Behavioral economists investigate the irrational side of human decision making. But why are humans “irrational” in the first place? In The Rational Animal, Arizona State University Professor Douglas Kenrick and University of Minnesota Professor Vlad Griskevicius delve into the evolutionary reasons for humans’ seemingly dim-witted choices. NerdWallet Recently spoke with the authors to discuss their new book.
When and how did you decide to write the book together?
Griskevicius: Doug is an evolutionary psychologist and I am a business professor. The two of us have published many scientific studies revealing the evolutionary psychology of consumer behavior. We had shared a lot of those findings with our colleagues at other universities. But one day over lunch, as we were discussing the everyday practical implications of all these findings, we realized that there was a need for a book painting the big picture for readers who were not in academia. We wanted to tell a story connecting our own colleagues’ research findings with work by other psychologists, economists, decision scientists, biologists, and anthropologists, and to do so in a way that would appeal both the experts and to educated laypersons. In this book, we try to paint that wider canvas in a colorful way, showing why an intimate familiarity with our inner Rational Animal matters to business leaders and working stiffs, to armchair economists and their real-world counterparts, to politicians and their constituents, to teachers and to those of us who still have a lot to learn.
Throughout the book, you offer a series of personal and self-deprecating anecdotes showing how you yourselves are rational animals. What are your favorite examples?
Griskevicius: I emigrated from a poor Communist country (Lithuania), where I once stood in line for four hours to buy my first banana. Just after I first landed in America on a Pan Am jumbo jet, I was taken to a giant supermarket where I could choose any one item. My first purchase as a newly minted capitalist was to buy a pack of Bubblicious watermelon bubble gum. And as for that banana I stood in line for four hours to buy back in the old country, I ate it with the peel still on, thinking it would be downright stupid to throw away any part of so desirable a delicacy.
Kenrick: I am a risk-averse investor who carefully protected his paltry retirement savings by putting them into safe investments. After watching my retirement account grow sluggishly while the stock market shot up, I transferred a large portion of those funds into the stock market in 2001, just in time to participate in a couple of historically unprecedented crashes in stock values. Unless this book makes the New York Times best-seller list, I’m now planning to retire some time after my 79th birthday, probably to a small hut in rural Ecuador.
How do you think your book deepens the study of behavioral economics?
Kenrick: The book takes an evolutionary look at our irrational biases, revealing that rather than being design flaws in the mind, our biases are actually design features. This new perspective provides two important insights into behavioral economics:
Insight #1: Human decision making serves evolutionary goals. The traditional way of thinking about human behavior is based almost completely on a consideration of people’s surface goals – to get a decent bargain on a pair of dress shoes, for example, or to pick a fine restaurant for my date next Saturday. But humans, like all animals, evolved to make choices in ways that promoted deeper evolutionary purposes. Once we start looking at modern choices through this ancestral lens, many of our decisions that appear foolish and irrational at the surface level turn out to be smart and adaptive at a deeper evolutionary level.
Insight #2: Human decision making is designed to achieve several very different evolutionary goals. Economists and psychologists have often assumed that humans seek a single broad goal – “to feel good” or “to maximize benefits.” But in actuality, all humans pursue several very different evolutionary goals, such as acquiring a mate, protecting ourselves from danger, and attaining status. This is an important distinction. Depending on which evolutionary goal is currently consciously or subconsciously on your mind, you will have very different biases and make very different choices.
How does our environment influence our decision-making?
Kenrick: Our environment activates different evolutionary goals. How are we going to allocate our limited cognitive processing capacities? The answer depends on which important evolutionary threats and opportunities are currently on the horizon. If there is a threat to your life, obviously, you do not keep pondering your retirement investments. Likewise, a mating opportunity is likely to radically change the way we process information. We have found that the classic economic “loss aversion” gets more extreme when people are worrying about dangers, but goes away for men thinking about trying to attract a woman. Indeed, we inherit a set of intrinsic priorities that change the way allocate our attention and how deeply we think depending on those fundamentally important goals. This implies that our choices are subconsciously guided by those deeper evolutionary goals. And it suggests something even more radical: that there’s more than one “you” making decisions. Although it feels as if there is just one single “self” inside your head, your mind actually contains several different Subselves, each of whom has a specific evolutionary goal and prioritizes things in completely different ways. You make decisions differently when your goal is wooing an attractive mate, versus fending off the bad guys, versus climbing up in the local status hierarchy.
I enjoyed your chapter on social parasites. How can people avoid being tricked?
Kenrick: From con men to company men, many conspirers seek to exploit our evolutionary tendencies. How can you determine if you’re dealing with a social parasite bent on exploiting you? It can be difficult, but there are three things that you can do to protect yourself.
Know Thine Enemy. If you begin to feel like something is a little fishy, ask a simple question: Is the other person really what he or she appears to be? Exploiters will often tell you that they are just like you. But before taking them at their word, it pays to look a little closer. When the cuckoo lays its egg in another bird’s nest, it too attempts to mimic the egg’s appearance to look like that of the other bird. But the egg will rarely be completely identical to the real bird’s egg. If the victimized bird takes a closer look, it will recognize the fake. In fact, many victims successfully spot the parasitic egg and throw it out of the nest before any damage can be done. Likewise for us humans. Even if someone seems to be just like you, unless he is your identical twin, your interests don’t completely overlap. Taking a closer look at that opportunity that seems too good to be true will likely reveal that it is.
