There are Free Lunches Statement of Intentions

There are Free Lunches: Behavioral Clues to Live Happy in the Economic World is a blog that intends to present updated and relevant information about the "hidden" and only recently uncovered dimensions of the economic science: the behavioral factors. With this blog we intend to promote in Europe and in the rest of the World, the top research articles and perspectives on behavioral economics, decision making, consumer behavior, and general behavioral science. We aim to be followed by journalists, academics, managers, civil servants, and everyone who wishes to improve their daily interaction with the economic world and consequently, their lives' happiness.

Wednesday, 28 December 2011

The Ten Happiest Jobs (via Forbes)

There are some surprises in the ten happiest jobs, as reported a General Social Survey by the National Organization for Research at the University of Chicago.

You can check them here: 10HappiestJobs

Tuesday, 27 December 2011

Carbon footprint of the world's biggest cities (via CNN)

The graphic details the world's 10 most populated cities and their annual carbon emissions. There is currently no standard approach by which cities measure their carbon output. The figures represented within this chart are drawn from cities' own inventories, the methodologies for which vary from city to city.

Here is the map: 10co2emission

Monday, 19 December 2011

Why Do People Defend Unjust, Inept, and Corrupt Systems? (via SimoleonSense)

Why do we stick up for a system or institution we live in—a government, company, or marriage—even when anyone else can see it is failing miserably? Why do we resist change even when the system is corrupt or unjust? A new article in Current Directions in Psychological Science, a journal published by the Association for Psychological Science, illuminates the conditions under which we’re motivated to defend the status quo—a process called “system justification.”

System justification isn’t the same as acquiescence, explains Aaron C. Kay, a psychologist at Duke University’s Fuqua School of Business and the Department of Psychology & Neuroscience, who co-authored the paper with University of Waterloo graduate student Justin Friesen. “It’s pro-active. When someone comes to justify the status quo, they also come to see it as what should be.”

Reviewing laboratory and cross-national studies, the paper illuminates four situations that foster system justification: system threat, system dependence, system inescapability, and low personal control.

If you want to know more about this study, you can check it here: SystemsStatusQuo

If You Act Your Age, What’s Your Carbon Footprint? (via NYT)

We’ve all heard that some countries produce more carbon dioxide per capita than others, with the United States among the leaders of the pack. But how do your individual emissions change over the course of a lifetime?

A new study plots carbon dioxide emissions related to the typical American’s habits over a lifetime.

As it turns out, if you’re enjoying senior citizen discounts, you’re probably much kinder to the planet than you were in your slightly younger days, but your 20-something grandchildren are kinder still.

Age is a telling predictor of carbon dioxide emissions, according to a study published in the journal Demography.

If you 5 minutes, you can check everything here: StudyAgeEmissions

Wednesday, 14 December 2011

In Tuition Game, Popularity Rises With Price (via New York Times)

COLLEGEVILLE, Pa. — John Strassburger, the president of Ursinus College, a small liberal arts institution here in the eastern Pennsylvania countryside, vividly remembers the day that the chairman of the board of trustees told him the college was losing applicants because of its tuition.

It was too low.

So early in 2000 the board voted to raise tuition and fees 17.6 percent, to $23,460 (and to include a laptop for every incoming student to help soften the blow). Then it waited to see what would happen.

Ursinus received nearly 200 more applications than the year before. Within four years the size of the freshman class had risen 35 percent, to 454 students. Applicants had apparently concluded that if the college cost more, it must be better

“It’s bizarre and it’s embarrassing, but it’s probably true,” Dr. Strassburger said.

If you have 7 minutes, you can understant why the fact that families associate price with quality, as originated that prices with education to rise faster than inflation: TuitionPriceRisesPopularity

Sunday, 11 December 2011

Endowment Effect & Adoption (via New York Times)

Elizabeth Fitzsimons, a reporter for The San Diego Union-Tribune, tell us her and his husband impressive story of adopting a chinese baby girl. The story is touching and impressive, and it shows how the Endowment Effect (people place a higher value on objects they own than objects that they do not) can be at work, even when we adopt a child. It also has a happy end!
If you have 7 minutes, you can check all the story here: Endowment&Adoption

Friday, 9 December 2011

The Moral Molecule (via Neuroeconomicstudies)

Paul Zak, 49, is a scientist, author and entrepreneur known for his groundbreaking research into oxytocin, a brain chemical he calls the “moral molecule” because it helps explain why people act responsibly, even when nobody is watching. A professor of economics, psychology and management at Claremont Graduate University, Zak is a pioneer in the emerging field of “neuroeconomics,” which studies how the brain affects economic decisions. His book, The Moral Molecule: Vampire Economics and the New Science of Good and Evil, will be published by Dutton in 2012.

If you have 3 minutes, you can read an interesting interview with the "father" of Neuroeconomics: InterviewPaulZak

Tuesday, 6 December 2011

Solar power is contagious — but not quite virulent (via The Washington Post)

There’s a new paper out from Bryan Bollinger of NYU’s Stern School and Kenneth Gillingham of Yale finding that, in California, solar power seems to be contagious. Having a bunch fo neighbors who are installing solar panels on their roofs makes a person more likely to try out solar for him- or herself. No surprise, peer pressure can be a powerful motivator. Specifically, the authors find, “a one percent increase in the zip code installed base leads to just over a one percent increase in the adoption rate.”

That explains why solar tends to cluster in specific California neighborhoods. (Interestingly, the authors note, the majority of solar adopters cite financial reasons, while only 26 percent say they’re installing panels out of concern for the environment.) But does it mean that rooftop solar adoption will eventually reach critical mass and trigger a fast chain reaction? John Farrell of the New Rules Project crunches the numbers and urges caution: “[I]f solar PV was being installed only once every 100 days at the outset, the peer pressure effect will take over 15 years to reduce the time between neighborhood installs to 10 days.” In other words, he says, “solar is contagious, but it’s not yet very virulent.”

You can check here the original paper and some extra data on the issue: SolarPowerPeerPressure

Sunday, 4 December 2011

Bottled water trend may be harmful to teeth (via Nature)

The trend for bottled water could be damaging teeth, according to new research conducted in America. According to a study published in the January/February 2009 issue of General Dentistry, the journal of the Academy of General Dentistry, bottled water fans are missing out on the valuable fluoride found in tap water. Researchers tested the fluoride content in more than 100 different samples of bottled water, which fell into six categories, distilled, drinking/purified, spring/artesian, mineral, fluoride-added and flavour-added.

If you have 1 minute, you can check everything here: BottleWater

During REM Sleep Stress Chemicals Shut Down And The Brain Processes Emotional Experiences (via MNT)

They say time heals all wounds, and new research from the University of California, Berkeley, indicates that time spent in dream sleep can help.

UC Berkeley researchers have found that during the dream phase of sleep, also known as REM sleep, our stress chemistry shuts down and the brain processes emotional experiences and takes the painful edge off difficult memories.

The findings offer a compelling explanation for why people with post-traumatic stress disorder (PTSD), such as war veterans, have a hard time recovering from painful experiences and suffer reoccurring nightmares.They also offer clues into why we dream.

if you have 5 minutes, you can check everything here: DreamSleep&Stress

Tuesday, 29 November 2011

Emotions, not facts, drive investors to sell (via Futurity)

UC DAVIS (US) — Regret and pride guide stock investors more than economic facts — often to their financial detriment—a new study shows.

Researchers looked at each day an investor made a stock purchase and whether the investor had sold those same stocks for a gain or loss during the previous 252 trading days. The team found that investors not only prefer to re-buy a stock that was profitable in the past, but they are also more likely to buy such a stock if it lost value after they sold it. (Credit: iStockphoto)

“Having sold a stock, investors are disappointed if it continues to rise, and regret having sold it in the first place,” says Brad Barber, a professor in the Graduate School of Management at the University of California, Davis. “They anticipate that their disappointment and regret will be more intense if they repurchase such a stock rather than not repurchasing it; thus investors are most likely to repurchase a stock previously sold for a gain that is trading below the price at which they sold it.”

If you have 2 minutes, you can check everything here and have a link to the paper: EmotionsDriveInvestors

Monday, 28 November 2011

Willpower: It's in Your Head (via NYT)

IS willpower an illusion? Is the traditional notion of a deep mental reservoir of strength a fiction?

