Why we have such an overwhelming need to believe that we understand and control our world, even if that means buying into ideologies and mythologies that obviously contradict our experience.

Well yes, this is intriguing, but in the sense that life itself is intriguing — how is it possible that a cocktail of amino acids suddenly can give rise to amoebae, ferns, sequoias, tulips, shrimp, dolphins, elephants, wasps, eagles and humans.

When you look at this from an economics perspective, it’s not that intriguing. To survive and prosper, life forms need to be efficient. They need to preserve resources and not spend them frivolously. Provided it is, on balance, effective, certainty is more efficient than uncertainty. Provided they are, on balance, effective, heuristics are more efficient than intense cognitive effort.

This assumption shifts the perspective of what is in our interest and what is not. What seems to be ‘not in our interest’ from an economic (or any other) logic can in fact be necessary to protect the coherence of our worldview and the integrity of the idea that we have value and agency.

What looks irrational is often a matter of a limited perspective — ironically, failure to see bounded rationality for what it is, and seeing irrationality instead is a prime example of WYSIATI. Satisficing rather than maximizing can be perfectly rational, once you consider the cost of maximizing.

Does that mean that there is no such thing as irrationality? Not at all. One way of not depleting your resources frivolously is not spending them at all. A couch potato runs no risk of wasting resources, but spending your life watching TV or playing with your Xbox is not necessarily in your own long-term interest. Misapplied efficiency can backfire, just like misapplying heuristics can do.

The real challenge in taking an economics perspective to life is understanding how you (and people in general) make the inevitable trade-offs, and what your/their real preferences are. Spend now or save for your retirement? Have another biscuit, or avoid putting on weight? Go for a run or stay in bed for another half hour?

And indeed: make real sacrifices in order to protect your worldview?

in this sense, the automatic process takes over when the conditions for abstract thought are not fulfilled. When the idea of having control and value has been grind to bits by ruthless experience we default to automatic/ subconscious/ contextual thinking because that does not require reasons (and is therefore not affected when these reasons are invalidated), it is guided by instinct and experience, not abstract thought.

I had to read this a few times, and then the irony struck me. This reads like an attempt to seek certainty — a clear, unambiguous explanation why we act the way we do. A kind of universal law of human behaviour. I’ve been there, and I’ve come back, realizing there’s nothing to be found there. There can be any number of reasons why heuristics dominate our thinking and behaviour — including what you describe, but not limited to it.

Most of the time, I think, we are not exclusively guided by instinct and experience, or by abstract, reasoned thought. It’s a messy mixture of the two. It’s chaotic. Like the weather, it’s possible to predict tendencies, but only in limited conditions can we be precise. More people reuse their towels when you use behavioural messages than when you appeal to their reason — but by no means everyone. And there are always people who’d respond better to a factual message than one that plays to our desire for social validation.

I will look up your book!

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Accidental behavioural economist in search of wisdom. Uses insights from (behavioural) economics in organization development. On Twitter as @koenfucius

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