A set of old fashioned scales with a clock on one side and piles of money on the other
A set of old fashioned scales with a clock on one side and piles of money on the other
(Featured image: Mona Tootoonchinia via Pixabay)

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). …


Narrow view through a tunnel
Narrow view through a tunnel
(featured image: Zak/Flickr CC BY-NC-ND 2.0)

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…


(Featured image: pch.vector via Freepik)

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…


VU meter
VU meter
(Featured image: Shane Forster/Flickr CC BY-SA 2.0)

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…


Vincent van Gogh’s signature
Vincent van Gogh’s signature
featured image: Wikimedia Commons/Public Domain

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…


A heavily fortified border with barbed wire
A heavily fortified border with barbed wire
(featured image: Mussi Katz/Flickr CC BY)

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…


Stencil of Charles Darwin on a concrete wall at night
Stencil of Charles Darwin on a concrete wall at night
(featured image: duncan c/Flickr CC BY)

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…


Ruler
Ruler
(featured image via Pixabay)

When we treat rules, however well-intentioned, as unconditional imperatives. we may end up doing more harm than good

When I was younger, so much younger than today, I joined the Institute of Advanced Motorists, a British organization that aims to increase road safety by improving driving standards. Now, like most people, I was convinced that I am a better driver than the mean driver, but at the time I was spending a lot of time in the car and wanted to regain the joy of driving, rather than experience it as a boring chore. …


A large red boxing glove, and a small blue one
A large red boxing glove, and a small blue one
(featured image: EliasSch via Pixabay)

Ethical concerns are an important factor in policymaking, and fairness often figures prominently in this respect. But are we really using it in the way we do?

In last week’s post, I referred to the challenges in setting policies for vaccinating people against COVID-19. If the aim is to protect the people who are the most at risk of the disease, then it makes sense to give priority to the elderly and those with underlying conditions, and to work your way down from there to the young and healthy, the people who are unlikely to develop serious symptoms, let alone require hospital admission.

There are clear instrumental motives for such an approach: the risk is not just to the individuals, but also to society as a whole…

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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