In recent years, the popular answer has been yes. Our abilities, according to this argument, are constrained by the narrow limits of our biology. In her 2008 book, “Health at Every Size,” the nutritionist Linda Bacon argues that, because of how the brain’s hypothalamus works, it is a “myth” that anyone can will himself to lose weight by maintaining a diet. “It’s not your fault!” she writes. “Biology is so powerful it can ‘make’ you break that diet.”

This year, in their book “Willpower: Rediscovering the Greatest Human Strength,” the social psychologist Roy F. Baumeister and the New York Times science writer John Tierney survey a large body of scientific research to conclude that willpower is limited and depends on a continuous supply of the simple sugar glucose. When glucose is depleted, you fall prey to impulse shopping, affairs and cookies. The solution? “Try to get some glucose in you,” Mr. Tierney told NPR.

Such theories have an obvious appeal: attributing failures of willpower to our fixed biological limits justifies our procrastination as well as our growing waistlines. Not only that, we also get to consume more sugar. But are these theories correct?

You can check everything here, if you have 5 minutes- Willpower: It's in Your Head

Thursday, 24 November 2011

Kahneman Fast&SlowThinking BookPresentation@LSE (via BehEconGroup@Linkedin)

To celebrate the 100.000th visit to the There are Free Lunches blog and to thank all my readers for their attention and support, I would like to share with all of them an extensive interview - almost 1:30hr - with Daniel Kahneman, the founder of Behavioral Economics, Nobel Prize of Economics, and the most influent psychologist alive.

If you are willing to take the chance, I am sure you will hear interesting things about the way economic actors make decisions, what is the future of an economy of well-being, and many other interesting stuff. This interview was provided by Alain Samson: KahnemanFastSlowBookPresentation@LSE

Happiness should have greater role in development policy – UN Member States (via UN)

This happen on the 19th of July 2011. Only came to my eyes yesterday, and represents such good news that I decided to share it with you:

"The General Assembly today called on United Nations Member States to undertake steps that give more importance to happiness and well-being in determining how to achieve and measure social and economic development.

In a resolution adopted without a vote, the Assembly invited countries “to pursue the elaboration of additional measures that better capture the importance of the pursuit of happiness and well-being in development with a view to guiding their public policies.”

The resolution said “the pursuit of happiness is a fundamental human goal” and embodies the spirit of the globally agreed targets known as the Millennium Development Goals (MDGs).

Member States also welcomed the offer of Bhutan, which for many years has used gross national happiness rather than gross domestic product (GDP) as a marker of success, to convene a panel discussion on the theme of happiness and well-being during the Assembly’s next session, which begins in September.

The resolution notes that the GDP indicator “was not designed to and does not adequately reflect the happiness and well-being of people in a country,” and “unsustainable patterns of production and consumption can impede sustainable development.”

Meanwhile, the Assembly today also adopted a resolution stressing the importance of equality among the six official UN languages – Arabic, Chinese, English, French, Russian and Spanish.

Wednesday, 23 November 2011

Equity and Social Capital can Overcome Everything..Even a Fire

Today I would like to share with my readers the story of a company from my country, Portugal, and how equity and social capital allowed the company to surpass a very difficult obstacle: a fire that destroyed the entire production zone, corresponding to 20% of the total area.

The story is simple, but the outcome is not. Sicasal is a company from the processing of meat industry and after a fire which destroyed a significant part of the factory, and in times of economic crisis, everyone was expecting a massive lay-off. Surprisingly, the management and the employees of the company showed us that “when ties are strong, the boat goes the boat beyond the vague”. Not only the administration announce since the beginning that there would not be lay-off, but also the employees engaged themselves personally in reconstructing the factory that was destroyed by the fire.

What was the result? After one week, the factory was working at 80% of his full capacity, and this was achieved with almost no help from outside resources. The employees themselves, almost alone, rebuilt the factory that was destroyed by the fire.

Also, the country was impressed by the emotional way employees talked about their factory and its leaders.

If you understand Portuguese, you can check a small piece from Portuguese television here:

Sunday, 20 November 2011

Is there a proven system for making yourself happier? (via SimoleanSense)

Yes. We see a lot about increasing happiness these days, including excellent books by Daniel Gilbert, Gretchen Rubin and Martin Seligman.

I was curious about what what led to all this and came upon studies done by Michael Fordyce in 1977 and 1983.

He developed a system of 14 points that showed solid gains in happiness among his students: The collected findings from all studies indicate that the program has a noticeable and perhaps long-lasting effect on happiness for the great majority of individuals exposed to it and that this effect is due to the content of the information, not merely the artifact of sensitization or expectations about happiness to which it was compared.

Source: "A Program to Increase Happiness: Further Studies." from Journal of Counseling Psychology, 30(4), 483-498

So what was the system? Here are the 14 points, along with links to relevant info:

Briefly described, the 14 fundamentals are as follows:

(a) keep busy and be more active;

(b) spend more time socializing;

(c) be productive at meaningful work;

(d) get better organized and plan things out;

(e) stop worrying;

(f) lower your expectations and aspirations;

(g) develop positive, optimistic thinking;

(h) become present oriented;

(i) work on a healthy personality;

(j) develop an outgoing, social personality;

(k) be yourself;

(l) eliminate negative feelings and problems;

(m) close relationships are the number one source of happiness;

(n) put happiness as your most important priority.

Yes, some may seem obvious or easier said than done, but we probably aren't working as hard at many of these at we could.

Does access to a television increase debt? (via SimoleanSense)

Interesting, this paper suggests that television access is associated with higher debt levels for durable household goods, but not with the total amount of non-mortgage debt.

The empirical results suggest that the greater access to television is associated with a greater tendency to maintain household debt and debt for household products. Results also suggest that greater access to television is associated with higher levels of debt for durable goods, though not for total debt levels.

If you want to check the complete the paper, here you have the link:

Monday, 14 November 2011

The need to re-design money to solve both financial crisis and environmental crisis (via Jem Bendell’s Journal)

Why is the whole world in debt? How can we end these crises? Here is a TEDx talk on the hidden cause of the financial crisis. The real crisis is in our monetary system – the way our money is created. The solution is to redesign the way money is created. This is the underlying reform required to end the financial, environmental and social crises afflicting our societies. In this TEDx talk, Professor Jem Bendell calls on assembled broadcasters from across Europe, to expose the true nature of our current crises, and how to solve them.

Listen to these guy for 12 minutes, if you find it really interesting, please share it with all your friends - that was what I did:

Do Small Packages Make Us Eat More? (via Psychology Today)

In 2004, Kraft introduced small package sizes for several of its snack food lines. Aside from there being times when a smaller package might be more convenient, many consumers welcomed packages that were trumpeted as being helpful in moderating their own intake. This now-popular trend of "reduced size" or "100 calorie" packs was of course wildly successful. Not only did consumers want smaller packages, they were willing to pay more (per unit) for a package that was shrunk down in size. This was a win-win situation for both consumers and firms. Many consumers recognize that if left with the large package of chocolate, they continued to eat and eat. The idea was that if the package was smaller and promised to help them regulate their own intake, this had value for them.

But do people actually eat less as a result? New research says its unlikely to be the case. Jennifer Argo and Kate White, two marketing professors, recently conducted a series of studies in which consumers were given the opportunity to eat various unhealthy snacks. Those eating from small packages (versus large packs or no packages) ate significantly more that the other groups. Further, those who were low in appearance self-esteem (individuals particularly concerned with their weight and body image), the effects were even larger. Ironically, those who are presumably most interested in small packages are those who are most likely to overeat from them.

If you have 3 minutes, you can check everything here:

Thursday, 10 November 2011

Why Do People Eat Too Much? (via Wired)

“It seems to me that our three basic needs, for food and security and love, are so mixed and mingled and entwined that we cannot straightly think of one without the others.”
- M.F.K. Fisher

Human beings are notoriously terrible at knowing when we’re no longer hungry. Instead of listening to our stomach – a very stretchy container – we rely on all sorts of external cues, from the circumference of the dinner plate to the dining habits of those around us. If the serving size is twice as large (and American serving sizes have grown 40 percent in the last 25 years), we’ll still polish it off. And then we’ll go have dessert.

Consider a clever study done by Brian Wansink, a professor of marketing at Cornell. He used a bottomless bowl of soup – there was a secret tube that kept on refilling the bowl with soup from below – to demonstrate that how much people eat is largely dependent on how much you give them. The group with the bottomless bowl ended up consuming nearly 70 percent more than the group with normal bowls. What’s worse, nobody even noticed that they’d just slurped far more soup than normal.

