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Chris Martenson And Dan Ariely Discuss The Behavioral Economics Behind The Desire To Inflate
Dan Ariely Decodes Why Humans Are Hard-Wired To Inflate
Looking back at the carnage created by the bursting of the credit bubble, it’s natural to scratch your head and ask “How did we ever let that happen?”. Behavioral economics exists to answer questions like this.
Last week Chris sat down with Dan Ariely, gallivanting behavioral-economics-researcher-extraordinaire, who is breathing new life into this previously obscure field of study. The resulting interview is full of fresh, non-intuitive insights and shines light on how the human brain is often hard-wired for irrational action when it comes to money.
Click here to listen to the interview on ChrisMartenson.com
Dan has a fresh and pretty non-traditional way of explaining the more intriguing aspects of human behavior, including:
- The overwhelming influence of emotion in driving our decision-making
- Our vulnerability to present temptations & our overestimation of our future virtuousness
- Our amazing capacity to justify irrational circumstances
- Our blindness to conflicts of interest when they work in our favor
- Why we do a poor job of appreciating future risk
Each of these played a role in the excessive behavior responsible for the credit crisis – and continue to hamper our ability to handle its aftermath rationally today.
One of the key takeaways for us was how Dan’s research provides an empirical explanation for why inflation will likely win the day: our mental programming leads us to prefer behavior that favors it.
Dan is the James B. Duke Professor of Psychology & Behavioral Economics at Duke University, where he holds appointments at the Fuqua School of Business, the Center for Cognitive Neuroscience, the School of Medicine, and the Department of Economics. He is also a founding member of the Center for Advanced Hindsight.
Using simple experiments, Dan studies how people actually act in the marketplace, as opposed to how they should or would perform if they were completely rational. His interests span a wide range of daily behaviors and his experiments are consistently interesting, amusing, and informative, demonstrating profound ideas that fly in the face of common wisdom.
He is the author of the New York Times Bestseller Predictably Irrational: The Hidden Forces that Shape Our Decisions and The Upside of Irrationality: The Unexpected Ways We Defy Logic at Work and at Home. His research has been published in leading psychology, economics, and business journals, and is featured occasionally in the popular press.
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The First Day
The first recorded Words of God that we have are "Let there be light" (Genesis 1:3 NIV). The sun was already shining brightly, but God made the earth's thick new atmosphere allow diffuse light to penetrate to the surface. And so it was that the light was made separate from darkness. The first day of earth's creation was literally the first "day" as someone on earth's surface would experience it - a period of opaque light, and a period of darkness. (Genesis 1:3-5)
The Second Day
The separation of the waters. There was yet no liquid water, no oceans. All of the water was in the form of a vapor, a worldwide super-fog, extending a number of kilometers/miles up from the very hot (above the boiling temperature of water) bare-rock earth's surface (the earth's core remains molten right to the present day). God's "hovering over the waters" in verse 2 describes His being above that gaseous-water atmosphere, not a liquid ocean. God then caused most of the water to condense onto the cooling earth which simultaneously formed a whole-planet ocean and cleared the sky. (Genesis 1:6-8)
The Third Day
The first appearance of dry ground. The further cooling of the surface set in motion a process of natural contraction, uplifting and motion of the crust (the process continues today, called "plate tectonics"). The earth changed from a smooth one-level molten "cue ball" to a planet with an irregular surface with ocean basins and continental landmasses. With dry ground available, the first plants were made to grow in great abundance. (Genesis 1:9-13)
The Fourth Day
With the sky now clear, the sun, moon and stars were dependably visible. They were to "serve as signs to mark seasons and days and years." The sun marked the day (sunset to sunset), the moon the month (new moon to new moon), and the stars the seasons (constellations are seen in particular seasons e.g. "Orion" is visible in winter in the northern hemisphere, which is summer in the southern hemisphere). (Genesis 1:14-19)
The Fifth Day
Great numbers of birds and sea creatures. God blessed them and said, "Be fruitful and increase in number and fill the water in the seas, and let the birds increase on the earth." (Genesis 1:20-23)
The Sixth Day
Vast numbers of land animals. Man. From the man, woman (humans today are just now discovering how to genetically alter fertilized embryos, and even to create one human from the tissue of another - known as "cloning"). (Genesis 1:24-31)
The Seventh Day
The Sabbath Day. "By the seventh day God had finished the work He had been doing; so on the seventh day He rested from all His work. And God blessed the seventh day and made it holy, because on it He rested [or ceased] from all the work of creating that He had done." The day that is the basis for The Fourth Commandment. (Genesis 2:2-3)
The Eight Day
After a career of 7 days of working, God decided to retire in style and decided to create a stock market where he could sell everything he made time X100. He took on a mortgage on the earth with the Devil and invested everything he had in it. And to make sure that whenever his little game would fuck him in the ass and blow in up in his face, he created inflation so he could keep on playing his game and retire in style.
