MIT's Ariely Tells Economics To Behave

We think we know what we like, but we really only have a vague idea, claim Ariely. When we're telling people what we prefer, we're usually generating those preferences on the spot and pretending that we've always thought so. So our preferences can be moved around by framing how they're generated. Most of us can give three reasons why we like something a lot, but ask for ten reasons, which taxes us cognitively, and we begin to get the impression our passion is coming up short.

Two questionnaires using the same 1-9 frequency bar for times you floss daily or times you floss monthly create different responses. Asking people if they floss 1-9 times daily makes people who floss daily feel like they're on the "low" end. With the monthly version, people who skip days almost always feel reassured at being on the high end. The bar is arbitrary, but in context, people expect it to be meaningful.

We're always looking around for cues that help us make immediate, relative decisions, rather than absolute, for-all-time commitments. Whatever information is at hand, we use, whether it's relevant or not. Ariely has done a study where asking people to think of a number led to differing bids on a subsequent auction. The number had nothing to do with anything, except that it was fresh in their minds, and it became an "anchor" relative to which prices seemed high or low.

Or there's the study where students looked at two pictures of person A and person B, and were asked which one they'd like to go out with. People expressed whichever preference until a third picture was added: this was an "uglified" version of person A. The relative information that person A was more attractive than their ugly doppelganger made them more attractive than person B, too.

Though we can arbitrary about the information we use to make decisions, once we've made them, we're consistent. Ariely calls this self-herding: "It's as if you're standing in line behind yourself," and you copy whatever the person in front of you did. After a few $3 lattes, you stop deciding to spend $3 on a cup of coffee, and just pay up.

There's a similar coherence to our vices--most people will lie, cheat, or steal a little. Just a little, so a we can fashion a self-serving excuse. Everyone has a reason for what they do, especially if they know it's wrong. (The concept of "wrong" itself needs activation from time to time--students cheat less when they are asked to reflect on moral behavior first.) Curiously, our cultural fetish for cash money affects theft. Ariely has a bargain-basement experiment where he'll leave $1 Coke bottles in a fridge vs. $1 bills. The Cokes walk off, the cash stays put.

(We think that things have membership in both the social and market economies--we're all taught to share things. People may unknowingly "loan" you things all the time. But cash is first and foremost an element of the market economy. No one shares a dollar bill.)

Where we're not coherent is when we're emotionally aroused. Virtually no one in a relaxed, rational frame of mind can predict their behavior in an aroused emotional state, which invalidates "just say no" approaches. (And explains why old-fashioned modesty seems so repressive--the idea was not to get aroused at all. But that's a high-stakes game.)

Because this is Seattlest, we'll close by discussing what all this has to do with beer. There aren't that many ways in which these cognitive structural processes operate differently for different people. But cultural environments can give different cues. In the U.S., blind taste testing showed that most people liked the same kind of beer. But when ordering in public, people also liked to demonstrate their individual taste by not getting what someone else was getting. In Hong Kong, where individual taste isn't such a heady brew, tastes converge in public situations.

And so, as Linda Ellerbee used to say, it goes.