Or look at this study, done in 2006 by psychologists at the University of Pennsylvania. One day, they left out a bowl of chocolate M&M’s in an upscale apartment building. Next to the bowl was a small scoop. The following day, they refilled the bowl with M&M’s but placed a much larger scoop beside it. The result would not surprise anyone who has ever finished a Big Gulp soda or a supersized serving of McDonald’s fries: when the scoop size was increased, people took 66 percent more M&M’s. Of course, they could have taken just as many candies on the first day; they simply would have had to take a few more scoops. But just as larger serving sizes cause us to eat more, the larger scoop made the residents more gluttonous.

Serving size isn’t the only variable influencing how much we consume. As M.F.K. Fisher noted, eating is a social activity, intermingled with many of our deeper yearnings and instincts. And this leads me to a new paper by David Dubois, Derek Ruckner and Adam Galinsky, psychologists at HEC Paris and the Kellogg School of Management. The question they wanted to answer is why people opt for bigger serving sizes. If we know that we’re going to have a tough time not eating all those French fries, then why do we insist on ordering them? What drives us to supersize?

If you have 3 minutes, you can check everything here:

Five Good Questions for Behavioral Economist Dan Ariely (via AdvisorOne)

When it comes to making decisions, using emotions is likely to be unsuccessful or lead us astray; money isn’t unique in that regard.

Using simple experiments Dan Ariely 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.
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.

Dan earned a bachelor’s degree in psychology from Tel Aviv University, his master’s and doctorate degrees in cognitive psychology from the University of North Carolina, and a doctorate in Business Administration from Duke University. He is the author of The New York Times bestsellers 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. I am the proud owner of both and have benefitted from them both.

His research has been published in leading psychology, economics, and business journals, and has been featured many times in the popular press. Dan has graciously agreed to answer what I hope are Five Good Questions.

If you have 10 minutes, you can check everything here:

Tuesday, 8 November 2011

Economics Behaving Badly (via The New York Times)

It seems that every week a new book or major newspaper article appears showing that irrational decision-making helped cause the housing bubble or the rise in health care costs.

Such insights draw on behavioral economics, an increasingly popular field that incorporates elements from psychology to explain why people make seemingly irrational decisions, at least according to traditional economic theory and its emphasis on rational choice. Behavioral economics helps to explain why, for example, people under-save for retirement, why they eat too much and exercise too little and why they buy energy-inefficient light bulbs and appliances. And, by understanding the causes of these problems, behavioral economics has spawned a number of creative interventions to deal with them.

But the field has its limits. As policymakers use it to devise programs, it’s becoming clear that behavioral economics is being asked to solve problems it wasn’t meant to address. Indeed, it seems in some cases that behavioral economics is being used as a political expedient, allowing policymakers to avoid painful but more effective solutions rooted in traditional economics.

Take, for example, our nation’s obesity epidemic. The fashionable response, based on the belief that better information can lead to better behavior, is to influence consumers through things like calorie labeling — for instance, there’s a mandate in the health care reform act requiring restaurant chains to post the number of calories in their dishes.

Calorie labeling is a good thing; dieters should know more about the foods they are eating. But studies of New York City’s attempt at calorie posting have found that it has had little impact on dieters’ choices.

Obesity isn’t a result of a lack of information; instead, economists argue that rising levels of obesity can be traced to falling food prices, especially for unhealthy processed foods.

To combat the epidemic effectively, then, we need to change the relative price of healthful and unhealthful food — for example, we need to stop subsidizing corn, thereby raising the price of high fructose corn syrup used in sodas, and we also need to consider taxes on unhealthful foods. But because we lack the political will to change the price of junk food, we focus on consumer behavior.

If you have 3 minutes, you can check everything here:

Can a change in portion size transform our bad food habits? (via TheSustainableBusinessBlog)

Including calorie numbers on menus has little effect but changing portion size and price could have a surprising result.

It is a commonly held view that calorific information on restaurant menus helps customers manage calorie consumption. In an online survey of visitors to the Sustainable Restaurant Association's website, over 60 per cent of respondents from the UK agreed. And in the halls of New York City's Board of Health they felt so strongly about the display of calorific values, it's been a legal requirement for short-order restaurants since 2008.

In the study Calorie Labeling and Food Choices: A First Look at the Effects on Low-Income People in New York City by New York University, only half of the customers questioned had noticed any calorie labeling on menu boards. Of those, just over 27 percent said the information influenced their choices. However, saying you're influenced is very different from being influenced. The study found there was no change in the number of calories purchased after the introduction of calorie labeling. Why?

If you have 3 minutes, you can check everything here:

Sunday, 30 October 2011

Is Happiness Overrated? (via Wall Street Journal)

The relentless pursuit of happiness may be doing us more harm than good.

Some researchers say happiness as people usually think of it - the experience of pleasure or positive feelings - is far less important to physical health than the type of well-being that comes from engaging in meaningful activity. Researchers refer to this latter state as "eudaimonic well-being."

Happiness research, a field known as "positive psychology," is exploding. Some of the newest evidence suggests that people who focus on living with a sense of purpose as they age are more likely to remain cognitively intact, have better mental health and even live longer than people who focus on achieving feelings of happiness.

In fact, in some cases, too much focus on feeling happy can actually lead to feeling less happy, researchers say.

The pleasure that comes with, say, a good meal, an entertaining movie or an important win for one's sports team - a feeling called "hedonic well-being" - tends to be short-term and fleeting. Raising children, volunteering or going to medical school may be less pleasurable day to day. But these pursuits give a sense of fulfillment, of being the best one can be, particularly in the long run.

If you have 3 minutes you can check everything here:

Monday, 24 October 2011

Richard Wilkinson: How economic inequality harms societies (via TED)

We feel instinctively that societies with huge income gaps are somehow going wrong. Richard Wilkinson charts the hard data on economic inequality, and shows what gets worse when rich and poor are too far apart: real effects on health, lifespan, even such basic values as trust.

If you have 16:55, you can check everything here:

How Behavioral Economics Can Help Cure the Health Care Crisis (via HBR)

Noncompliance with medical advice is one reason the U.S. health care is so costly. Yet it has received only cursory attention in the national health care debate — undoubtedly because politicians don't want to risk offending their constituents.

How bad is this problem? According to a study by the National Community Pharmacists Association, three of every four Americans don't take their drugs as directed. Forty-nine percent forget to take them; 31% don't fill their prescriptions and 29% stop taking their pills before the drugs run out! According to the New England Healthcare Institute, this costs the U.S. $290 billion per year (over 11% of our $2.5 trillion health care bill).

More waste comes from missed appointments. According to a cross-study analysis, no-show rates for doctor's visits run as high as 20% to 30%. Although there is no system-wide estimate of the effect, one study pegs the overall cost of each missed appointment to be over $700 to the health care system. Given the fact that in 2006 there were about 900 million appointments, the annual cost to the system is over $150 billion.

We think there is a tremendous opportunity to use behavioral economics (which recognizes that people aren't always rational) and relatively simple technology to create new tools that aid health organizations in managing consumers' behavior and that help patients improve their own actions. Even very small changes in patient population behaviors would have a dramatic impact on costs.

If you have 3 minutes, you can check everything here:

Do children make us happier? (via bakadesuyo)

Over the past few decades, social scientists like me have found consistent evidence that there is an almost zero association between having children and happiness. My analysis in the Journal of Socio-economics (Powdthavee, 2008) is a recent British example of parents and non-parents reporting the same levels of life satisfaction, on average.

But the warnings for prospective parents are even more stark than ‘it’s not going to make you happier’. Using data sets from Europe and America, numerous scholars have found some evidence that, on aggregate, parents often report statistically significantly lower levels of happiness (Alesina et al., 2004), life satisfaction (Di Tella et al., 2003), marital satisfaction (Twenge et al., 2003), and mental well-being (Clark & Oswald, 2002) compared with non-parents.

There is also evidence that the strains associated with parenthood are not only limited to the period during which children are physically and economically dependent. For example, Glenn and McLanahan (1981) found those older parents whose children have left home report the same or slightly less happiness than non-parents of similar age and status. Thus, what these results are suggesting is something very controversial – that having children does not bring joy to our lives.

