SimonWaldman.net

Loved this. Dan Ariely is a behavioural economist – which basically means…well, I’m not quite sure what it means [find out here ]. But, for the purposes of this book, it means he gets to look at why people consistently do things which are apparently irrational or inconsistent or both.

Like – why some people are more motivated when they’re not being paid for something (it’s all about market norms and social norms you see), or why we’re prepared to pay so much for a coffee (it’s about anchors), or whether men say one thing, but then do something else when sexually aroused (no shit, Sherlock!).

So – this neatly slips between Freakonomics (which I didn’t think was that great) and Tim Harford’s ‘The Undercover Economist’ (which had me wishing I’d done Economics A level – and yes, while I’m in this vein, I’m just about to start The Logic of Life – which I suspect will have a fair amount of crossover).

Anyway – my favourite bits.

• His description of social norms and market norms. This explains why it’s generally not a great idea at the end of Christmas dinner to say to your mother in law who cooked. ‘That was delicious..how much do we owe you, will £50 be ok..?’ (because she is working under social norms); while it’s similarly not a great idea to waltz out of a restaurant giving the owner a kiss and saying you had a lovely time but not paying (because s/he is operating under market norms). I simplify this hugely – but it’s obvious that some of the great culture clashes on the web are actually the collision of social and market norms.

• He is great on pricing. Full stop. The first couple of chapters on comparability and the ‘fallacy of supply and demand’ should be read by anyone who has to cook up a price point for anything.

• He also points out the compelling attraction of ‘free’ – and that zero is not just another price point (yes, lots more where that came from).

• He gives the example of students at Duke university getting hold of ultra rare basketball tickets, and then creating a market for them. The owners think they should sell at $3000. The buyers think they’re worth about $170 – and under the banner of the ‘high price of ownership’ – basically we overvalue our stuff (as anyone who has set up stall at a car boot sale will realise).

Anyway – I suspect proper economists might deem this sort of thing too pop to be meaningful, but I found a few of the insights both new and profound. Thoroughly recommend it. Buy it here.

Also – a full interview in NewsWeek.