Why We Buy: The Best Books On Behavioral Economics
The field of Behavioral Economics is becoming increasingly relevant to brands looking to connect with their right people and increase their bottom lines.
Here are my recommendations for the best books out there on the topic.
*All links are partner links for Amazon which means if you purchase through my link I may receive a small commission at no cost to you.
Misbehaving: The Making Of Behavioral Economics by Richard Thaler
From the publisher: Winner of the Nobel Prize in Economics. Get ready to change the way you think about economics. Nobel laureate Richard H. Thaler has spent his career studying the radical notion that the central agents in the economy are humans―predictable, error-prone individuals. Misbehaving is his arresting, frequently hilarious account of the struggle to bring an academic discipline back down to earth―and change the way we think about economics, ourselves, and our world. Coupling recent discoveries in human psychology with a practical understanding of incentives and market behavior, Thaler enlightens readers about how to make smarter decisions in an increasingly mystifying world. He reveals how Behavioral Economics and analysis opens up new ways to look at everything from household finance to assigning faculty offices in a new building, to TV game shows, the NFL draft, and businesses like Uber. Laced with antic stories of Thaler’s spirited battles with the bastions of traditional economic thinking, Misbehaving is a singular look into profound human foibles. When economics meets psychology, the implications for individuals, managers, and policy makers are both profound and entertaining. *Shortlisted for the Financial Times & McKinsey Business Book of the Year Award.
Randomistas: How Radical Researchers Are Changing Our World by Andrew Leigh
From the publisher: A fascinating account of how radical researchers have used experiments to overturn conventional wisdom and shaped life as we know it. Experiments have consistently been used in the hard sciences, but in recent decades social scientists have adopted the practice. Randomized trials have been used to design policies to increase educational attainment, lower crime rates, elevate employment rates, and improve living standards among the poor. This book tells the stories of radical researchers who have used experiments to overturn conventional wisdom. From finding the cure for scurvy to discovering what policies really improve literacy rates, Leigh shows how randomistas have shaped life as we know it. Written in a “Gladwell-esque” style, this book provides a fascinating account of key randomized control trial studies from across the globe and the challenges that randomistas have faced in getting their studies accepted and their findings implemented. In telling these stories, Leigh draws out key lessons learned and shows the most effective way to conduct these trials.
Dollars and Sense: How We Misthink Money and How to Spend Smarter by Dr. Dan Ariely and Jeff Kreisler
From the publisher: We think of money as numbers, values, and amounts, but when it comes down to it, when we actually use our money, we engage our hearts more than our heads. Emotions play a powerful role in shaping our financial behavior, often making us our own worst enemies as we try to save, access value, and spend responsibly. Exploring a wide range of everyday topics–from the lure of pain-free spending with credit cards to the pitfalls of household budgeting to the seductive power of holiday sales– Behavioral Economics guru Ariely and his co-author Kreisler demonstrate how our misplaced confidence in our spending habits frequently leads us astray, costing us more than we realize, whether it’s the real value of the time we spend driving forty-five minutes to save $10 or our inability to properly assess what the things we buy are actually worth. Together Ariely and Kreisler reveal the emotional forces working against us and how we can counteract them. Mixing case studies and anecdotes with concrete advice and lessons, they cut through the unconscious fears and desires driving our worst financial instincts and teach us how to improve our money habits. The result not only reveals the rationale behind our most head-scratching financial choices but also offers clear guidance for navigating the treacherous financial landscape of the brain. Fascinating, engaging, funny, and essential, Dollars and Sense provides the practical tools we need to understand and improve our financial choices, save and spend smarter, and ultimately live better.
The Choice Factory: 25 Behavioral Biases that Influence What We Buy by Richard Shotten
From the publisher: By observing a typical day of decision-making, from trivial food choices to significant work-place moves, he investigates how our behaviour is shaped by psychological shortcuts. With a clear focus on the marketing potential of knowing what makes us tick, Shotton has drawn on evidence from academia, real-life ad campaigns and his own original research. The Choice Factory is written in an entertaining and highly-accessible format, with 25 short chapters, each addressing a cognitive bias and outlining simple ways to apply it to your own marketing challenges. Supporting his discussion, Shotton adds insights from new interviews with some of the smartest thinkers in advertising, including Rory Sutherland, Lucy Jameson and Mark Earls. From priming to the pratfall effect, charm pricing to the curse of knowledge, the science of behavioural economics has never been easier to apply to marketing. The Choice Factory is the new advertising essential.
