Most people don’t know what they want and don’t know that they want it-until they see it and the reptilian brain kicks in.
“Everything is relative,” writes economist Ariely (Behavioral Economics/MIT), “and that’s the point.” His book, a cousin to Freakonomics and The Long Tail, is a spry treatise on how the world works and how we spend our money based on other people’s rules. Knowing that everything is relative, says Ariely, a merchandiser will display a 19-inch television next to 26-inch and 32-inch models, the prices progressing from $210 to $385 to $580, with the point being to sell the nicely profitable, nicely midsize model first. Of course, because we want more relative to what we have, that merchandiser will hope to see us again, now clamoring for the bigger, more expensive model. Thus the economy chugs along, and thus our credit debt deepens. When the time comes to buy that bigger goodie, then we will respond to an “anchor price” that somehow worms its way into our mind. This is the same anchor price that leads us to think that a four-dollar cup of coffee is acceptable, and after doing it once, we do it again, for we now “assume that this is the way you want to spend your money.” Is it? Maybe not, but people are funny creatures of habit, and it is for all of us that Ariely has a brilliant solution to a problem that is very real: “a self-control credit card that would let people restrict their own spending behavior,” categorically and overall, fixing, say, grocery spending at $200 a week and coffee spending at $75 a month. Fat chance of it catching on, he allows: After all, the credit-card companies make $17 billion a year in interest charges. They know our irrational ways, too. Make a point of seeing this book. That way you’ll know you want it, and you will.

Radio In Vivo Jan 30th 2008 Radio Show

George Akerlof, Nobel Laureate in Economics, 2001 Koshland Professor of Economics, University of California at Berkeley

Jerome Groopman, Recanati Professor, Harvard Medical School and author of “How Doctors Think”

Daniel Gilbert, Professor of Psychology, Harvard University and author of “Stumbling on Happiness”

Daniel McFadden, Nobel Laureate in Economics, 2000 Morris Cox Professor of Economics, University of California at Berkeley

Kenneth Arrow, Nobel Laureate in Economics 1972, Professor of Economics Stanford University.

Geoffrey Moore, author of “Crossing the Chasm” and “Dealing with Darwin”

Nicholas Negroponte, founder of MIT’s Media Lab and founder and chairman of the One Laptop per Child non-profit association.

David A. Ross Director emeritus, San Francisco Museum of Modern Art and Director emeritus, Whitney Museum of American Art

Dafna Ariely, Dan’s mother

James Surowiecki, author of “The Wisdom of Crowds”

Yoram Ariely, Dan’s father

Sumi Ariely, Dan’s wife

Wenda Harris Millard, President, Media, Martha Stewart Living Omnimedia

Alan Kay, President of Viewpoints Research, winner of the Turing, Draper, and Kyoto Prizes

Vince Barabba, Chairman, Kings County Ventures and Market Insight Corporation

Daniel Kahneman, Nobel Laureate in Economics, 2002 ugene Higgins Professor of Psychology and Public Affairs, Princeton University.

Jack M Greenberg, Chairman, Western Union Company, retired Chairman and CEO McDonald’s Corporation

Paul Slovic, founder and President of Decision Research

Charles Schwab, Chairman and Ceo, The Charles Schwab Corporation

Chip Heath, Co-author Made to Stick, Professor Stanford Graduate School of Business

Chunka Mui, Fellow, Diamond Management and Technology Consultants, and co-author of Unleashing the Killer App.

Michael Ruhlman, Chef, journalist and author of, among other books, The Elements of Cooking: Translating the Chef’s Craft For Every Kitchen.