Why studying irrationality is useful?

Predictably IrrationalIf you are not academically inclined and you start reading a book like “Predictably Irrational” and “Thinking, Fast and Slow” (or worse still books that are not supposedly aimed at normal people, but only at academicians), you will identify with the following status update I had posted on Facebook recently:

Human irrationality surprises nobody other than Economists.

Human behavior surprises nobody other than psychologists.

The psychologists and behavioral economists love to spend time (and pages of writing) in convincing people that the traditional economists‘ idea of humans being rational agents is not right. Apparently traditional economists are also not an extinct species and they are busy in debunking these psychologists. The debate continues. And a layman (from the point of view of academic economists and psychologists) is often left to wonder if there is any point in reading what essentially tells us something we already know very well. That humans are not rational!

Well there is a point! Because thankfully, psychologists don’t just stop at explaining and proving that humans deviate from economists’ idea of rationality, they also study exactly how they are irrational. Not being rational does not mean there is no rhyme or reason to human behavior. While figuring out how people are irrational, psychologists essentially figure out how we behave. Some things they figure out may be obvious and intuitive to us, and many others are not. These findings can help us in understanding our own selves better, making better decisions and generally improving our lives by managing our psychology. As marketers and entrepreneurs these give valuable insights into behavior of our customers, employees and anyone we deal with.

The point of studying human irrationality is best summed up in the following insight from “Predictably Irrational”.

Our irrational behaviors are neither random not senseless – they are systematic and predictable.

And that’s why studying them is useful. It can help us predict human behavior.

So, how about starting by reading the summary of “Predictably Irrational“? Summary of “Thinking, Fast and Slow” is also coming soon.