Should we be guided by our head or by our heart? Or is this the wrong question?
If you want to share some of your wealth with others, there are literally thousands of charities that are happy to take your money and distribute it to the needy on your behalf. But which charity is best? Even if you have a preference for a particular kind of beneficiary you want to support, there are often still many organizations that serve your particular preferred target. How to choose between them?
If you were an effective altruist, you would — as the name suggests — look at the effectiveness of the charities’ work. The extent to which they realize their…
There are many things about which we don’t know much, but that ignorance doesn’t stop us having an opinion
An indoor swimming pool. The smell of chlorine in the air is palpable, and the kids are coughing. You’re not the only person to notice, and another parent asks what you think an acceptable concentration of chlorine in the air should be. You take a wild guess: “4ppm?” The other person seems to be in the know: “It’s 2ppm now,” she says. “Oh, then it should be less,” you state.
There doesn’t seem to be anything amiss with this conversation. You are not a chemist or a health and safety expert, so you had no real idea. You nevertheless gave…
Time is money, it is often said, but that doesn’t mean “no time” is equivalent to “no money”
We are social beings, but we are also economists: we interact with others in various social relationships, and at the same time these relationships sometimes make material demands on our scarce resources, notably money and time. These can be sizeable (a friend can invite us to her wedding on a Caribbean beach), or rather modest (an evening out with colleagues, with a show and a nice meal, or perhaps just a coffee and a chat with an acquaintance). …
We cannot possibly be aware of everything, but sometimes acting as if what we see is all there is can be embarrassing — or worse.
A long time ago, when my hair was long and not so grey — well it is pretty long again, the barbers have only just reopened after the latest lockdown — a friend of mine had come up with a new, jocular greeting. We were deeply into jocular phrases at the time. They combined attempts at sophisticated wit with our own private slang. The kind of thing you do as a teenager.
Anyway, my friend’s new greeting, instead of a more conventional variant on “how are you?”, was “how’s your mum?” Slightly absurd, slightly mysterious even — but he thought…
Fingerprints have long been associated with our identity, but more than a bit of skin at the tip of a finger, it is our behaviour that is characteristic of who we are
There is a song that, when I first heard it, really struck home. Not, I hasten to say, that I have ever been engaging in a strange drinking game with a bunch of Belgian businessmen; I don’t even have a son, let alone one that played football. But the sentiment it expresses resonated with me — and still does today.
The song — Come Home, Billy Bird by The Divine Comedy — relates the predicament of an international business traveller who the night before drank too much, missed his wakeup call, and now — in the company of a phenomenal…
Sometimes circumstances force us to make changes to what we normally do. But how do we avoid the temporary quietly morphing into the permanent?
We have been under COVID-19 restrictions of one kind of another on and off for over 12 months now. Hardly any country has returned to full normality, to things as they were before the first lockdowns. In many places — notably much of Europe — the direction of travel is still towards stricter constraints instead of towards relaxation. Who but the worst pessimist expected, when this all began, that today we would still be living in this weird, impaired society?
Our assumptions were clearly overoptimistic, and inspired more by wishful thinking and motivated reasoning than by solid knowledge about pandemics…
Value, and in particular differential value, determines much of our behaviour. But it’s a slippery, ethereal concept
A long time ago, when travel was still possible and people still went on holiday, every morning I went to get provisions for the day at the local grocer in the seaside town where we were staying. And every time I could not help noticing his peculiar way of selling soft drinks. For the shopkeeper was selling the exact same drinks for two different prices, one roughly 10p higher than the other. I say “exact” but there was actually one difference: the cheaper one simply stood on a shelf, while the more expensive one was in the chiller.
It illustrates…
When we should really challenge our own, and other people’s omission bias
Biases (cognitive and behavioural tendencies) and heuristics (mental shortcuts) are often associated with bad decisions, but it is worth bearing in mind their evolutionary origins before we label them as unconditionally problematic. Whether we are thinking of risk aversion, confirmation bias, the representativeness heuristic, or hyperbolic discounting, there are good reasons why we have been carrying these tendencies for thousands of generations.
For our evolutionary success is in part the fortunate result of these biases. Imagine how well our ancestors would have fared if none of them had been risk averse, and they’d encounter a sabre tooth tiger as they…
The bounds to our rationality are sometimes within our control and even self-imposed — an easy opportunity to improve our decisions?
How irrational are we really? Book titles like Predictably Irrational and The Upside of Irrationality would seem to suggest we are beyond redemption. Numerous scientific experiments appear to confirm that we are subject to dozens upon dozens of biases, which mess with our decisions. It is true that we don’t always make the best possible decisions, and it is true that sometimes these biases are implicated. But mostly, our decisions are pretty good, and when they’re not, it is not necessarily because we are irrational.
A good while before Behavioural Economics became a thing, Herbert Simon challenged the assumptions of…
Better decision making may mean widening, or narrowing horizons — depending on whether you are a human or a machine
Four years ago, in the small hours of 21st March 2017, the neighbourhood around the Dortmund-Scharnhorst station was shaken by a loud blast. Earlier, a 31-year-old man had decided to gain access to the contents of a ticket machine on the platform — money and unused travel permits. He had been drinking in a nearby bar, presumably to stiffen his resolve, before setting off for the halt in the North-Eastern suburbs of the German city with a bag of gas cannisters, which he was seen sprayed into the machine. As he ignited it, the machine exploded, its metal front panel…
Koen Smets
Accidental behavioural economist in search of wisdom. Uses insights from (behavioural) economics in organization development. On Twitter as @koenfucius
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