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Dan Ariely on his Books, his Work and What Makes Him Tick

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My guest today is Dan Ariely, James B. Duke Professor of Psychology and Behavioral Economics at Duke University. Welcome to OpEdNews, Dan.  You've written several books in recent years, Predictably Irrational and The Upside of Irrationality, that explore how and why we make decisions. In the latter book, you share how a three-year stint in the hospital [because of severe burns] changed you and steered you toward your current career. Can you tell our readers about that?


Photo credit: Advanced Hindsight

The hospital changed me in many ways. I think one of them is it made some questions become very salient to me. So, for example, I became very interested in the question of how you remove bandages from burn patients, which is not a question that anybody would ask unless you really have to deal with this. And I asked the question: should you remove bandages from burn patients quickly, to minimize the duration, but at the expense of each second being very painful; or should you take them off slowly, taking a long duration but having each second not as painful. Which one is better?

I asked other questions.  I asked questions about placebos. At the time I was in the hospital, there was a limit on how much pain medication they would give us. And each could decide when we want our medication. And sometimes I would see patients who were getting more than their fair share. And I would ask, "How come?" And they told me that these were placebos.

So, there were questions like this that started to pique my curiosity. How do we do things the right way? What are the mistakes we make? What are some of the human tendencies?
With the bandage removal, by the way, I did lots of experiments and I found out that this was the wrong approach. The right approach would have been to worry about the intensity, not the duration, to make the treatment longer and not as painful.

The second big change in me was the fact that I was taken out of the cycle of life and I was put aside. For a long time, I couldn't function like other people in society. And I started looking at all kinds of things from a different, external perspective. You know, I couldn't do simple things like getting out of bed and eating (I was being fed by a tube for a long time). When you take this side view to life, all of a sudden, everything looks very, very  different. This was another very, very important change that happened to me. And I started looking at life as an outsider.

I think that's actually something that stays with me. Even now that I'm part of society in nearly every aspect, I still have some of this perspective of looking at things from a slightly outside perspective which is not a lot of fun as a member of society but it's a very useful thing as a social scientist.

In your first year of college, you took a class on the physiology of the brain. Both the topic and your professor had a profound impact on you. Can you talk about that a bit?

My first class on the physiology of the brain had a really important impact on my life. The teacher's name was Professor Hanan Frank. When he was 18, he went over a land mine and both of his legs had to be amputated. First of all, it was amazing for me to see how he took his personal interest in pain and made it into his professional interest. He was a pain researcher, mostly working on brain mechanisms, how the brain understands pain. It was also interesting to figure out how the brain understands pain, and how complex it really is. It's something we feel and it's so prominent and clear and nevertheless we don't really understand. The next influence he had on me was that any time we asked a question, he didn't just say "yes" or "no". He basically said, "How would you test it?" This was really very interesting to think about how would we use all the methods we have to try and answer something. And I love that approach.

I love that approach of trying to come up with methods even though we were only first year students. And the last thing is this was my first venture into experimental research. So, one class I had a particular idea for how epilepsy might develop. It was something that had to do with the relationship between the central brain and the spinal cord. And he actually liked my idea. And we designed a method to test it that had to do with putting catheters in the spinal cords of rats and trying to create an epileptic seizure in the central brain and to prevent it in the spinal cord. At the end of the day, it turns out that the result did not pan out; my theory was wrong.

It also turns out that I couldn't really operate. My hands were so bad that operating and cutting rats was not something I could do. But this idea of doing experiments and trying to figure out things this way was incredibly interesting and addictive to me. So, I think that this was when I became an avid proponent, or maybe addicted to, the experimental method. With this idea that anything that you think about life - almost anything - you could come up with an experiment and maybe not get the full answer to what you're asking but at least the partial answer. That was very exciting for me.

Actually, I did forget one thing about him. We also had lots of discussions about pain. One of the things we discussed: One day, I came back from the dentist and I told him that I did not take novacaine at the dentist. And he said that also since his injury he didn't take novacaine at the dentist. And we started wondering if we were the only people who had serious injuries and then don't care about pain. And that led to another project which we did. We went to an army veteran place, it's like a country club for people who got injured in the army. And we tested the pain threshold and tolerance of people with different injuries. And what we found very much supported our subjective feeling that people with severe injuries just did not care so much about pain. It's not that they didn't feel the pain; they just didn't care as much.  I think it has to do with the fact that once you have a lot of experience with pain, you basically learn to accept it. You don't worry so much about the signal and perhaps even start appreciating it for its value.