How is this possible? Harvard professor Daniel Gilbert, and author of the best selling Stumbling on Happiness, addresses the issue:

The reason is that humans hold fast to a number of wrong ideas about what will make them happy. Ironically, these misconceptions may be evolutionary necessities. “Imagine a species that figured out that children don’t make you happy,” says Gilbert. “We have a word for that species: extinct. There is a conspiracy between genes and culture to keep us in the dark about the real sources of happiness. If a society realized that money would not make people happy, its economy would grind to a halt.”

If you have 3 minutes, you can check everything here:

Friday, 21 October 2011

Not so selfish (via Samuel Bowles)

A prescription for how human cooperation evolved will provoke much-needed debate about the origins of society, finds Peter Richerson.
Humans are capable of remarkable feats of cooperation. Warfare is an extreme example: when under attack, hundreds or even millions of people might join forces to provide a mutual defence. In A Cooperative Species, economists Samuel Bowles and Herbert Gintis update their ideas on the evolutionary origins of altruism. Containing new data and analysis, their book is a sustained and detailed argument for how genes and culture have together shaped our ability to cooperate.
Modern hunting and gathering societies offer clues as to how human cooperation evolved. They are typically organized into tribes of a few hundred to a few thousand people. Each tribe is composed of smaller bands of around 75 individuals united by bonds of kinship and friendship. Formalized leadership is often weak, but cooperation is buttressed by social norms and institutions, such as marriage, kinship and property rights. The tribal scale of social organization probably evolved by the late Pleistocene (126,000–11,700 years ago), or perhaps much earlier.

If you have 5 minutes, you can check everything here:

Sunday, 16 October 2011

The dark side of happiness (via Boston Globe)

You can be happy starting today! Don’t sit by any longer, while friends and co-workers enjoy the good life. Happiness is yours for the taking: All you have to do is reach out and grab it.

So goes the message of countless self-help books and motivational videos, and the mantra of many a life coach. It’s been the thesis of a long and growing list of magazine stories and newspaper articles. It’s the appeal of a good number of serious psychology books, based on scientific research.

The last decade has been a golden era in the rigorous study of happiness, with researchers defining, ever more precisely, what makes us happy. And while the scholarship is new, it builds on a long national tradition of articulating happiness as one of life’s fundamental goals. The pursuit of happiness has been right up there with life and liberty since the country’s foundation.

Now, though, there is gathering evidence that happiness is not what it may appear. A string of new studies suggests that the modern chase after happiness--and even happiness itself--can hurt us. Happy, it turns out, is not always the way you want to be. To be happy is to be more gullible. Happy people tend to think less concretely and systematically; they are less persuasive. A happy person is less likely to discern looming threats.

And the chase itself can backfire: The more you value happiness, it turns out, the more unhappy you will become. The problem, a team of psychologists reports, is that when you focus too much on happiness, you are disappointed when happy events--your birthday party, say--don’t deliver a bigger boost. Which makes you unhappy. Reach for happiness with both hands, and it will abandon you.

If you have 10 minutes, you can check everything here:

Tuesday, 11 October 2011

Markets don’t think, feel or believe anything (via BusinessJournalism)

The markets believe Greece needs a restructuring.

No, they don’t.

Journalists have been told for decades to “humanize” their stories, so readers might better understand complicated subjects. That’s why when oil prices break through some imaginary “psychological barrier,” tag teams of reporters are dispatched to America’s gas stations to ask customers what they think it all means. The fact that these consumers generally have no idea has not stopped us from dumping millions of words’ worth of clichéd observations about “pain at the pump.”

Attempts to humanize are harmless enough. If writers and editors can’t rid their stories of valueless opinions from people who know nothing about what they’re being asked, they can rest easy knowing that most astute readers will just skip over them.

More insidious is the convention of writing about markets as though they were human beings, such as these examples:

There is alarm at Berlin’s inability to grasp how financial markets think.

The Fed’s hope is to relieve some of the pressure on institutions to sell at fire-sale prices, easing the strains on economic activity and making the credit markets feel more comfortable in buying mortgage bonds again.

Could Egypt destabilize global economy? Markets say no.

NYSE Euronext chief executive Duncan Niederauer can say something. The New York Stock Exchange, in a written statement or through an official, can say something. The market it enables cannot. The “market” is cold and lifeless. It couldn’t order a sandwich, let alone think about the “global economy.”

How we write and edit affects how people think. I can’t say it’s purposeful, but it’s safe to say that anthropomorphism (attributing human characteristics to things) can actually affect how real live people think about the markets.

If you have 3 minnutes you can check everything here:

Sunday, 9 October 2011

Habituation from Thought: Thinking Can Enhance Self-Control—in Eating and Elsewhere (Via Big Think)

Last December, a series of provocative studies appeared in Science. The finding: imagine eating a food, over and over and over, and you will eat less of it when you are actually given the opportunity to do so. At first glance, it seems completely counterintuitive. Don’t we get hungry when we watch The Food Network or read delicious descriptions in cookbooks, magazines, or novels? Doesn’t thinking about eating make us hungrier to eat? Yes. Absolutely. But these studies come with a twist, and that twist is repetition. Mind-numbing, frequent repetition, plain and simple.

If you have 5 minutes, you can read everything here:

Wednesday, 28 September 2011

The Price of Friendship, as Measured by Radiohead Tickets (via Freakonomics)

Radiohead is famous for doing price experiments with fans. At the height of illegal downloads, the band asked fans to pay-what-you-want for their album. They picked a small venue in New York — the Roseland Ballroom which accommodates 3,000 instead of Madison Square Garden which seats about 20,000 — and limited ticket sales to 2 per customer. But can limiting supply like this really stop a black market from emerging?

The answer is no. I checked Craigslist and there were already tons of ads. Economics tells us that limiting supply will only make price go up. I’m seeing average scalping prices right now — from $400 to $1000 for an $80 face value ticket. But what’s more interesting to me are the desperate buyers, not the sellers. Sellers just list the price they’d like for their goods, but buyers — many of whom don’t have that kind of cash — will start to barter in hopes that a seller is crazy enough not to take cash. This kind of thing is always fun for an informal study on people’s utility curve. The Gothamist has a good roundup of weird things people are offering/asking for (a soul, a date, or “priceless heirlooms or foreign treasures.”)

And of course, for a friend who’s so kind to offer me a ticket (not free, but at cost) I did the only thing I could think of: map his utility curve.

There were 2 conditions to his offer: arrive on time, and 100% commitment to going. Both of which were fine by me. I surveyed him to try to understand why he would give up $1000.

If you have 5 minutes, you can check everything here:

Sunday, 18 September 2011

The Psychology Of Yogurt (via Wired)

One of the deepest mysteries of the human mind is that it doesn’t feel like part of the body. Our consciousness seems to exist in an immaterial realm, distinct from the meat on our bones. We feel like the ghost, not like the machine.

This ancient paradox—it’s known as the mind-body problem—has long perplexed philosophers. It has also interested neuroscientists, who have traditionally argued that the three pounds of our brain are a sufficient explanation for the so-called soul. There is no mystery, just anatomy.

In recent years, however, a spate of research has put an interesting twist on this old conundrum. The problem is even more bewildering than we thought, for it’s not just the coiled cortex that gives rise to the mind—it’s the entire body. As the neuroscientist Antonio Damasio writes, “The mind is embodied, not just embrained.”

The latest evidence comes from a new study of probiotic bacteria, the microorganisms typically found in yogurt and dairy products. While most investigations of probiotics have focused on their gastrointestinal benefits—the bacteria reduce the symptoms of diarrhea and irritable bowel syndrome—this new research explored the effect of probiotics on the brain.

The experiment, led by Javier Bravo at University College Cork in Ireland, was straightforward. First, he fed normal lab mice a diet full of probiotics. Then, Mr. Bravo’s team tested for behavioral changes, which were significant: When probiotic-fed animals were put in stressful conditions, such as being dropped into a pool of water, they were less anxious and released less stress hormone.

If you have 3 minutes you can check everything here:

Friday, 16 September 2011

Self-delusion a winning survival strategy, study suggests (via World Science)

Har­bor­ing a mis­tak­enly in­flat­ed be­lief that we can easily meet chal­lenges or win con­flicts is ac­tu­ally good for us, new re­sults from sim­ula­t­ions sug­gest.

Pub­lished in the re­search jour­nal Na­ture Sept. 14, the re­search in­di­cates that over­con­fi­dence of­ten br­ings re­wards, as long as “spoils” of con­flict are large com­pared with the costs of com­pet­ing for them.