Inside the Nudge Unit: How Small Changes Can Make a Big Difference by David Halpern
From the publisher: Behavioral scientist Dr. David Halpern heads up the UK government’s “Nudge Unit,” the world’s first government institution that uses behavioral economics to examine and influence human behavior, to “nudge” us into making better decisions. Seemingly small and subtle solutions have led to huge improvements across tax, healthcare, pensions, employment, crime reduction, energy conservation, and economic growth. Adding a crucial line to a tax reminder brought forward millions in extra revenue; refocusing the questions asked at the job center helped an extra 10% of people go off their benefits and back into work; prompting people to become organ donors while paying for their car tax added an extra 100,000 donors to the register in a single year. Now David Halpern and the Nudge Unit will help you to make better choices and improve your life. The Nudge Unit has attracted widespread media and public interest—large pieces have run in the New York Times and Economist; and it’s been subject to case studies and reviews by the Harvard Business School and Goldman Sachs.
Behavioural Economics: A Very Short Introduction by Michelle Baddeley
From the publisher: The study of Behavioral Economics is revealing that our lives are not that simple. Instead, our decisions are complicated by our own psychology. Each of us makes mistakes every day. We don’t always know what’s best for us and, even if we do, we might not have the self-control to deliver on our best intentions. We struggle to stay on diets, to get enough exercise and to manage our money. We misjudge risky situations. We are prone to herding: sometimes peer pressure leads us blindly to copy others around us; other times copying others helps us to learn quickly about new, unfamiliar situations. This book explores the reasons why we make irrational decisions; how we decide quickly; why we make mistakes in risky situations; our tendency to procrastination; and how we are affected by social influences, personality, mood and emotions. The implications of understanding the rationale for our own financial behavior are huge. Behavioral economics could help policy-makers to understand the people behind their policies, enabling them to design more effective policies, while at the same time we could find ourselves assaulted by increasingly savvy marketing.
The Art of Choosing by Sheena Iyengar
From the publisher: Whether mundane or life-altering, these choices define us and shape our lives. Sheena Iyengar asks the difficult questions about how and why we choose: Is the desire for choice innate or bound by culture? Why do we sometimes choose against our best interests? How much control do we really have over what we choose? Sheena Iyengar’s award-winning research reveals that the answers are surprising and profound. In our world of shifting political and cultural forces, technological revolution, and interconnected commerce, our decisions have far-reaching consequences.
From the publisher: A new wave of products is helping people change their behavior and daily routines, whether it’s exercising more (Jawbone Up), taking control of their finances (HelloWallet), or organizing their email (Mailbox). This practical guide shows you how to design these types of products for users seeking to take action and achieve specific goals. Stephen Wendel, HelloWallet’s head researcher, takes you step-by-step through the process of applying behavioral economics and psychology to the practical problems of product design and development. Using a combination of lean and agile development methods, you’ll learn a simple iterative approach for identifying target users and behaviors, building the product, and gauging its effectiveness. Discover how to create easy-to-use products to help people make positive changes. √ Learn the three main strategies to help people change behavior √ Identify your target audience and the behaviors they seek to change √ Extract user stories and identify obstacles to behavior change √ Develop effective interface designs that are enjoyable to use √ Measure your product’s impact and learn ways to improve it √ Use practical examples from products like Nest, Fitbit, and Opower
The Paradox of Choice: Why More Is Less by Barry Schwartz
From the publisher: Whether we’re buying a pair of jeans, ordering a cup of coffee, selecting a long-distance carrier, applying to college, choosing a doctor, or setting up a 401(k), everyday decisions—both big and small—have become increasingly complex due to the overwhelming abundance of choice with which we are presented. In The Paradox of Choice, Barry Schwartz explains at what point choice—the hallmark of individual freedom and self-determination that we so cherish—becomes detrimental to our psychological and emotional well-being. In accessible, engaging, and anecdotal prose, Schwartz shows how the dramatic explosion in choice—from the mundane to the profound challenges of balancing career, family, and individual needs—has paradoxically become a problem instead of a solution. Schwartz also shows how our obsession with choice encourages us to seek that which makes us feel worse. By synthesizing current research in the social sciences, Schwartz makes the counter intuitive case that eliminating choices can greatly reduce the stress, anxiety, and busyness of our lives. He offers eleven practical steps on how to limit choices to a manageable number, have the discipline to focus on those that are important and ignore the rest, and ultimately derive greater satisfaction from the choices you have to make.
From the publisher: Every day we work hard to motivate ourselves, the people we live with, the people who work for and do business with us. In this way, much of what we do can be defined as being “motivators.” From the boardroom to the living room, our role as motivators is complex, and the more we try to motivate partners and children, friends and coworkers, the clearer it becomes that the story of motivation is far more intricate and fascinating than we’ve assumed. Payoff investigates the true nature of motivation, our partial blindness to the way it works, and how we can bridge this gap. With studies that range from Intel to a kindergarten classroom, Ariely digs deep to find the root of motivation—how it works and how we can use this knowledge to approach important choices in our own lives. Along the way, he explores intriguing questions such as: Can giving employees bonuses harm productivity? Why is trust so crucial for successful motivation? What are our misconceptions about how to value our work? How does your sense of your mortality impact your motivation?