Your last statement intrigued me, Dan. What is the value of pain that you refer to? How can pain be a good thing?


Play aka work: Lego Bionics, used for experiments on motivation and de-motivation [see his second book , The Upside of Irrationality: The Unexpected Benefits of Defying Logic at Work and at Home]  (Photo credit: Advanced Hindsight)


Pain is a signal.  It's a signal for something happening in the body.  I think it's a signal most clearly for something going right, for athletes.  There are people who are saying, "If it doesn't hurt, it's not working". Or, you feel a sore muscle at the end of a  training period and you feel good about it. So, there are cases where pain is giving you an indication that something is working or that you've done something. But I think that for people with my kind of injury, there are some similarities. This is not like exercising but, if you think about it, pain is generally associated with treatments that are about getting better:  physical therapy, operations, occupational therapy. Even the bath treatment, right? Every one of them is, hopefully, about improvement. For some people, of course, more pain means closer to death or deterioration. But there are types of injuries where pain is indicative of recovery, that someone is getting better.

Over the years, you and your colleagues have done a lot of very interesting experiments that examine human behavior. Besides for satisfying your curiosity, what practical application does all this experimenting have? If our behavior is basically irrational, and subconscious to boot, how does having that confirmed help in any way?

I think that the experiment does help with personal curiosity. But I think that one of the most wonderful things about social science is that it's the science of everyday life. Once you understand how we work and how our environment works to influence us, there are a lot of practical lessons to take from this. And this goes all the way from how we behave in shopping environments and what we are influenced by,  to trying to understand the emotion, to trying to understand happiness, to trying to understand the psychology of money interpretation, to thinking about procrastination. Of course, in my last book on dishonesty, it has to do with trying to understand conflicts of interest and trying to also understand what is the right way to regulate banks and institutions in general.

So, if you think about it, I think there are basically three lessons: there are lessons to individuals on how we lead our lives. There are lessons for companies about what kind of products and services they should create. And there are lessons for regulators about what they should try to regulate in the market. There are a lot of examples - obvious, but maybe I'll just give you one from each. If you think about consumer behavior, one of the things we learn is once people make one decision in one category, other decisions are likely to follow.  Another example, one of the things we're learning, is that it's very hard to think about the "opportunity cost" of money. Every time you buy a cup of coffee or a piece of fruit, you should be thinking, what am I giving up? What is this money costing me in terms of other things that I could buy? That's the opportunity cost.

But it turns out that it's very, very hard to think about  opportunity costs. So, because of that, people don't. We just think about things like relative pricing, or discount pricing, or something else. But if you train yourself, there are ways to think about things in exchange. If you just say to yourself, "Is this new car worth $30,000?" that's very tough. How do you figure out if it's worth it or not? But, if you try to make it concrete, saying, "Is this worth not going on seven vacations over the next seven years?" it gives you a better way to try to reason about it. Now, that's on the individual level. At the company level, I think there are many cases in which companies create products that are not very suitable for people. I think that online dating is the classic example for this, where we decide on a dating site the way that is easy for our computers to search but not easy for people to use. I can describe to you hundreds of people: their height and weight, eye color, religion, income and all kinds of other things but this would not give you any sense in terms of who they are and whether you'd like to have dinner with them or like to snuggle in front of the fireplace. So, it's an example of something, that by not understanding human nature, the design of the product is being ill informed.  

And finally, there's financial regulation. If you think about it, we have a very easy time pointing fingers, and saying, "Oh, these bankers are just terrible individuals. As long as we replace the people who are the head of the banks, everything will be fine." But the reality is that it's not just about this; it's about a system that has very, very sad and misaligned incentives, that creates conflicts of interest, wishful blindness and ideology to wrap it around. And, because of that, it is incredibly hard to behave well. So we can say, "Oh, these are just bad people," but the reality is that almost no matter who you put there, maybe with the exception of Mother Teresa, would misbehave. So, we need to understand where the dishonesty is coming from. How we really prevent it is by eliminating fuzzy rules and conflicts of interest.

Let's talk about dishonesty and those fuzzy rules you referred to.  Can you tell our readers what you discovered about how honor codes and the Ten Commandments affected cheating?

