In their book Animal Spirits, George Akerlof and Robert Shiller recount the intellectual battles waged between Milton Friedman and Paul Samuelson, two of the 20th century’s most important economists. Friedman was a huge believer in the power of markets, and in consumers’abilities to make rational decisions. Samuelson also recognized the power of markets, but thought…
Albert Rees was a University of Chicago trained economist who wrote some of the most influential works in the field of labor economics. Despite his Chicago training – Chicago being the epicenter of the idea that humans are guided largely by rational choice – he was well aware of something crucial missing from economic theory:…
During a particularly miserable World War II battle, a military analyst estimated that it cost $25,000 in artillery shells for each enemy soldier killed. That caused one soldier to ask: “Why wouldn’t it be better to just offer the Germans $25,000 to surrender?” If only the world were so rational! (Click here to view comments)
In a recent post, I give you a flavor for Rich Cohen’s wonderful book The Fish That Ate the Whale. One of the things that struck me in reading his book was the psychology of entrepreneurial success. It is often difficult to be a superstar entrepreneur if you are realistic. Often the biggest successes in…
A recent news article reported that a grocery store in Durham, North Carolina now offers healthy checkout aisles for people interested in minimizing temptation. Ring up your groceries in that aisle, and you won’t be surrounded by candy bars and bags of chips. On the other hand, I’m guessing you will still be surrounded by magazine…
Most people would say they would prefer to work in a job with interesting and fulfilling opportunities. But new research shows that people may pick a boring job over a stimulating one if they perceive they aren’t being paid enough for extra effort. Duke University Fuqua School of Business marketing professorPeter Ubel and David Comerford, an assistant professor at…
My former employer, the University of Pennsylvania Health System, no longer hires tobacco users. It has joined a growing group of employers, including many health systems, that discriminate against smokers on the grounds that such employees cost the employer money (through loss in productivity) or, in the case of medical institutions, act against the health promoting…
Here is a nice picture, from the Wonkblog, summarizing the best evidence to date on whether cigarette taxes reduce smoking. The bottom line here is that cigarette taxes slightly reduce smoking among smokers. That slight reduction reflects, in part, those people who quit smoking because it has simply become too expensive. It also includes people…
The importance of sleep is perhaps most realized when we become sick. When we are hospitalized and most in need of every ounce of health, though, hospital care practically guarantees that we won’t get good sleep. Fortunately, two approaches hold promise to improve sleep for patients: one organizational, and the other a common trick of…
I recently posted on how public park builder, Robert Moses, used the psychology of sunk costs to get more money for his ambitious projects. Once those projects were complete, he also used social psychology to keep them clean. It had to do with the directions he gave to the people hired to clean up the…