Over­con­fi­dence can br­ing suc­cess in sports, busi­ness or even war, the au­thors say. But they cau­tion that this bold ap­proach al­so risks wreak­ing ever-great­er hav­oc. They cite the 2008 fi­nan­cial crash and the 2003 Iraq war as just two ex­am­ples of when over­con­fi­dence back­fired.

“The mod­el shows that over­con­fi­dence can plau­sibly evolve in wide range of en­vi­ron­ments, as well as the situa­t­ions in which it will fail. The ques­tion now is how to chan­nel hu­man over­con­fi­dence so we can ex­ploit its ben­e­fits while avoid­ing oc­ca­sion­al dis­as­ters,” said study co-author Dom­i­nic John­son of the Uni­vers­ity of Ed­in­burgh.

The re­search­ers, from the Uni­vers­ity of Ed­in­burgh and the Uni­vers­ity of Cal­i­for­nia, San Die­go, used a math­e­mat­i­cal mod­el to sim­ulate the ef­fects of over­con­fi­dence over genera­t­ions. Their mod­el pit­ted “o­verconfident” play­ers against play­ers with ac­cu­rate per­cep­tions of their own abil­i­ties, and oth­ers that were un­der­con­fi­dent.

If you have 2 minutes, you can check everything here:

Tuesday, 13 September 2011

Ethical banking takes root in the mire of the global financial crisis (via

The financial crisis and its excesses have manured a breeding ground where new initiatives are sprouting, aimed at revolutionizing the banking world, or at least at introducing a different outlook, with a certain moral content.

Among these, ethical banking is raising its head, with statistics that show a sustained growth in clientele. The May 15 "indignation" movement has inspired thousands of people to search for alternatives to a traditional banking system that they reject. Ethical banking institutions are attracting more clients than ever, and their growth, though limited, is constant.

The ethical banking sector, composed in Spain of only five entities and somewhere more than 50,000 clients, stands for total transparency. It only invests in the real economy, finances projects related to sectors such as renewable energies and ecological agriculture, and holds social justice to be its own particular Bible.

"I looked at the list of companies I had invested in, and none of them were to my liking. It was a pleasure to tell my bank to withdraw all my investments in the stock market. Then your conscience is a lot clearer, because your money is passing through an ethical filter," says Víctor Maeso, member of an agricultural cooperative at Manresa, near Barcelona.

If you have 2 minutes, you can check everything here:

Tuesday, 6 September 2011

Behavioral Economics Arrives to Portugal!!!

If you can read in Portuguese you can read about the first Portuguese Graduate Course in the Area:ós-Graduações/Pós-Graduação+em+Psicologia+para+Decisores/

Monday, 5 September 2011

Slow down! You move too fast! (via research)

Attempts to curb speeding on the roads usually involve a mix of scary messages and the threat of fines or driving bans. But behavioural economics is starting to be applied to this social issue in creative ways.

A brilliant example from the inspirational is the speed camera lottery. If you keep within the speed limit you are caught on camera and automatically entered into a lottery to win a prize. This (in BE terms) is a classic piece of reframing: from a negative and punitive stance to a positive one – offering a reward for those who obey the rules.

Slightly more practical is the Smiley SID (Speed Indication Display) which is a traffic calming sign designed to use social norms on drivers to reduce their speed. A smiley SID rewards drivers when they obey the speed limit, while a sad SID tells them they’re going too fast. Developed as more of a gentle reminder and a non aggressive means of speed limit enforcement, SIDs are seen as the “friendly” face of community and site speed education. They have been found to be effective particularly in low-speed areas, which tend to be residential.

If you have 5 minutes you can check everything here:!-you-move-too-fast/4005749.article

Behavioral Economists Establish a Beachhead Within Obama Administration (via Bloomberg)

Peter R. Orszag, the White House budget director, plans to resign this summer, the first of President Barack Obama’s Cabinet to do so. He leaves behind an indelible mark on two of the President’s signature issues: the $862 billion economic stimulus plan and the $940 billion health- care reform law, both of which he had a major hand in drafting.

In another, less visible arena, Orszag’s imprint could be just as big. He was one of the Administration’s most prominent devotees of behavioral economics -- the study of what drives consumers to part with their money as they pick one product, retailer, or provider over another. If you give consumers better information and subtly push them in the right direction, the thinking goes, they can be coaxed, not commanded, into buying healthier foods, consuming less energy, and taking out more affordable mortgages, Bloomberg Businessweek reports in its June 28 issue.

At the Office of Management & Budget, Orszag, 41, created a team of like-minded adherents, including Cass R. Sunstein, Obama’s regulatory czar and the co-author of Nudge, a behavioralist manifesto. They have quietly established a beachhead, influencing major sections of the health-care reform law and the financial-regulation overhaul Congress is about to complete. Their handiwork can be seen in proposed rules ranging from mine safety to retirement savings, tire durability, and food labels.

If you have 3 minutes you can check everything here:

Sunday, 4 September 2011

Dissonant Debt (via

A recent US academic study that showed college students feeling “empowered” by student debt has baffled many observers.[1] In an environment of over-indebtedness and increasing joblessness, one would have thought that a student loan would be perceived as a burden. But no, according to researchers at the University of Ohio, the greater the debt the higher college students’ self-esteem. In reality, the perception of the debt load is not counterintuitive at all. If students value the education they receive, it is almost certain that they will view the debt in a positive light too.

People like to keep their beliefs consistent with one another. In earlier posts we have shown how this preference affects gang membership, fidelity in marriage[2] and church-going[3]. The same applies to the student loan: if the students believe that their studies are valuable and worthwhile, it is perfectly consistent that they see an outsized student loan as acceptable. Indeed, the higher the debt, the greater value the student is likely to attach to the education. Any other conclusion would provoke uncomfortable feelings of cognitive dissonance.

If you have 2 minutes, you can check everything here:

Thursday, 25 August 2011

Your Emotions Are What You Eat: How Your Diet Can Reduce Anxiety (via Big Think)

If you believe your emotions can affect your health, nutritionist-author Nora Gedgaudas would say you've got another thing coming.

In her view, your emotions are largely a product of your health.

At the Ancestral Health Symposium this month at UCLA Gedgaudas spoke about "the myth of the 'mind-body connection' and how diet can powerfully impact mental health and cognitive performance" and she expanded on this in an interview with Age of Engagement.

"Emotions are biochemical storms in the body and brain," she says. "The healthier your biochemistry, of course, the better the emotional and also the cognitive forecast."

Psychological issues have physiological underpinnings, she says, not the other way around. Nor are they a result of outside issues.

If you have 5 minutes you can check everything here:

Wednesday, 24 August 2011

FREE! in Swedish Medicine (via Dan Ariely)

I recently learned of an interesting innovation in medical pricing coming from Sweden. This pamphlet from the healthcare authority states (translated): ”If you have a respiratory problem and you don’t take antibiotics for it during your first visit to the doctor, you have the right to a second visit within five days free of charge.

This approach is using the power of FREE! in an attempt to get people to reduce their use of antibiotics. But, I wonder if this approach might be too powerful, such that it will get people who should get antibiotics, not to get any. And, I also wonder if this approach will be particularly effective on people who have less money — which might not be ideal.

Monday, 22 August 2011

Daniel Kahneman Lecture in London (Nov 16, 2011)

Wednesday 16 November 2011
7.00pm to 8.30pm - Good availability
Lecturers: Daniel Kahneman

Two systems drive the way we think and make choices: system one is fast, intuitive, and emotional; system two is slower, more deliberative, and more logical. Over many years, Nobel Prize winner Daniel Kahneman has conducted groundbreaking research into this – in his own words – “machinery of the mind”. Fast thinking has extraordinary capabilities, but also faults and biases. Intuitive impressions have a pervasive influence on our thoughts and our choices.