One of the most interesting things we found out was that once people are asked to recall the Ten Commandments, they stop cheating. And what's particularly interesting is this even holds true for people who don't recall almost any of the commandments. So, its not about believing in God. It's about thinking about our moral code. In fact, even when we take self-declared atheists and we ask them to swear on the Bible, they stop cheating.  So, that's incredibly optimistic. Now, in terms of the Ten Commandments, this is just one general instance of a code of ethics. You can think of all kinds of other honor codes. We tried university honor codes, which turn out to work just the same way and I suspect, even though we didn't try it, that standard codes of ethics for different professional organizations would work just the same.

And I think what's going on here is that people basically want to be honest. And the moment we think about honesty and morality, we supervise our own standards to a higher degree. Now, what is also important here is to realize that we don't always supervise our standards of behavior, and to ask, what are the conditions that would make us more likely to do it?  So, we can say, "How do we get people at the moment of temptation to be more conscious, aware and thoughtful?" The other direction is to say it's not direction from the awareness, it's direction from the code of ethics. So, what if, for example, the code of ethics was more strict and clear and the boundaries were more clear?  I think this is incredibly important.

Think about something like Alcoholics Anonymous. Imagine the rule was, don't have more than - a glass a day.  That would be a very difficult rule. Because, what exactly is a glass? All of a sudden, the glasses would be very large. And what if we didn't have a drink yesterday? Could we have two tomorrow? And so on. So having very clear lines is very important. So, if you think about this from both directions, there is the direction of us paying attention to our own morality and our own decisions and behavior and there's the direction of the rules being less fuzzy and less open for interpretation. And I think we need to think about both of those aspects if we want to move forward.  

In The Honest Truth About Dishonesty: How We Lie to Everyone - Especially Ourselves,  you talk  about first offenses and the court's tendency to let offenders off lightly. You come at it from a different direction. Why? Can you elaborate on this critical point? 


Photo credit: M. Lengemann

There is sometimes the view that the first offense is just not that bad. After all, the person is not really a criminal and this was the first time and we all make mistakes and we all should show some leniency. It may be tr ue, but in the other part of the story, what we find is that the best description of dishonesty is what we call "slippery slopes". That people start with one thing and then they continue to the next and continue to the next, and so on. And we usually see big acts of crime and we say to ourselves, "We could never have done that," it turns out that the people themselves never thought they could do that. Instead, what happens is that people take one step and then the next step and the next step until it becomes too bad. And from that perspective, what it really means is that we should stop things early because if we wait too long, the slippery slope would have started. And, because of that, I think we should actually pay extra special attention to the initial act. Now, how much should we punish people, what should we do?  There are lots of questions about it. But for sure we should not just ignore it, because if we make light of it, there's a good chance it will become the first act in a series of negative acts.

So, Dan, have you heard about the judicial system paying any attention to your findings and adjusting their reaction to first offenses accordingly?

Sadly, not yet.

That's what I thought you'd say. You have a have a wonderful time brainstorming and collaborating with your colleagues, coming up with original ways to test your theories.  Can you walk us through the fine-tuning of an experiment, how it goes from being a theory to being a well-thought out experiment that will measure what you want it to?

We do have great times thinking about experiments in general and we think about the general idea. And you know what? It's really interesting to think about what a good experiment is, because an experiment is really an abstraction. If you do a field experiment, then everything about the reality is also in the experiment. When you do a lab experiment, it's really a question of abstraction: it's a question of what will remain and what will not remain in the experiment. What aspect of reality will the experiment represent and not. When you think about it, in economics, when we create a model of human behavior, it's all about incentives and money. When we do experiments in human behavior, we also abstract something. For example, we could say this is about doors, but it's really about options; or this is about jazz but it's really about choices. So, we abstract things. And that's an interesting question of art. I don't know what a good way to think about that is. So, that's an important issue and, then, there's the question of how we fine-tune it. Initially, we have an idea of what the right representation of the experiment is and then we create something and we try it out. And sometimes we learn that this is great and sometimes we learn that we haven't thought about something. People don't understand the instructions, something is abstract, some people don't react to it in the way that we thought. And then we keep fine-tuning it. So, there's some thought, there is some art, and then there is some hard labor, trying to figure it out and the mixture of all of those things changes over time.

If you don't mind, I'd like to go back and dig a little deeper into the concept of first offenses and dishonesty. Can you talk more about the way our minds work so that what might or should be unacceptable behavior is miraculously recast?  What happens that sets that slippery slope into action?

