Scan barcode
A review by devinayo
Misbehaving: The Making of Behavioral Economics by Richard H. Thaler
5.0
I like buying clothes that are on sale that I don't actually need. When the clothes arrive, I don't always wear them because it's just not as fun as making the purchase.
I gain the pleasure from getting a good bargain, instead of the goods itself. Apparently in behavioral economic terms it's known as "transaction utility", which according to Richard Thaler in his book "Misbehaving", "can lure all of us into making purchases of objects of little value." This is painfully accurate description of me and my obsession with sales.
Thaler won a Nobel Prize in 2017 for discovering what seemed to be a common truth: that humans are mostly irrational and make bad decisions especially when it comes to the economy. And yet, when he first proposed the idea decades ago, most of the economic theory was built upon the foundation that humans were rational being who seeked to optimize their utility out of the available resources.
Reading "Misbehaving" is a surprisingly fun experience, perhaps thanks to Thaler's understanding that humans are not the so-called Econs who will gladly read dense and dry nonfictions in order to gain insights and understanding about how the economy works and how we, as an irrational being, make decision that might be not always the best in the long run or has the highest value.
Some insights, such as that people are loss averse, might be a common sense now. However, combined with other insights from Thaler's research in behavioral economy, the findings are fleshed out and become more relevant to readers who are not economists. Endowment effect, for instance, explains why it is hard for us to let go of things that we have (or we think that we have) in the face of more attractive choice, be it another goods or money.
Thaler is also the author of "Nudge", which is mentioned briefly in "Misbehaving". He aims to use behavioral economic logic in making public policies or to encourage people into making better decision, which he called as libertarian paternalism.
In short, "Misbehaving" is an interesting read. There are lots of insights and interesting case studies that make the book not at all boring.
I gain the pleasure from getting a good bargain, instead of the goods itself. Apparently in behavioral economic terms it's known as "transaction utility", which according to Richard Thaler in his book "Misbehaving", "can lure all of us into making purchases of objects of little value." This is painfully accurate description of me and my obsession with sales.
Thaler won a Nobel Prize in 2017 for discovering what seemed to be a common truth: that humans are mostly irrational and make bad decisions especially when it comes to the economy. And yet, when he first proposed the idea decades ago, most of the economic theory was built upon the foundation that humans were rational being who seeked to optimize their utility out of the available resources.
Reading "Misbehaving" is a surprisingly fun experience, perhaps thanks to Thaler's understanding that humans are not the so-called Econs who will gladly read dense and dry nonfictions in order to gain insights and understanding about how the economy works and how we, as an irrational being, make decision that might be not always the best in the long run or has the highest value.
Some insights, such as that people are loss averse, might be a common sense now. However, combined with other insights from Thaler's research in behavioral economy, the findings are fleshed out and become more relevant to readers who are not economists. Endowment effect, for instance, explains why it is hard for us to let go of things that we have (or we think that we have) in the face of more attractive choice, be it another goods or money.
Thaler is also the author of "Nudge", which is mentioned briefly in "Misbehaving". He aims to use behavioral economic logic in making public policies or to encourage people into making better decision, which he called as libertarian paternalism.
In short, "Misbehaving" is an interesting read. There are lots of insights and interesting case studies that make the book not at all boring.