Does Irrationality Have an Upside? by Daniel Pink

July 4th, 2010

Does irrationality have an upside?

One of my favorite books of recent years was Predictably Irrational by Duke behavioral economist Dan Ariely. Now Ariely is back with a new book, The Upside of Irrationality, and it’s just as good and, in some ways, even better.

Where the last book focused on how poor reasoning can lead us astray, this one explores dozens of cool experiments that offer some guidance on using our irrational tendencies for our benefit at work and at home. Ariely also threads the book with his own story — especially his experience being severely burned in an explosion as a young man — which gives this book a more personal feel than its predecessor.

Here are five insights (mostly in Ariely’s own words) that I’ve found particularly compelling and that I’ve been badgering people with the last few days.

1. Bonuses can impair performance. “Paying people high bonuses can result in high performance when it comes to simple mechanical tasks, but the opposite can happen when you ask them to use their brains.” (Careful readers will note that I wrote about one of Ariely’s experiments on this front in Drive.)  “[T]hough a large amount of money would most likely get you to work many hours (which is why high payment is very useful as an incentive when simple mechanical tasks are involved), it is unlikely to improve your creativity.”

2. Seeing the fruits of our labor is inherently motivating. In an experiment where people who loved Legos were paid to create Lego figures, having their creation disassembled before their eyes dramatically reduced their interest and their persistence. “[I]f you take people who love something . . . and you place them in meaningful work conditions, the joy they derive from the activity is going to be a major driver in dictating their level of effort.  However, if you take the same people with the same initial passion and desire and place them in meaningless working conditions, you can very easily kill any internal joy they might derive from the activity.”

3. We overvalue what we make ourselves. Airely calls this the “IKEA effect.” But this irrational valuing can actually help us. “[T]o increase your feelings of pride and ownership in your daily life, you should take a larger part in creating more of the things you use in your daily life.”

4. We adapt to new conditions — both good and bad — remarkably quickly.This leads to a piece of counterintuitive advice. “You may think that taking a break during an irritating or boring experience will be good for you, but a break actually decreases your ability to adapt, making the experience seem worse when you have to return to it.” Likewise, it’s helpful to “slow down pleasure” and actually interrupt or space out pleasurable experiences so you don’t adapt to them too quickly.

5.  Acting on our negative feelings can dangerous — even in the long run.“[I]f we do nothing while we are feeling an emotion, there is no short-term or long-term harm that can come to us.” However, if we make a decision based on that emotion, “we may not only regret the immediate outcome, but we may create a long-lasting pattern of [decisions] that will continue to misguide us for a long time.”

That’s just a taste. Read the whole book. (You can buy it here, here, or here.) It will be one of the most rational decisions you make this summer.