The question about the slippery slope is actually quite simple. Think about an action as a  cliff. You're on one side of the action; it looks like a cliff. But when you pass it, it looks very different. In particular, the moment you pass something, it becomes part of you. And as it's becoming part of you, it becomes much more noble, reasonable, understandable. And then, taking the next step becomes easier and easier. You can think of this as rationalization, or call it dissonance. According to dissonance, it's about how our beliefs are influenced by our actions. The idea is that once you act in a certain way, your action is very clear to you. And you say to yourself, "How could I act this way?" And you change your beliefs so that your beliefs follow your actions. So, a person who has not acted in a certain way can hold beliefs that this action is appalling. But once  he's acted in that  way, this action stands in contrast to his beliefs. This is what Festinger calls dissonance; it's an unpleasant state. Now, you can't change what you have done. It's very hard to erase our memories about what we have done.  So, what we do instead is we change our preferences. So, the moment we behave in a certain way, we define that way as being the better way. Festinger showed that many years ago with a very nice demonstration. He got people to do some boring tasks. And once they were doing these boring tasks, he paid some people a lot of money and some people he paid a little money. The people he paid a lot of many had no problem  saying,  "It's a boring task; I got paid a lot."  The people he paid a little money experienced dissonance. They basically asked themselves, "Why was I doing this? How could I explain that I was doing this?" And they said to themselves, "It can't possibly be that this was boring and I did it for a dollar. Therefore, it must be that the task was more interesting." And they basically changed their opinion to coincide with their behavior.

One of the most interesting and currently relevant experiments you've done concerns the relationship between CEO pay and performance. What did you find and was anything implemented because of your findings? 
 
Photo credit: Dan Keinan 

Basically, what we found about bonuses is that money is a two-edged sword. Money creates motivation but it also creates stress. Now, when we deal with simple mechanical tasks,  think about something like laying bricks, or jumping or doing something very simple, there's no problem.  The stress is not really overwhelming people and higher bonuses lead to higher effort and higher performance. But, what we find out is that when a task requires cognitive skill: thinking, imagination memory, concentration and so on, all of a sudden, more money actually creates more distraction. Why? Because when you have a large amount of money on the line, people think about the amount of money on the line and they don't focus on the task. So, just imagine that you were going into brain surgery and you wanted your surgeon to focus very carefully on your brain. Would you like to offer him a bonus? Would you like him to think 25% of the time about his bonus es or would you rather he focus on the operation? Of course, it's obvious that we want him to be in a state of thinking about the operation and not about the money. So that's basically what we found.

Now, the reality is that people love bonuses; and while they see how this result could work on other people, people have a hard time seeing how they themselves would be distracted. Even the people on Wall Street that I've talked to that basically admit that much of the end of the year they just focus and think about bonuses, and therefore are not thinking about their jobs, even those people don't want to cancel it and they still think it's good. So, what's interesting about bonuses is that we have a very strong theory and the theory is correct about simple mechanical tasks. It's not correct for things requiring thought and imagination and so on. But the people who pay themselves with high bonuses of course don't want to see the reality differently. And in some sense, who could blame them? If there was a way to pay professors with bonuses, I too, would want these extreme bonuses and I too would do my best to try and avoid the reality of how useful or not useful it is.

I should point out that there are lots of other things about bonuses. Bonuses allow for companies to scale up and down salaries, bonuses allow different individuals to make decisions about money. So, they have all kinds of other advantages that are not a part of my calculation. But in terms of providing improvement in performance, I think that's something we should question to a higher degree. So far, I think the only companies that we've dealt with that are willing to question it is when they deal with low-level employees, people who are in calling centers, on the production floor and so on. But hopefully, if we'll spend a couple of years proving how bonuses work at those levels, maybe they'll be willing to take these lessons to higher levels as well.

Your admission about hankering for an extreme bonus yourself is a perfect example of knowing something doesn't work but wanting it anyway or being unwilling to give it up.  So after all these years of examining the way we make decisions, how well have you been able to take your own advice? If not or not always, what kinds of things have tripped you up?

