We intuitively understand that, when we want to maximize something that is good for us, there are almost always trade-offs involved. But are we equally astute when we want to minimize something that is bad?

One of the employers I have had the pleasure to work for had a pretty developed system of benefits, that went by the rather apt name of Choices. The whole idea of offering benefits in addition to a salary is that the value to the employee is higher than the cost to the company — a true win-win. But while the cost to the employer is easy to calculate, a given benefit may not have the same value to every member of staff. …

When we elect political leaders, what we really need is to be able to trust them. But how good are we at assessing their trustworthiness?

The 2020 US presidential elections will probably be remembered for longer than most of its predecessors. But leaving aside the circus that surrounds this edition, presidential elections would appear to be among the simplest of choices that a voter can face. In many countries, the final vote goes between just two people, and even where there are more candidates (as in the US), it is still almost always a two-horse race.

What are the criteria — and indeed what should be the criteria — on the basis of which we make such a choice? We often don’t give it a great deal of thought. Some might give their vote to whoever is the candidate of the party they have always voted for; others might vote on the basis of the anecdotes they heard about the hopefuls, what they have heard them say, or how they come across. If we dig a bit deeper, though, it becomes clearer what we are really looking for. Whoever wins the election will make numerous decisions throughout their tenure, decisions that will often affect us, directly or indirectly, in big ways or in small ways. …

Good drama is about the vivid, compelling depiction of the characters’ decisions, and the ethical challenges that confront the dramatis personae are an essential ingredient.

“Drama is truly compelling when it exposes the raw, painful trade-offs its characters face”, I wrote in Good drama = good economics. Good drama does not just entertain you, but makes you think. Why do these characters behave the way they do? What motivates their choices and decisions? Perhaps even, what would I do if I were this or that character? Classic plays by Shakespeare, or even 2000 years earlier, by Sophocles or Aristophanes are masterful in their observation and depiction of human behaviour and the moral dilemmas that characterize it. But modern TV drama can do so, too. …

The choices we make reveal that we are sometimes quite content to make material sacrifices for emotional utility, and indeed to accept material compensation for emotional damage. But how far can we go in this?

“A spoonful of sugar helps the medicine go down”, Mary Poppins used to sing (that’s your earworm sorted for today). An instructive song, although perhaps a bit questionable given that it celebrates a substance that has, since the 1964 movie, acquired a certain stigma. Its more enduring lesson is that combining something perceived as positive with something perceived as negative was capable of changing behaviour: refusal to swallow a bitter pill might be overturned if it is first sweetened.

Emotions in standard economics

The idea sounds like it is coming straight from behavioural economics, but it fits perfectly well in standard economics too. Incentives — often material benefits — do influence behaviour. People are prepared to work overtime if the pay compensates them for the time sacrificed, time they could otherwise spend on more pleasant, leisurely activities. The prospect of winning a voucher redeemable at a well-known online bookstore is often used to entice people to spend time completing a survey rather than doing something less boring. …

A behaviouralist (re)learns some lessons

The thin veneer of a little specialist knowledge does not stop an observer of human behaviour exhibiting pretty much the same patterns of behaviour as everyone else. In fact, it can be most enlightening to reflect on one’s own behaviour. Gather round, and listen to my story.

For the last two years, I have been the co-instructor of an online course at an American university. Each term, students need to produce four written assignments, together representing more than half the marks for the entire course. …

Almost all decisions we face have a tipping point — the point where we would change our mind. Good decision-making means working out where it is.

This is a time of tough decisions. Many governments face rapidly rising COVID-19 infection rates, and are desperate to bring the outbreak back under control. A lockdown, with only shops considered of vital importance are allowed to open, and the default for everyone is to stay at home — even if only for a limited time, to act as a so-called circuit breaker — is perhaps the most effective way of stemming the alarming increase in COVID-19 cases.

But even three or four weeks of lockdown would come with considerable costs. It would further damage economic sectors already very badly hurt by the pandemic so far, such as retail, hospitality and entertainment. It would also have adverse public health consequences (notably for mental health) and impair social interaction with friends and family (including with vulnerable people). …

Most of us don’t only work for the money. But should that influence how much we get paid?

Many years ago, one of my daughters once asked me why everyone did not earn the same amount of money. Wouldn’t it be fairer if everyone just got the same? After all, if it’s someone’s birthday at school and they bring sweets for the class, they are divided equally among everyone.

I explained that not all jobs are the same. Some are really hard work, or unpleasant, or dangerous, or they mean that you need to work at night or over the weekend. People may not want to do a job carrying heavy loads all day, cleaning sewers, installing aerials on tall buildings, or driving trains at 5am unless they get paid a bit more than jobs where all you need to do is sit at a desk and tapping on a computer keyboard all day. And on top of that, some jobs are so difficult to do that there are not many people who can do them. …

How we think matters more than what we think and who we are

From the moment we’re born, to understand the world, we rely on the judgement of others. Our parents, our siblings, our friends, our teachers, our colleagues, our boss, our political leaders, the media, social media, and so on — they all help us figure out how things hang together. There are two main reasons for this: others know facts we don’t know, and they may also be better than we are at transforming those facts into a judgement.

But not everyone’s judgement is equally reliable. Their own factual knowledge may be inaccurate, or their competence in interpreting the facts may be imperfect. We learn to understand this, and we learn to trust (and indeed to mistrust) some people more than others. …