Why People Make Bad Decisions
Wednesday, June 24, 2009 at 09:08 AM EDT
A while ago, when I wrote a review of Freakonomics, I got a comment from a reader who made it quite clear that they didnâ€™t think I knew the hell what I was talking about: â€œAs for rationality. People donâ€™t make decisions rationally, or for that matter irrationally. Just not how weâ€™re wired.â€
I think that Cian is sort-of right, and I donâ€™t think that Cian being sort-of right means that Iâ€™m totally wrong. Itâ€™s not a zero-sum game. Most people make most of their decisions in the hope of achieving the best outcome â€“ but because the amount of social, economic and cultural data to be parsed is too huge for most people to survey, many decisions come out pretty eccentric. â€œOur brains work like big coincidence detectors and use improbable coincidences to make decisions about what is realâ€, as psychologist Tom Stafford explained. If a coincidence is neither big enough nor improbable enough, it may not register at all.
MMR is a good example. From a medical outcome point of view, the rational decision would be to take the jab and have done. But what if youâ€™ve been made aware of the vaccine damage hypothesis, but have no experience of the diseases the vaccine is protecting against? Then you might be more fearful of the vaccine than the disease, and the rational response to that (however irrational the data) would be to avoid vaccination.
And what if non-vaccination had some other benefits that donâ€™t show up in the epidemiology? Like a powerful feeling of community with other anti-vaxxers and a belief that you are part of an important narrative of repressed knowledge? Those social factors could be very powerful incentives, and might push the decision-maker firmly away from vaccines.
Why am I dwelling on a months-old blog comment today? (Hint: not just because I am slow-brained and resentful of correction.) Because I came across two excellent blog posts lately which used analogies with irrational economics to rationalise apparently illogical behaviours.
Tom Ewing parses some data on boom-and-bust in baby names:
Aaronovitch Watch compares David Aaronovitchâ€™s ongoing apologia for the Iraq war to the behaviour of a scam victim:
To which the only thing I feel like adding is that people quite often continue to poor funds into a duff investment theyâ€™ve been persuaded to make, because the social cost of admitting the mistake seems greater than the financial cost of continuing it. Similarly, the social cost of changing your childâ€™s name is usually even greater than the cost of sticking with something thatâ€™s turned out to be a bit common. Even irrationality can have a rational outcome.