I think there are two separate categories of life. I think there is the category of life of large decisions that happen infrequently and there is the category of life of frequent decisions that we make repeatedly. And I think I've been relatively successful in the large decisions: what house to buy and how to think about commuting and how to think about vacations, what kind of experiences make one happy or not, and so on. So, on the large things, I think I've been successful. Where I fail is the small decisions. If you think about overeating, sometimes drinking too much, texting and driving, and if you think about the repeated behavior, that's where I have difficulty. In my particular case, one of the large challenges I have is the challenge of saying "no". I have a very hard time saying "no". I get about an invitation a day to do something and many of those things are really interesting and exciting and I would love to say "yes" and the people who invite me are kind and wonderful and I think about it, decision by decision. And of course, this is a mistake because I end up saying "yes" all the time and I travel too much and don't sleep enough, and so on. So, I think that when it comes to large things, you can stop things, slow down, make a better decision. When it comes to the small decisions, it's really hard to become more rational. But I think what we need to do is develop better habits. So, in my own inability to say "no", I am creating rules for myself and those rules will hopefully help me lead a more balanced life. But it's a realization that when I face the challenge, I fail, so what I need to do is make sure that I don't face the challenge. It makes me think about free will. Basically, it says, once it is attempted, we're likely to fail; but the version of free will that we have as an individual is the ability to look at life and say, "I am going to fail in these cases; let me make sure that I don't encounter them." And because of that, I'll do better. 
 
Photo credit: Advanced Hindsight 
Halloween, reflecting Dan's interest in bees and their interactions and behavior 

Speaking of your attempts to curb your instinct to say "yes", I'm so glad you didn't turn down my invitation for an interview! Here's my last question, Dan. Despite a devastating accident many years ago and a life full of daily pain and limitation, you clearly enjoy life and you have a very full one: your wife, your family, your work. How have you managed that rather amazing feat?

I don't know.  And I also don't know what separates people who eventually show resilience and people who don't. Actually, the research on that is not clear. I will tell you one thing. There were people with me at the burn center that took the path of being professionally disabled. And they restricted their social circle to other people who were with disabilities. And I think they basically changed their standards of what they expect, what they can hope for; and I never did that. I stayed within the same social circle; I kept the same standards. I didn't change my expectations for myself and I think that maybe that's the issue. I just did not adapt to this life.  And I came from basically comparing myself to people who were not disabled and not injured and that was my standard of comparison. And, on top of that, I think that there was another issue, which is that once you have something really bad happen, it's easier to look at small things and not take them too seriously. I think that has definitely been a part of my life. I just don't take lots of small hiccups on the road too seriously. I don't get too upset about a lot of things. And I think that helps. From that perspective, I think that having an injury like mine which is memorable and observable and easy to see and easy to remember actually has, ironically, a positive effect. Because it's easy for me to imagine the counterfactual - it's easy for me to imagine how much worse things could have been and look at the small hiccups of life, which all of us have and usually affect us to a large degree, with a different perspective.  

I enjoyed this immensely! I can't wait to see what you're up to next, Dan. Thanks so much for talking with me.

***
Dan Ariely   web page 

According to Wikipedia, Ariely's TED talks have been viewed 2.8 million times.  All three of his books have been New York Times best-sellers. He has appointments at the Fuqua School of Business, the Center for Cognitive Neuroscience, the Department of Economics, and the School of Medicine at Duke University. He is also a founding member of the Center for Advanced Hindsight.









 

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Joan Brunwasser is a co-founder of Citizens for Election Reform (CER) which since 2005 existed for the sole purpose of raising the public awareness of the critical need for election reform. Our goal: to restore fair, accurate, transparent, secure (more...)
 
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thanks for another great interview!... by Meryl Ann Butler on Monday, Dec 10, 2012 at 8:37:08 AM
This was one of my most fun interviews yet. Both t... by Joan Brunwasser on Monday, Dec 10, 2012 at 9:36:58 PM
I also noted that you are getting close to a milli... by Meryl Ann Butler on Monday, Dec 10, 2012 at 10:16:48 PM
Thanks for new perspectives from several key know-... by Don Caldarazzo on Monday, Dec 10, 2012 at 12:48:24 PM
Dan doesn't profess to offer advice on the judicia... by Joan Brunwasser on Monday, Dec 10, 2012 at 9:39:57 PM
I'm looking into it now. 600 articles! Bless yo... by Don Caldarazzo on Monday, Dec 10, 2012 at 10:47:03 PM
And it doesn't seem like seven years but it is. Ho... by Joan Brunwasser on Wednesday, Dec 12, 2012 at 9:21:51 PM