As children we are often irrational, cruel, unforgiving, crying, screaming, laughing, and very irresponsible. I remember how I tried to rip my brother off on regular basis proposing shaky deals to make his toys mine. I remember screaming and cursing at my parents for no reason (in retrospect), I remember running through the house being frustrated, and I remember drinking so much beer when I was a bit older that I offered the sink in the upstairs bathroom a taste of the insides of my stomach. In the field of economics humans are considered rational beings. When you say A you do A. When you did that one time, you will do it another time as well. Children though, are far from capable of thinking and acting this way. Look at me as a child. However, are adults really that different?
If somebody scratches the screen of your television do you get angry? Have you ever screamed at somebody cutting you off in traffic? Have you ever drank alcohol and driven your car home anyway? All these things we would be able to explain when we are kids, but adults?
As adults we have developed prefrontal cortex, the part of the brain that is at the front of our skull, and is supposedly what makes us the most awesome animal on earth. However, why do we get in the car when we drank alcohol, even though we know the risks will never outweigh the cost? Why do we get angry when something material breaks down, even though this emotional state gets us far from what we want. And, why do we wage war across the globe, when this consequently, instantly or ultimately backfires?
In his books Predictably Irrational and the Upside of Irrationality, behavioral economist Dan Ariely seeks to answer questions like these. Behavioral economics reasons that, unlike in the field of economics, humans are not rational. Humans are influenced by tons of factors like emotions, social norms, and relativity that make us a lot more irrational than most animals.
The crux lies in the fact that we are usually unable to recognize that we are limited in such profound ways. At the same time we have constructed our society with ourselves on top of the world, that it is hard not to think that we are gods, compared to all other animals on this planet. This failure to recognize our own limitations makes it only more plausible that we cut ourselves short.
The most important thing I learned from reading the books on irrationality is that human behavior is always subject to relativity. I believe this subject is so powerful because it makes a difference every day.
You walk into a store to look at shoes. You see two different pairs of which one is on sale. This is amazing, you are definitely going to buy these because you like them and they are cheaper than the other pair. However, did you need shoes in the first place?
I remember when I was traveling through Uruguay. There is this beautiful place called Cabo Polonio which is a protected area at the coast. Beautiful beaches, sandy roads, and only accessible by walking 10km or a half an hour off-road truck ride. Obviously this place is very expensive. After I continued hitchhiking and ended up at an Eco Camping the day after. Even though it was cheaper than Cabo Polonio, my friend considered me crazy. She had booked her stay at Cabo Polonio earlier and had payed a lot less.
You are selling your car, your customer bargains a €100,- discount, however you still earn €5000,-. Then when you walk into the supermarket and you are not buying the strawberries today because they are €1,-, more expensive than normal.
This relativity is being used on us all the time by marketing companies making us buy stuff we don’t need. Therefore to be aware of this, might not only make decisions more satisfying in the long term, it might also save you a couple of bucks.
Next time fight a bit harder to keep the price of the car you are selling up, and buy the strawberries. The next time you walk into a store compare the clothes with what is hanging in your wardrobe at home instead with what’s on offer in the store. And, the next time you start fighting with your spouse over an unorganized living room, zoom out and wonder what would you like your interaction with the other to be like in this very moment, instead of going berserk over an easy to solve issue.
Failure to Consider Human Adaptability
This fascinating concept I had never really considered but is truly remarkable. I for myself realized that I have very little trouble traveling alone, living abroad, learning new languages, and taking on the challenge to integrate in different places. Nevertheless, plenty friends, family and others I know regularly comment “that they could never do that”.
In his books Dan Ariely uses his own example being severely injured after being hit by an exploding magnesium flare. After this he never managed to live without pain. Particularly his right arm has never fully recovered. At the time the doctors proposed amputating the arm and installing a prosthesis. He decided not to, as he could not see himself live without the arm.
Now imagine the last time you lost a loved one or you broke up. This usually is accompanied by grief, confusion, and often also hopelessness. “How can I live without this person?” you wonder. Over time however, the pain gets less, and life continues.
If you would have taken your adaptability into account at the time, what would the situation have looked like?
Or on a more material note – remember when you bought that awesome new Iphone with retina screen, the most beautiful on the market. Two weeks later however, you drop your new phone and there is a giant crack in the screen. First you are angry and frustrated, but 4 months later you are still walking around with that crack in you screen.
Take Home Messages
Once you realize that you are probably more capable of adapting to difficult situations life should already become a bit brighter. Similarly if you manage to zoom out at any moment of comparison – is this what I want to compare or should there be other factors included?
I am a firm believer of the fact that once you know your limitations they are easily dealt with. Only being aware of them already makes a huge difference, at the same time this allows for using them. Ultimately, I know this will create freedom.