Why Behavioral Economics Is Cool, and I’m Not- great piece by Adam Grant in HuffPost – Grant is a behavioral economist and best-selling author, his most famous book – Give and Take: Why Helping Others Drives Our Success
Here are some of my favorite surprising studies. What do they have in common?
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• People are more likely to buy jam when they’re presented with 6 flavors than 24.
• After inspecting a house, real estate agents thought it was $14,000 more valuable when the seller listed it at $149,900 than $119,900.
• When children play a fun game and then get rewarded for it, they lose interest in playing the game once the rewards are gone.
• People conserve more energy when they see their neighbors’ consumption rates.
• If you flip a coin six times, people think Heads-Heads-Heads-Tails-Tails-Tails is less likely than Heads-Tails-Tails-Heads-Heads-Tails, even though the two are equally likely.
• Managers underestimate the intrinsic motivation of their employees.
They’ve all appeared in the media as research done by behavioral economists, when in fact they were done by psychologists.*
This is a common mistake. As one Nobel Laureate in economics observes: “When it comes to policy making, applications of social or cognitive psychology are now routinely labeled behavioral economics.”
It happens to me regularly: I’m an organizational psychologist, but I get introduced at least once a week as a behavioral economist. The first time this happened before a speech, I attempted to set the record straight, telling the executive that all of my degrees were in psychology. His response: “Your work sounds cooler if I call you a behavioral economist.”
Why would that be? Let’s consider five possible explanations and the evidence for each:
Hypothesis 1: Behavioral economists are hotter than psychologists.
Survey says: false. In a study of the physical attractiveness of professors in 36 different fields, psychologists were #10 and economists were #30.
Hypothesis 2: Behavioral economists do more interesting work than psychologists.
This one is false too. Exhibit A: Daniel Kahneman, the grandfather of behavioral economics and author of Thinking, Fast and Slow is a psychologist. Despite winning his Nobel Prize in economics, he holds a Ph.D. in psychology and has been a psychology professor for his entire career. Exhibit B: Dan Ariely, a leading scholar in behavioral economics and author of Predictably Irrational, has multiple degrees in psychology and zero in economics.
Hypothesis 3: Behavioral economists do more interesting work than psychologists who aren’t named Dan.