Know Thy Situation. If you are feeling compelled to spend a lot of money, sign on the dotted line, or make some big decision, ask yourself: Have I been primed to feel this way right now? Exploiters will often first prime in their unsuspecting targets the specific subself most vulnerable to their pitch. Before trying to sell you a “rare” diamond ring costing two months of your salary, for example, a social parasite might activate your Mate Acquisition subself, for which the opportunity to part with thousands of dollars for a scarce rock might seem perfectly reasonable. But the same decision might seem ludicrous to your other selves, who are being intentionally shut out from the current decision process by a manipulative exploiter. Even if it at that moment something feels like the smartest decision in the world, the best advice is to wait and sleep on it. By giving yourself a little more time, you enable your other subselves to ponder the decision. Something that seemed like a no brainer one day might look foolish the next. And by waiting, you won’t be the fool.
Know Thyself. Finally, if you find yourself really wanting something you can’t afford, ask yourself a deeper question: What evolutionary need is this purchase attempting to fulfill? The answer will often come back to one of our seven subselves. For instance, your yearning for that expensive family trip to Disney World likely reflects a need to be a good parent, and that pricey diamond anniversary ring reflects a need to be a good spouse. Realizing that our material desires reflect deeper evolutionary needs provides an important insight: Before maxing out your credit card, consider alternative ways to achieve the same evolutionary need. Usually there will be plenty of options. Rather than taking your kids to Disneyland, the need to be a good parent might be equally fulfilled by spending some quality time with your kids (one of our wives is fond of noting that “love” is spelled T-I-M-E not C-A-S-H). And rather than buying a diamond ring for your anniversary, the need to be a good spouse might be equally fulfilled by telling your partner a heartfelt “I love you” and expressing why he or she means so much to you. Our brains are wired not to seek material goods, but to fulfill evolutionary needs. And just like our ancestors, we are fully capable of fulfilling those needs without draining our bank accounts.
What advice do you have to individual investors?
Griskevicius: Rational self-interest is not in your self-interest. The classic economic model of decision making presumes a mind designed to maximize self-interest. It applies well to interchanges involving Wall Street traders or consumers buying used cars from strangers, but is surprisingly inappropriate in describing how most people make most of their important decisions.
Contrary to what many psychologists and economists used to believe, market economics is the wrong way to approach most of the decisions you make on a day-to-day basis. This is not only true of your interactions with your friends, family, and most of the people you know and care about, but it also applies to your decisions on the job. Your workday life will be a lot more livable if you do not deal with your bosses, workers, or peers like you’d deal with a stranger haggling over the price of a used car. Even research on economic games finds that students trained in economics actually make less money, shooting themselves in the foot with selfish choices that irritate other people who would otherwise cooperate with them. Merely calling a game the “Wall Street Game” led people in one experiment to cooperate less, and walk away with fewer rewards in their pockets. Instead of asking what your friends, neighbors, and business associates can do for you, try asking what you can do to make them more like family. You may find they enjoy doing business with you more than if you negotiate hard over every nickel and dime on the restaurant bill.
You provide insight not only on how people make financial decisions, but personal ones as well. Do you have any advice on how people should find mates?
Kenrick: We have done a bit of research on how people choose mates, and have found a few interesting sex differences in the men’s and women’s mating psychology, some of which profoundly change what the two sexes prioritize in choosing mates. We have a whole chapter in the book on “his and hers” sexual economics. Around the world, for example, men place higher value on youth and physical attractiveness, and women place more value on status and resources. Our own research, and that of our colleagues, has also suggested that men and women negotiate relationships differently, especially at the early stages – when men are seeking to escalate sexual intimacy, and women are seeking signs of long-lasting love. There are lots of practical implications of understanding how all this works, but here are a couple. First, beware the influence of unreasonable standards on your own mate choices. We have found that exposing yourself to the beautiful models and actresses in the media can make men dissatisfied with the real women they actually have a chance with, and that the same can occur for women who see all the powerful and wealthy men in the media. Although the media can be like mind-candy for our mate-seeking mechanisms, they can, like too much Ben ‘n Jerry’s ice cream, have some negative effects. So, if you’re looking for a mate, take a vacation from the media for a while, and you’ll be more satisfied with your actual choices. Second, the most desirable members of the opposite sex are also desirable to others, so if you manage to “catch” someone who is above your own mate value, be ready to pay some costs. Extremely handsome men, for example, are more likely to get sexual offers from other women (and men are notoriously bad at resisting such offers), so another reason to pick someone whose market value is close to your own, they will appreciate you more.
Any other life advice?
Griskevicius: Don’t assume other people are morons. Behavioral Economists have uncovered a host of ways in which people’s decisions can be oversimplified, self-defeating, and biased. If you read about this research, it’s easy to chuckle at the foibles of human nature. And it turns out that we humans suffer from one especially strong bias – we secretly believe that it’s other people who are the fools, whereas we think of ourselves as thoughtfully brilliant geniuses. The theory that people are eminently rational applies to us, but the theory that people are irrational applies to them.
But the more deeply we look, the more we realize that people’s decisions, though sometimes foolish and irrational at the surface, are often driven by subconscious programs that make deeper evolutionary sense. Even when the person making the decision can’t explain the evolutionary logic behind it, humans have evolved to make decisions in ways that are typically good for our evolutionary interests. So while you shouldn’t assume that you yourself are an omniscient Econ, it will serve you well not to assume that other people are self-defeating Morons.
This is not to say that our evolutionary tendencies will always steer us correctly. Our adaptive rationality is geared to the ancestral, not the modern world. In many ways, we’ve designed the modern world to reflect our ancestral needs (we use our iPhones and automobiles to keep in touch with friends and families, for example). But there is sometimes a mismatch between our evolved inclinations and the current environment, as when those Bernie Madoff-style parasites exploit our inclinations toward familial trust. An evolutionary perspective helps us identify where we should expect these kinds of mismatches and how to work around our automatic reactions when they might get us into trouble. So respect your Inner Chimp, but also read Consumer Reports.
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