The Enigma Of Reason by Hugo Mercier
From the publisher: Reason, we are told, is what makes us human, the source of our knowledge and wisdom. If reason is so useful, why didn’t it also evolve in other animals? If reason is that reliable, why do we produce so much thoroughly reasoned nonsense? In their groundbreaking account of the evolution and workings of reason, Hugo Mercier and Dan Sperber set out to solve this double enigma. Reason, they argue with a compelling mix of real-life and experimental evidence, is not geared to solitary use, to arriving at better beliefs and decisions on our own. What reason does, rather, is help us justify our beliefs and actions to others, convince them through argumentation, and evaluate the justifications and arguments that others address to us. In other words, reason helps humans better exploit their uniquely rich social environment. This interactionist interpretation explains why reason may have evolved and how it fits with other cognitive mechanisms. It makes sense of strengths and weaknesses that have long puzzled philosophers and psychologists―why reason is biased in favor of what we already believe, why it may lead to terrible ideas and yet is indispensable to spreading good ones. Ambitious, provocative, and entertaining, The Enigma of Reason will spark debate among psychologists and philosophers, and make many reasonable people rethink their own thinking.
The Power of Habit: Why We Do What We Do in Life and Business by Charles Duhigg
From the publisher: Named one of the best books of the year by The Wall Street Journal. In The Power of Habit, award-winning business reporter Charles Duhigg takes us to the thrilling edge of scientific discoveries that explain why habits exist and how they can be changed. Distilling vast amounts of information into engrossing narratives that take us from the boardrooms of Procter & Gamble to the sidelines of the NFL to the front lines of the civil rights movement, Duhigg presents a whole new understanding of human nature and its potential. At its core, The Power of Habit contains an exhilarating argument: The key to exercising regularly, losing weight, being more productive, and achieving success is understanding how habits work. As Duhigg shows, by harnessing this new science, we can transform our businesses, our communities, and our lives.
How We Decide by Jonah Lehrer
From the publisher: The first book to use the unexpected discoveries of neuroscience to help us make the best decisions. Since Plato, philosophers have described the decision-making process as either rational or emotional: we carefully deliberate, or we “blink” and go with our gut. But as scientists break open the mind’s black box with the latest tools of neuroscience, they’re discovering that this is not how the mind works. Our best decisions are a finely tuned blend of both feeling and reason—and the precise mix depends on the situation. When buying a house, for example, it’s best to let our unconscious mull over the many variables. But when we’re picking a stock, intuition often leads us astray. The trick is to determine when to use the different parts of the brain, and to do this, we need to think harder (and smarter) about how we think. Lehrer shows how people are taking advantage of the new science to make better television shows, win more football games, and improve military intelligence. His goal is to answer two questions that are of interest to just about anyone, from CEOs to firefighters: How does the human mind make decisions? And how can we make those decisions better?
Dan Ariely, Behavioral Economist and the New York Times bestselling author of The Upside of Irrationality and Predictably Irrational, examines the contradictory forces that drive us to cheat and keep us honest, in this groundbreaking look at the way we behave: The (Honest) Truth About Dishonesty. From ticket-fixing in our police departments to test-score scandals in our schools, from our elected leaders’ extra-marital affairs to the Ponzi schemes undermining our economy, cheating and dishonesty are ubiquitous parts of our national news cycle—and inescapable parts of the human condition. Drawing on original experiments and research, in the vein of Freakonomics, The Tipping Point, and Survival of the Sickest, Ariely reveals—honestly—what motivates these irrational, but entirely human, behaviors.
Risk Savvy: How to Make Good Decisions by Gerd Gigerenzer
From the publisher: In this age of big data we often trust that expert analysis—whether it’s about next year’s stock market or a person’s risk of getting cancer—is accurate. But, as risk expert Gerd Gigerenzer reveals in his latest book, Risk Savvy, most of us, including doctors, lawyers, and financial advisors, often misunderstand statistics, leaving us misinformed and vulnerable to exploitation. Yet there’s hope. In Risk Savvy, Gigerenzer gives us an essential guide to the science of good decision making, showing how ordinary people can make better decisions for their money, their health, and their families. Here, Gigerenzer delivers the surprising conclusion that the best results often come from considering less information and listening to your gut.
For more, check out The Best Books On The Psychology Of Persuasion
Melissa Bolton is a copywriter and Brand Therapist® who uses Neurobranding to develop solopreneurs, micro-businesses, and individuals residing in the creative arena. Her signature Brand Therapy services include pairing both psychology and behavioral science principles with your story to help you define your brand, impel your niche, and breathe new life into your ideas.