If you have 2 minutes you can check everything here:

Wednesday, 17 August 2011

The End of Rational Economics? (via Big Think)

If you have 2:24 please check here the ideas of Paul Krugman (Nobel Prize of Economics) about the issue:

Thursday, 4 August 2011

Principle 8: Follow the Herd Instead Of Your Head

By visiting the Internet Movie Database at, consumers can access a huge array of information to help them choose a movie, including trailers, plot summaries, and detailed information about the cast and crew. This information allows consumer to simulate the experience of watching a movie, potentially enabling them to make more accurate affective forecasts and better movie choices. Alternatively, however, consumers could choose to ignore all of this detailed information about a movie’s content, and instead click on "user ratings" to find out how thousands of other visitors to the site rated the movie. It is possible to break down these ratings by demographics so, for example, a thirty-two year old woman could find out how women ages 30-44 liked the movie. So which method is better?
Research suggests that the best way to predict how much we will enjoy an experience is to see how much someone else enjoyed it. In one study, Gilbert, Killingsworth, Eyre, and Wilson (2009) asked women to predict how much they would enjoy a speed date with a particular man. Some of the women were shown the man’s photograph and autobiography, while others were shown only a rating of how much a previous women had enjoyed a speed date with the same man a few minutes earlier. Although the vast majority of the participants expected that those who were shown the photograph and autobiography would make more accurate predictions than those who were shown the rating, precisely the opposite was the case. Indeed, relative to seeing the photograph and autobiography, seeing the rating reduced inaccuracy by about 50%. It appears that the 17th century writer François de La Rochefoucauld was correct when he wrote: "Before we set our hearts too much upon anything, let us first examine how happy those are who already possess it."
Other people can supply us with a valuable source of data not only by telling us what has made them happy, but also by providing information about what they think will make us happy (McConnell, Dunn, Austin, & Rawn, 2010). To demonstrate this idea, McConnell et al (2010) told participants that they would be asked to eat two small snacks and then unveiled a piece of celery and a chocolate chip cookie, in turn. After seeing each food, participants predicted how much they would enjoy eating it, and then ate it and rated their actual enjoyment. Unbeknownst to participants, they were being watched by two observers, who surreptitiously rated participants’ facial reactions when each food was unveiled. The flash of affect that appeared on participants’ faces when they saw each food significantly predicted their enjoyment of the food—above and beyond the affective forecasts the participants themselves had made just moments before eating. This suggests that an attentive dining companion may be able to tell whether we would enjoy the fish or the chicken simply by watching our reactions when these options are presented. More broadly, other people may provide a useful source of information about the products that will bring us joy because they can see the nonverbal reactions that may escape our own notice.

Friday, 22 July 2011

How Psychological Tricks can Keep People from Being Killed on the Tracks

The suburban rail system in the Indian megalopolis of Mumbai is best visualized as two slim arteries cutting through a crowded peninsula. On a map, the Western Line runs due north; the Central Line begins similarly, then wanders away into the city’s northeastern parts. These two lines and a couple of adjunct capillaries, making up a rail network dating back to 1857, carry roughly 7 million commuters a day, some of them over distances as long as 75 miles.
Every mile of this network runs through dense pockets of population, houses, and buildings; these are often just yards away from the tracks, separated at best by a low wall. Sixty percent of the length of the Central Line, for instance, has slums on either side. At rush hour, trains barrel through every couple of minutes, and pedestrian bridges over the tracks are rare. As a consequence, the most popular way for pedestrians to get between east and west Mumbai is to dash illegally over unguarded sections of the tracks.
The consequences are often fatal. On average, 10 people die daily by being hit as they’re crossing the tracks. Track trespassing is the largest everyday cause of unnatural deaths in Mumbai.
For just over a year, however, an experiment at Wadala station, on the Central Line, has been hinting at unorthodox solutions to this problem. On the surface, the experiment involves small, odd changes. Certain railway ties have been painted bright yellow; a new kind of signboard has been installed near the tracks; engine drivers have modified the way they hoot their warning whistles.
This modest tinkering has had dramatic results. In the six months before the experiment went live in December 2009, Wadala had recorded 23 track-crossing deaths, said M. C. Chauhan, a manager with the Central Railway’s Mumbai division. Between January and June 2010, that number had dropped to nine; in the next eight months, up until February 2011, only one death was registered. “We think the project is a huge success,” Chauhan said.

You can check everything about this BE intervention here, if you have 10 minutes:

Sunday, 10 July 2011

Pay-What-You-Want Pricing and Charitable Giving (Via Stanford Center for Social Innovation)

In this quarter’s column, we explore “shared social responsibility” — the idea of companies working in tandem with charities and customers to support socially beneficial causes.

One way this can work is illuminated in a recent study co-authored by Leif Nelson, an associate professor of marketing at the Haas School of Business at UC Berkeley. Nelson and his colleagues have shown that when customers are allowed to pay what they want for a purchase, and — this is key — when they simultaneously know a portion of their money will go to a specific charity, they offer substantially more than they would without the involvement of the charity.

It turns out that just offering a product at a fixed price and telling customers that a certain percentage of their purchase will go to the charity doesn’t stimulate as many sales — and therefore doesn’t raise as much money as hoped. Yet this is the most common charitable promotion consumers see.

Interestingly, the study reveals that letting people pay what they want, combined with a promise that some will go to charity, produces even more profit than selling them a product at a regular, fixed price — whether that price has a charity offer attached to it or not. It also produces a surplus that can go to the charity itself. This type of co-participatory pricing scheme, then, is an ingenious way of stimulating both philanthropic giving and increased sales — a win-win for everyone.

If you have 5 minutesyou can check this insigth to the "honest bar" phenomena here:

Answer to Lydia

Hi Lydia,
It really resemble a social psychology experiment, reason why I decided to amplify it ;)
According with one of the reception employees it worked well, with the
gains from not paying an extra employee and the turists satisfaction surpassing the
small costs from people who consumed without paying.
I agree tha the fact it was a small community of turists, having a good time and establishing a
positive exchange with the villages resort also played a role.
Thanks for your comment, Diogo

Tuesday, 5 July 2011

"Honesty Bar"

While in vacations at the beautiful island of Madeira (I truly recommend it), I was amazed by the pools' bar management philosophy. It was called the "Honesty Bar" and it had no waiters! Besides that it had everything else a normal pool bar can have: fresh drinks, all sorts of snacks, chocolates and candies, bread, cheesse and ham that you can use to make a toast. It had also the several devices used in similar bars such as a coffee machine, ice refrigerator, and a toaster. Most impressively, it had a small safe-deposit box with a considerable amount of money, which you should use to pay for your consumption (all the items had a price indication) and do the changes yourself. At the same time, you should also indicate in a sheet of paper what was your consumption, how much did you pay, and what was your appartment number. Did it work? I would say I don't know for how long does it last, but by the amount of money there was in the box when I payed for my cheese and ham toast and "Brisa Maracujá" (passion fruit drink typical from Madeira), and a considerably filled sheet of paper, it worked perfectly!!
The question is, why did it worked? Or why would it not work in another context? Is it the vacation mode? The fair transaction happening between the turist and the appartments village? The fact that it was occuring within a small community of turists?
I think answering these questions would be an interesting exercise to understand the puzzle between altruistic and egoistic economic behavior.

Monday, 4 July 2011

Management Science, one of the Most Important Management Journals, opened a Behavioral Economics Department (via SJDM mailinglist)

Given the tremendous growth and importance of behavioral economics research and building on the success of our Behavioral Economics and Finance Special Issue (which is scheduled to appear in the January 2012 issue), we have created a new department in Management Science: Behavioral Economics
We provide below our editorial team, the editorial statement for the department and information about Management Science.
Department Editors:
Uri Gneezy, University of California, San Diego
Teck-Hua Ho, University of California, Berkeley
John List, University of Chicago
Associate Editors:
Nick Bloom,Stanford University
Colin Camerer, California Institute of Technology
Jeffrey Carpenter, Middlebury College
Gary Charness, University of California, Santa Barbara
Yan Chen, University of Michigan
Anna Dreber, Stockholm School of Economics
Simon Gaechter, University of Nottingham
Stephan Meier, Columbia University
Klaus Schmidt, Univeristy of Munich
Andrew Schotter, New York University
Uri Simonsohn, University of Pennsylvania
Matthias Sutter, University of Innsbruck
Chad Syverson, University of Chicago
John van Reenen, London School of Economics
Roberto Weber, University of Zurich
Editorial Statement:
The Behavioral Economics Department seeks to publish original research broadly related to behavioral economics. We welcome laboratory experiments, field studies, empirical and theoretical papers. The goal of the Department is to promote research on incentives and behavior in domains such as markets, groups and individual decision making. In the cross-disciplinary tradition of Management Science, we encourage research that draws ideas from multiple disciplines including economics, psychology, sociology, and statistics to provide novel insights on behavioral economics. In all cases, manuscripts should provide high quality original approaches to behavioral economics, should be motivated such that the importance of the results are clear to nonspecialists and have important managerial implications for business and public policy.

Monday, 27 June 2011

Behavioural economics could knock £1.7bn off energy bills in the UK – if government gets the policy right (via the Green Living Blog)

New behavioural approaches to energy efficiency could save British households hundreds of millions of pounds each year, avoid millions of tons of carbon, and get more people to take advantage of the government’s new Green Deal and fuel poverty programs. The key lies in the new smart meters that will be deployed to every UK household over the next few years and whether the Department of Energy and Climate Change (DECC) allows suppliers, working with innovative companies, to translate this new energy data into value for consumers.

If you have 5 minutes, you can check everything here:

Friday, 17 June 2011

Dan Ariely Interview (via Qualtrics)

Behavioral Economist and New York Times Bestselling Author Dan Ariely met with Qualtrics to discuss behavioral economics, his research, and what his findings mean for researchers around the world. A portion of the interview is published here. We know you will enjoy it.
If you have 5 minutes, you can check everything here:

Thursday, 9 June 2011

Why Can’t More Poor People Escape Poverty? (Via Simoleon Sense)

Flannery O’Connor once described the contradictory desires that afflict all of us with characteristic simplicity. “Free will does not mean one will,” she wrote, “but many wills conflicting in one man.” The existence of appealing alternatives, after all, is what makes free will free: What would choice be without inner debate? We’re torn between staying faithful and that alluring man or woman across the room. We can’t resist the red velvet cake despite having sworn to keep our calories down. We buy a leather jacket on impulse, even though we know we’ll need the money for other things. Everyone is aware of such inner conflicts. But how, exactly, do we choose among them? As it turns out, science has recently shed light on the way our minds reconcile these conflicts, and the result has surprising implications for the way we think about one of society’s most intractable problems: poverty. In the 1990s, social psychologists developed a theory of “depletable” self-control. The idea was that an individual’s capacity for exerting willpower was finite—that exerting willpower in one area makes us less able to exert it in other areas. In 1998, researchers at Case Western Reserve University published some of the young movement’s first returns. Roy Baumeister, Ellen Bratslavsky, Mark Muraven, and Dianne Tice set up a simple experiment. They had food-deprived subjects sit at a table with two types of food on it: cookies and chocolates; and radishes. Some of the subjects were instructed to eat radishes and resist the sweets, and afterwards all were put to work on unsolvable geometric puzzles. Resisting the sweets, independent of mood, made participants give up more than twice as quickly on the geometric puzzles. Resisting temptation, the researchers found, seemed to have “produced a ‘psychic cost.’”

If you have 10m, you can check everything here:

Tuesday, 7 June 2011

Principle 7: Beware of Comparison Shopping

Each month, as many as twenty million people visited, a top comparison-shopping website that entices consumers with the slogan, “Search. Compare. Conquer.” Sites like this one offer consumers the opportunity to search for everything from mattresses and remote control cars to educational degrees, comparing a vast range of available options within a given category. The comparison shopping facilitated by these sites offers obvious benefits to consumers, who can find the best deal on the product most ideally suited to their needs. But recent research suggests that comparison shopping may sometimes come at a cost. By altering the psychological context in which decisions are made, comparison shopping may distract consumers from attributes of a product that will be important for their happiness, focusing their attention instead on attributes that distinguish the available options. Examining this idea, Dunn, Wilson, and Gilbert (2003) took advantage of a natural experiment created by the housing system at Harvard University. Near the end of their first-year of college, Harvard undergraduates are randomly assigned to spend the subsequent three years living in one of twelve “houses.” Each house has a dining hall, as well as recreational facilities, and much of undergraduate life revolves around the houses. Some of the houses are located near the center of campus and have beautiful architecture and lovely rooms, while others are located farther from the main campus and were built during more regrettable eras of architectural design. Although there is great variety in the physical features of the houses, all of them offer their residents a sense of community, as well as the opportunity to live with their closest friends, with whom they enter the housing lottery. When asked directly, first-year students in our study reported that the physical features of the houses (e.g., location, room size) would be less important for their happiness than the social features (e.g., sense of community, relationships with roommates). Indeed, when these students later settled into their houses as sophomores and juniors, their happiness was predicted by the quality of social features but not by the quality of physical features in the houses. But, when these students stood on the brink of entering the housing lottery and were asked to predict how happy they would be living in each of the twelve houses, their attention gravitated to the features that differed most between the houses; their predictions were driven largely by the physical characteristics of each house, which varied greatly between the twelve houses, while they overlooked the role of social features in shaping their own future happiness. Because students focused excessively on highly variable features of the houses, they fell victim to the impact bias, overestimating how happy they would be living in the physically desirable houses and how miserable they would be living in the less desirable houses. A similar process is likely to unfold in the real estate market. Before purchasing a home, people typically attend scores of open houses and viewings, scrutinizing spec sheets for information about each property’s features. Through this process of comparison shopping, the features that distinguish one home from another may come to loom large, while their similarities fade into the background. As a result, home buyers might overestimate the hedonic consequences of living in a big, beautiful house in a great location versus a more modest home, leading them to take out a larger loan than they can truly afford (potentially sowing the seeds for a nationwide financial crisis). From this perspective, comparison shopping may focus consumers’ attention on differences between available options, leading them to overestimate the hedonic impact of selecting a more versus less desirable option. To the extent that the process of comparison shopping focuses attention on hedonically irrelevant attributes, comparison shopping may even lead people to choose a less desirable option over a more desirable option. In a particularly vivid demonstration of this idea, Hsee (1999) presented participants with a choice between receiving a larger (2.0 oz.) chocolate valued at $2 that was shaped like a real cockroach and a smaller (0.5 oz.) chocolate valued at 50 cents that was shaped like a heart. Although only 46% participants of participants predicted that they would enjoy the larger roach-shaped chocolate more than the smaller heart-shaped one, fully 68% of participants reported that they would choose the roach-shaped chocolate. This suggests that comparison shopping may lead people to seek out products that provide the ―best deal‖ (i.e., why accept a chocolate valued at 50 cents when I could have one valued at $2?). Another problem with comparison shopping is that the comparisons we make when we are shopping are not the same comparisons we will make when we consume what we shopped for (Hsee, Loewenstein, Blount, & Bazerman, 1999; Hsee & Zhang, 2004). Morewedge et al (in press) asked people to predict how much they would enjoy eating a potato chip. Some participants were in a room that contained superior foods (e.g., chocolate) and some were in a room that contained inferior foods (e.g., sardines). Participants who were exposed to inferior foods predicted that they would like the chips more than did participants who were exposed to superior foods. But these predictions were wrong. When participants actually ate the chips, they liked them equally, regardless of what room they were in. When making predictions, participants naturally compared one imagined experience (chips) to another (chocolate or sardines). But once they actually had a mouthful of crispy fried salty potato chips, they no longer compared the food they were eating to the food they might have eaten but didn’t. One of the dangers of comparison shopping, then, is that the options we don’t choose typically recede into the past and are no longer used as standards for comparison.

Friday, 3 June 2011

Why You Don't Feel Rich, or paraphrasing Pablo Picasso: "they're poor people living with lots of money"

A Princeton study last fall showed extra income didn't affect most people's happiness above about $75,000 a year. Another study by Gallup found the happiest people in America earn $120,000 a year.
These folks may be happy. Just don't call them rich.

Survey after survey shows many Americans wouldn't consider themselves "rich" until they had a net worth of $5 million-$10 million. British publisher Felix Dennis says you aren't rich until you have at least $150 million. Russian oligarch Sergei Polonsky says anyone without a billion dollars "can go to hell."

The question over what's considered "rich" became important a few years ago after some politicians suggested anyone making more than $250,000 could afford a tax hike. Plenty found this absurd, and perhaps rightly -- what $250,000 buys varies wildly depending on geography. A quarter-million bucks in North Dakota buys a ranch. In New York City it (literally) buys a parking space.