What did the devil do with the money? Great commentary though!
That looked interesting but still...
This guy is probably part of the crew that think they deserve every single cent they earn.
Speech sounded like a Plato's discourse, with people staged to reinforce the principal point.
One example: the half full box of chocolates vs the full box of chocolates deal. One could say that waiting for one year and half is not exactly the same as waiting for one week. Not the point.
The point is that the issue is framed. The guy says he deals in reality (empirically learning with no expectation) yet he discards the answer the most commonly brought by US citizens.
If a US citizen is faced with the option of getting a half full chocolates right now or a full box of chocolates in one week, what is going to be the course of action?
The answer is that the US citizen will opt for half a box of chocolates right now and one full box of chocolates one week later. That is the course of action chosen by the US citizens.
The very idea of saving has to be banned when thinking of US citizens. The only course action they will dedicate to is the one bringing more consumption and even more consumption.
If ever you meet this guy in a conference, as this must be one of his typical (dont want to sound racist) examples, raise the hand and tell what your choice, as a US citizen is, a half full box right now and a full box a week later. Should be funny. And more constructive than anything.
Brain chemicals make us feel good when we do things we like. That's why we like to do them, repeatedly.
Chickens will sit on an egg because they like it.
If you put a baseball next to a Chicken she will sit on it instead, because it's bigger.
The chicken gets a bigger rush off of making sure bigger stronger eggs survive. It's Darwin approved.
Humans like sitting on a big pile of shit waiting for something to hatch because we're stupid. We're Bernanke approved.
Treasury Secretary Timothy F. (for Fucked-Up) Geithner actually used the words: "deeply irresponsible," in response to not raising the national debt level. I actually had to stare at that for a few minute before I busted out laughing and fell off my chair. I don't know who's more dangerous, him or politicians who actually take a few minutes out of their completely worthless day just to listen to him.
I believe that the F actually stands for "Fuckhead."
behavioral economics is bullshit. Just another way to skin a monetarist cat.
Fascists will uses behavioral economics to crush you if you let them. You are warned.
Empiricism, still full of bullshit as well. Empiricism = maybe what you found out, or maybe not. Empiricism is not the end all be all, except for fucktards who believe there has to be a solid answer, when in reality there isn't one.
Don't EVER forget that in their monetarist bag, behavioral economics and empiricism are the tools they use to fuck with you, and us.
1 or 0, reality or not. Not empircism and behavorial economics.
Behavorial economics, another bullshit god people pray to. But let's see, since people are just waking up to Keynes being bullshit, and still haven't figured out Austrians are just as clueless (ron and rand fucktard fascist unamerican in fact Paul's). Whether you believe in statistical regression model outputs as facts rather than suggestions which could be completely wrong, or in the invisible hand, all of the above are on the same plate.
It's the bullshit platter. Get a good mouthful and really taste it, because it's going to be on the menu everywhere soon. There you go. Realize it doesn't taste good.
Now throw out this bullshit too, since we are in the habit of ridding ourselves of sophistry filled explanations where our bullshit metrics are fooling us into different, fake reality, until something else pulls us back to reality.
Behavoiral economics, it's in the deathpanel filled, fascist, unamerican, non-healthcare we passed. (fuck the hmo's, single payer under hill-burton...and you better realize what this is).
Once again, enjoy your bowl of shit. You feed yourself at your own pleasure.
I cannot stand articles that generalize 'we' as in we all think the same way or make the same choices. Some of us can think for ourselves and don't need a pseduo-intellectual to tell us how we act.
The more I read Chris Martenson, the more I get the feeling he is a socialist in survivalist clothing.