Sunday, March 22, 2009

Lessons from Behavioral Economics

Charles Darwin celebrated his 200th birthday in 2009 (so did Abraham Lincoln -- in fact, Lincoln and Darwin were born on the same day). This year also marks the 150th anniversary of the publishing of Darwin’s The Origin of Species. It seems an appropriate time then to delve into the evolving research in behavioral and neuro-economics. What can education learn from the search to understand human irrationality?

For generations economic theory was based on the premise that people make rational decisions. In reality, however, they don’t. For instance, a rational economic decision-maker would always choose to maximize gain and minimize loss. And we may think that we do. Our actions, though, prove otherwise. Imagine you’re one of two participants in this little experiment. The other participant is given $10. She can give you as much of the $10 as she wants, a nickel, $5, or even all of it. If you accept what you’re given you both get to keep the money. If you reject what you’re given, neither of you gets anything. So you have the power to get something or nothing. Let’s say the other participant only gives you $1. Do you take it and let her keep the remaining $9? Or do you reject it, so that neither of you has anything? What would you do?

Rational economic theory assumes you take the money, whatever the amount, because you’re better off getting something than nothing. If you’re like most subjects in the actual study, though, you’d reject any uneven split. You’d rather punish the other subject (and yourself) for not being fair than get a little money you didn’t have before. Here’s an interesting twist to the story -- how much the other participant would offer depends on whether or not she can see you. Most subjects actually offered a $4 to $5 split if they could see the other participant. However, if the other participant was unknown, the amount offered dropped dramatically.

Experiments with how we choose among several items, which kind of tasks we procrastinate about, and how different triggers (like smells or large numbers) affect our decisions, among many others, have begun to reveal what on the surface appears to be a very quirky brain. Neuroscience is helping to identify patterns of brain activation in that apparent quirkiness. And evolutionary psychology is offering explanations about why these irrational behaviors may actually help us survive as a species.

Marketers have long been exploiting our behavioral tendencies. For example, the fresh produce is typically at the front of a grocery store because we’re more likely to buy junk food if we’ve already committed to something healthy. (A study revealing our greater tolerance for unethical acts when we have clean hands -- as in just washed -- versus when we have dirty hands highlights this behavioral oddity from another perspective.) In fact, our behavioral buttons are constantly getting pushed. Can education play the game too?

Many teachers likely already are playing the game. They’ve learned through experience what prompts desired actions, and they use whatever tricks help get the job done. I wonder if we can be more systematic and systemic about it. The research is fairly new, and I’m still swimming through it. But I think there’s potential. We’ll see.


Mr. Leagans said...


I'm a first year teacher in Houston and I've fallen in love with teaching economics. I'm also curious what kind of research and connections have been made between behavioral economics and education. Are there any books or specific researchers you have find to be especially helpful in the field?


Joel Leagans

David Dockterman said...

I'm looking for those books and articles myself. If and when I find some of value, I'll post them on The Dock Spot.

jdc said...

I've been thinking about this too. I'm not sure the research is yet beyond the point of determining the independence of some neuroeconomic 'trait' (e.g. delay discount) from another that pedagogy cares about like intelligence (see Shamosh and Gray "Delay discounting and intelligence: A meta-analysis" 2007 in the journal Intelligence).

That doesn't help too much in the classroom, but in a May article in the New Yorker, Walter Mischel indicates that DD can be effected through cognition. ( My guess is that meditation or mindfulness training is getting at similar factors.

The social behavioral economics issues are harder to engineer, I would guess.

Jonathan said...

I couldn't agree more about the importance of behavioral economics and education. Please see my blogpost for a few suggested readings: