political discourse, and within it also understanding Ramaswamy and his comment.

My guess is that when Ramaswamy proposed his new federal law, he did not really mean it as a real solution to the question. Nor was he adding facts to the discussion. No — he was signaling. Imagine that Ramaswamy would have said something of the republican-run-of-the-mill category.  Maybe he would have said that he would have gathered the Republican leadership to discuss the issue. Or maybe that he would have made sure to publicly register his protest.  Any such more modest statements would not portray him as a real true Republican leader. They would just portray him as a standard Republican. In contrast, by saying something impossible and outlandish he is using shibboleth and marking himself as a person with the qualities of a true Republican leader.

This is where French was wrong in his analysis because he mistakenly assumed that the goal of Ramaswamy’s response was to communicate a true opinion and not to signal his loyalty and identity and suitability to Republican leadership.

While I hope that this analysis of the role of shibboleth in the current political discourse, this perspective should not give us any comfort and instead it should make us even more worried. In standard communication we expect people to say what they mean, to say the truth and to add facts to the discourse. Especially when the communication is public on well accepted media channels. When shibboleth takes the center stage and these basic assumptions no longer hold, the risk of false narrative increases dramatically.

The challenge with this analysis is that it doesn’t help us figure how to deal with a discussion that pretends to be about real information but is in fact a shibboleth kind of communication. What we need is to approach this problem in two ways: First, we need to understand this shibboleth strategy and figure out how to take some of the things that politicians say and treat them as loyalty statements, and not as informative speech. Second, we need to demand more from our politicians.  We need to start having agreed upon standards for political discussions and it is best to set these clearly and before we get too deep into the election season, and ideally before the next debate.

P.S. Obviously, the problem of shibboleth is only limited to US politicians, and in other countries (Israel, UK, Brazil to name just a few) people, politicians, and social media are immune from this problem, but even so, it is useful to understand shibboleth and think about it as we go about consuming and producing information.


If you would like to read my new book MISBELIEF, this page includes an option to order a copy for yourself + a copy to be donated to an educator.  The book can also be found at Amazon, Bookshop.org, Audible, BAM, or Barnes & Noble.

Happy Birthday to MISBELIEF

September 19, 2023 BY Dan Ariely

Hello to All!

Today I am celebrating the release of my new book MISBELIEF: What Makes Rational People Believe Irrational Things.  I hope you will find this topic as interesting as I have, and get a book, and learn about what I describe as a psychological machine that influences people’s beliefs and changes them, sometimes in a way that is very difficult to understand. If you are curious about this book, you can learn more about it here and here.

If you decide you want to read the book, this page includes an option to order a copy for yourself + a copy to be donated to an educator.  The book can also be found at Amazon, Bookshop.org, Audible, BAM, or Barnes & Noble.


About my new book, MISBELIEF

August 21, 2023 BY Dan Ariely

Hello hello,

I am happy to announce that on September 19, 2023, HarperCollins will be publishing my new book MISBELIEF.

In the early Covid days, I had the misfortune to experience first-hand how it feels to be brutally attacked by people who believed that Covid was a plot designed to destroy humanity. One of the results of this experience was my fascination with the process by which people adopt beliefs that are patently untrue about other individuals, the news, and institutions. This book is partly a description of the people and experiences I encountered along my journey. But mostly it’s an explanation of the psychological machine that takes people and changes them in ways that seem difficult to understand. A psychological machine I call “the funnel of misbelief.”

You can learn more about the book here and here. If you decide you want to read the book, this page includes an option to order a copy for yourself + a copy to be donated to an educator.  The book can also be found at Amazon, Bookshop.org, Audible, BAM, or Barnes & Noble.

Here are some kind things that people have said:

“In this thoughtful, moving and well-written book, Dan Ariely narrates his personal and professional journey to understand the world of misbelievers and conspiracy theories, and offers insights and tips that will hopefully help all of us protect our fragile social fabric from being torn apart by disinformation and distrust.”
– Yuval Noah Harari, Bestselling author of Sapiens

“Misbelief is an urgent examination of the human attraction to misinformation. This timely book can provide a crucial foundation for building a more empathetic and informed society.”
– Daniel H. Pink, #1 New York Times bestselling author of The Power of Regret

Once again Dan Ariely writes in a way that gets us to think and reflect about our human nature. In Misbelief, Ariely helps us understand the nature of our opinions, how they’re formed, and how the forces of misinformation can distort them. This is an important book for those who want to understand themselves and the increasingly complex world around us.”
– Arianna Huffington, Founder & CEO, Thrive Global

“For most of us it is tempting to think that people misbelieve things because they are uneducated, unintelligent, or misinformed. But as one of the world’s leading scientists studying beliefs, Dan Ariely, convincingly demonstrates in this important book (and as he discovered first hand in being wrongly accused of leading a nefarious conspiracy!), Misbelief is a process to which any of us can fall prey. More importantly, he offers science-based suggestions on what we can do about the polarization and breakdown in trust that comes with Misbelief.”
– Michael Shermer, Publisher Skeptic magazine and author of Conspiracy: Why the Rational Believe the Irrational

 I hope you enjoy the book.

Irrationally yours,


Introducing My New Book: MISBELIEF

July 23, 2023 BY Dan Ariely

I have a new video introducing my new book!


Dan Ariely's MISBELIEF Book Image

Or you can view it on YouTube.

The book will be out on September 19th, but you can pre-order it here https://misbeliefbook.com