Every year is a good year to be aware of your financial behavior, but in 2017 our need for a more self-aware and enlightened citizenry somehow seems more urgent. If you’re looking for something new to read or want to better understand your own brain and behavior, consider picking up one of these books which explore different aspects of behavioral economics. The field, which merges economic theory and social science, can offer some insight into our increasingly complex and seemingly irrational society.
While these nonfiction books might lack the addictive, page-turning quality of a gripping novel, all of them shed light onto the complexity and evolution of our individual actions and collective behavior.
The Undoing Project: A Friendship that Changed Our Minds by Michael Lewis.
The Undoing Project is a new book out by Lewis, the best-selling author of other behavior economics tomes like Moneyball and The Big Short. The book examines the friendship and professional partnership of Daniel Kahneman and Amos Tversky, the two men who conceived of behavioral economics as a distinct interdisciplinary field. Kahneman and Amos Tversky “demonstrated how the human brain relies on mental shortcuts and biases in decision-making, which often leads people to irrational ends,” Bourree Lam writes. The Undoing Project explores Kahneman and Tversky and the unique friendship the two men shared.
If you’re interested in learning more about Daniel Kahneman and his field of work, check out his recent interview on Bloomberg Radio. It’s a great listen!
How Not to be Wrong: The Power of Mathematical Thinking by Jordan Ellenberg.
Mathematician Jordan Ellenberg does great job of showing readers how mathematics touches nearly every element of our lives. From language and behavior to the obesity epidemic and debating the existence of God, I’m fond of the way Ellenberg refers to math as “an atomic-powered prosthesis that you attach to your common sense, vastly multiplying its reach and strength.”
Predictably Irrational: the Hidden Forces that Shape our Decisions by Dan Ariely.
Ariely’s book provides a fascinating psychological exploration of the ways in which our expectations, emotions, social norms, and other seemingly illogical forces influence our reasoning abilities. If you’re wondering why you make the same mistakes over and over again, or want to understand why–in spite of your intentions–you’re always late for appointments and procrastinate to the nth degree, you will probably enjoy this book. Whether you are looking to better understand humans, sell products, design a better society or merely learn some interesting stuff, it’s worth reading.
Drive by Daniel Pink.
In Drive, Daniel Pink discusses the concept of building mastery and how creative play can enhance our sense of personal motivation. Pink’s book adds to a mounting body of psychology research showing how incentive pay tends to decrease worker productivity, especially for tasks that demand creative thinking. The most effective way to motivate people, Pink argues, is to give them opportunities for autonomy, mastery, and purpose.
Nudge: Improving Decisions about Health, Wealth, and Happiness by Cass Sunstein & Richard Thaler (my fantastic former professor at University of Chicago Booth School of Business).
First published in 2008, Nudge has aged well; its content continues to be timely. Nudge explores the concept of context and the ways in which context affects the decisions we make. It’s not the quality of a decision that makes a difference, Thaler and Sunstein assert, but rather the environment in which it is put into practice. The authors draw upon in-depth behavioral research to reveal how better information can “nudge” people toward making better choices.