These three recently-published books take research on cognitive science and behavioral economics and apply it to business and public policy. A common theme – people aren’t particularly logical, and this has huge impacts on how they behave, yet our business practices and government regulations often ignore this.
“Free Market Madness: Why Human Nature is at Odds with Economics–and Why it Matters,” by Peter A. Ubel (Harvard Business Press, 2009) – a wide-ranging book that presents a brief history of economics and a critique of market-based solutions to intractable social problems, all the while circling around perhaps its true theme: how to fix health care. Key quote:
Standard economic theory holds that if commuting is a source of unhappiness, then people…will choose long commutes if they believe such commutes will raise their happiness in some other ways, like by bringing them higher pay or better living conditions. If this economic theory is true, then when you ask people how happy thay are with their lives, those with long commutes should be just as happy as those with short ones….
Yet when economists Alois Stutzer and Bruno Frey studied the German populace, they found that the longer people commuted each day, the less satisfied they were with their overall lives.
“Management Rewired: Why Feedback Doesn’t Work and Other Surprising Lessons from the Latest Brain Science,” by Charles S. Jacobs (Portfolio, 2009) – comparing left-brain and right-brain approaches to management, strategy and leadership. Lots of good discussion of the role of narrative in learning, leading and communicating. Key quote:
Regardless of what structure, systems, and processes are used or how effective they are, it is impossible to prescribe how people should behave in every instance now and in the future. There are just too many variables, unpredictable changes, and ways to work around control systems. In fact, the more we try to prescribe what people do, the more we lose the advantage of the mind’s ability to change how it works through learning.
“Buyology: Truth and Lies About Why We Buy,” by Martin Lindstrom (Doubleday, 2008). A consumer marketer uses fMRI to peek inside the brains of research subject to see how brands, logos and messages affect our minds. (If you don’t think Lindstrom can market, consider this: he’s the first of his profession I’ve ever seen get an article in Parade Magazine.) Key quote:
[Our study] discovered that when people viewed images associated with the strong brands – the iPod, the Harley-Davidson, the Ferrari, and others – their brains registered the exact same patterns of activity as they did when they viewed the religious images. Bottom line, there was no discernible difference between the way the subjects’ brains reacted to powerful brands and they way they reacted to religious icons and figures.