If you have 5 minutes you can check all the information about this study here:

Thursday, 26 May 2011

Principle 6: Think About What You’re Not Thinking About

According to a recent poll, a majority of adult Canadians dream of owning a vacation home, preferably by a lake (Gilmer & Casser, 2009). The features they highlight as important for their dream cottage include peace and quiet, access to fishing and boating, and sunset vistas. These are features that are central to the very essence of a lakeside cottage, and they naturally come to mind when people envision owning a vacation home. But, taking a broader view, there are many other, less essential aspects of cottage ownership that are likely to influence owners’ happiness, from the mosquitoes buzzing just outside, to the late-night calls about a plumbing disaster in the lakeside area, to the long drives back home after a vacation weekend with sleepy children scratching their mosquito bites. Cast in the soft light of imagination, these unpleasant, inessential details naturally recede from view, potentially biasing consumers’ predictions about the degree of happiness that their purchases will provide. This phenomenon stems from a peculiar property of imagination. The farther away an experience lies in time, the more abstractly we tend to think of it (Liberman, Sagrastino, & Trope, 2002). This oversight matters because happiness is often in the details (Kahneman, Krueger, Schkade, Schwarz, & Stone, 2004; Kanner, Coyne, Schaefer, & Lazarus, 1981). On any given day, affective experience is shaped largely by local features of one’s current situation—such as experiencing time pressure at work or having a leisurely dinner with friends—rather than by more stable life circumstances (e.g., having high job security, being married; Kahneman et al., 2004). Over time, psychological distress is predicted better by the hassles and “uplifts” of daily life than by more major life events (Kanner et al., 1991). Thus, in thinking about how to spend our money, it is worthwhile to consider how purchases will affect the ways in which we spend our time. For example, consider the choice between a small, well-kept cottage and a larger “fixer upper” that have similar prices. The bigger home may seem like a better deal, but if the fixer upper requires trading Saturday afternoons with friends for Saturday afternoons with plumbers, it may not be such a good deal after all. Of course, after buying a new home, our happiness will depend not only on the ripple effects associated with home ownership, but also on the many aspects of daily life that are simply unrelated to home ownership, from birthday cakes and concerts to faulty hard drives and burnt toast. Yet, because such “irrelevant” details of daily life are obscured from view when we focus our mental telescopes on an important future event, we may frequently overestimate the emotional impact of a focal event (Wilson, Wheatley, Meyers, Gilbert, & Axsom, 2000). Wilson et al. (2000) found evidence for this idea by surveying football fans at the University of Virginia (UVA) prior to a big game against a rival school. Asked to imagine how they would feel in the days following the game, football fans expected that they would be much happier if their team won than if they lost. The day after UVA won this game, however, football fans were not nearly as ecstatic as they had expected to be. Prior to making their affective forecasts, another group of participants were asked to imagine what they would doing, hour-by-hour, on the Monday following the football game, and these participants made more moderate affective forecasts, apparently recognizing that the joy stemming from their team’s victory would be offset by the mundane activities of daily student life (e.g., eating, studying, attending class) that are unrelated to football. This suggests that consumers who expect a single purchase to have a lasting impact on their happiness might make more realistic predictions if they simply thought about a typical day in their life.

Wednesday, 25 May 2011

The Science of Compassion (via Big Think)

When people are less focused on self and the problems of the self, there is a kind of alleviation of stress. There’s nothing like reaching out and contributing to the lives of others to give a person, first of all a sense of significance and purpose. The idea of the helper’s high has been around since the early 1990’s. Allen Lukes, a psychologist, had individuals going out and helping others in various ways, at low thresholds, a couple of hours of activity at a soup kitchen or helping down the block or whatever it might be. And about half of the individuals, and this is a kind of half full/half empty paradigm, reported a feeling of elation; a kind of emotional buoyancy, if you will. Forty-three percent reported a sense of warmth and tranquility. Certainly many of them reported a sense of significance and meaning in life. And interestingly, even 13 percent said they felt an alleviation of chronic aches and pains.

If you have 2:48m you can check it all here:

Monday, 23 May 2011

There are Free Lunches @ SimoleonSense

There are Free Lunches post about "Buying Insurance and Happiness" is on the Weekly Roundup of SimoleonSense - - one of the most important blogs in the world about Behavioral Finance!
Thanks Miguel for showing your interest and keep up with the good work!!

Subliminal messages: we buy and we don't know why, or how our brain can associate "Money=KFC"

Subliminal messaging is illegal in the UK because it breaks the rules of your statutory rights as a consumer to make your own uninfluenced decisions on products. In the US it seems not to work like that, at least if we take a note at this KFC commercial.

This commercial makes your brain processing an image of both the product and a dollar bill. Seeing them together, your brain processes it as 'money= KFC' and so a few days later you might walk past KFC and decide to buy the product. Seemingly of your own choice, but actually you've ended up making a decision that KFC influenced your brain to make.

You can check how real it is here:

Tuesday, 17 May 2011

What is "Gross National Happiness"?

Bhutan, a country located at south-west of China, has a unique and commendable practice that you will find nowhere else in the world. One of the erstwhile kings thought that, while it was alright to strive towards economic progress, he must also know that people were actually becoming “happier” because of this progress. He talked about GNH (Gross National Happiness) besides measuring GNP (Gross National Product). I bet he was one of the visionaries who felt out of his wisdom that increasing wealth does not always result in proportionate increase in “happiness”.

The whole idea is quite interesting, you can check it here in 3 minutes:

Does justice depend on eating a sandwich? (via

Are judicial rulings based solely on laws and facts? Legal formalism holds that judges apply legal reasons to the facts of a case in a rational, mechanical, and deliberative manner. In contrast, legal realists argue that the rational application of legal reasons does not sufficiently explain the decisions of judges and that psychological, political, and social factors influence judicial rulings. We test the common caricature of realism that justice is “what the judge ate for breakfast” in sequential parole decisions made by experienced judges. We record the judges’ two daily food breaks, which result in segmenting the deliberations of the day into three distinct “decision sessions.” We find that the percentage of favorable rulings drops gradually from ≈65% to nearly zero within each decision session and returns abruptly to ≈65% after a break. Our findings suggest that judicial rulings can be swayed by extraneous variables that should have no bearing on legal decisions.

You can check this study from Shai Danziger, Jonathan Levav & Liora Avnaim-Pesso (2011) here:

Monday, 16 May 2011

Canadian researchers find a simple cure for cancer, but major pharmaceutical companies are not interested. Why?

Pharmaceutical companies are not investing in this research because DCA method cannot be patented, without a patent they can’t make money, like they are doing now with their AIDS Patent. Since the pharmaceutical companies won’t develop this, other independent laboratories should start producing this drug and do more research to confirm the findings and produce drugs. All the groundwork can be done in collaboration with the Universities, who will be glad to assist in such research and can develop an effective drug for curing cancer.

You can check everything abou this research program here:

Sunday, 15 May 2011

Principle 5: Pay Now and Consume Later

The shift toward immediate enjoyment and delayed payment represents a fundamental change in our economic system that undermines well-being in two important ways. The first and most obvious is that the “consume now and pay later” heuristic leads people to engage in shortsighted behavior—to rack up debts, to save little for retirement, etc. In the end, the piper must be paid, and when that happens, lives are often ruined. Vast literatures on delay of gratification, intertemporal choice, and delay discounting show that when people are impatient, they end up less well off. But there is a second reason why “consume now, pay later” is a bad idea: it eliminates anticipation, and anticipation is a source of “free” happiness. The person who buys a cookie and eats it right away may get X units of pleasure from it, but the person who saves the cookie until later gets X units of pleasure when it is eventually eaten plus all the additional pleasure of looking forward to the event. Of course, memory can be a powerful source of happiness too, and if anticipation and reminiscence were equal partners in promoting pleasure then there would be no reason to delay consumption because each day of looking forward could simply be traded for a day of looking backward. There is reason to believe, however, that anticipation is the Batman to the Robin of reminiscence. Research shows that thinking about future events triggers stronger emotions than thinking about the same events in the past. For example, students felt happier while anticipating an upcoming vacation than while reminiscing about the same vacation and bought a more expensive thank-you gift for someone who was going to do them a favor than for someone who had already done them a favor. Just as positive events that lie in the future seem better than the same events in the past, negative events that lie in the future appear worse than those in the past: mock-jurors awarded more money to an accident victim who was going to suffer for a year than who had already suffered for a year. Why, then, does consumer behavior so often reflect an apparent drive for immediate consumption? it is suggest that while the future may be more emotionally compelling than the past, nothing is as powerful as the present. Indeed, people exhibit future anhedonia, believing that their emotional responses will be less intense in the future than in the present. For example, participants believed that they would experience more pleasure on the day they received a gift if it were delivered today rather than three months later. If future feelings really were less intense than present feelings, then one could maximize benefits by consuming in the present (when the pleasure of consumption is at its zenith) and paying in the future (when the pain of paying is at its nadir). Of course, future feelings are not less intense than current ones, and thus future anhedonia is an affective forecasting error that causes people to consume immediately and thus miss out on the pleasures of anticipation.