At the Regulatory Clinics, people ask me what books to read to gain a better understanding of the biases and heuristics uncovered in the behavioural sciences, and the innovative regulatory responses that build on behavioural insights.
Serving the rapid growth of interest in behavioural sciences from policymakers and practitioners, scholars from various fields (including behavioural economics, neuroeconomics, psychology, and marketing) have begun to publish ‘popular science’ books. Many of these provide superb introductions to various areas of behavioural economics and behavioural science, and regulatory responses that build on these. I will discuss my top-10 here (in no specific order) and keep discussions brief because all these books have received extensive reviews across the internet.
Thinking, Fast and Slow (2011) – Daniel Kahneman
Actually, there is a specific order to the list. Daniel Kahneman’s Thinking, Fast and Slow is my absolute favourite. Why? The Financial Times captures it perfectly: ‘There have been many good books on human rationality and irrationality, but only one masterpiece.’ If you’re only going to read one book from this list, this should be that one. Period.
In this book, Kahneman takes you through his lifelong career as a psychologist with a keen interest in the psychology of judgement, decision making, and behavioural economics. He reveals the way we think, and the heuristics and biases we use when making decisions. It is a must read if you are interested in using behavioural insights for effective regulation. If you’re not going to read any of the books I suggest here, then please set aside one hour to watch Daniel Kahneman’s discussion of the book. It will be an hour well spent.
Influence: Science and Practice (2014) – Robert B. Cialdini
Robert Cialdini’s Influence: Science and Practice is the classic book on influence and persuasion—it follows up from his seminal book Influence: The Psychology of Persuasion first published in 1984. There’s also a graphic adaption of it. Quite fun, especially if you’re into comics.
This book will help you to understand why people say ‘yes’ (choose to do something), the heuristics and biases that influence them to say yes, and the strategies that others can apply to trigger those biases. This book was a massive hit in marketeer and sales communities, but it holds great lessons also for a regulation and compliance community.
You Are Not So Smart (2012), and You Are Now Less Dumb (2014) – David McRaney
David McRaney is a man of many trades. For me, his most impressive feat is the blog You Are Not So Smart that he started to explore self-delusion, flawed perception and overconfidence. The blog covers over a 100 heuristics and biases that affect our decision making (he has covered 136 at the time I am writing this blog post).
The blogs are conveniently brought together in two paperbacks (You Are Not So Smart, and You Are Now Less Dumb) and McRaney is working on a third. Most of his blogs have appeared as podcasts. In other words: no more procrastination and present bias, you can listen to the podcasts on your way home from work. Today!
Predictably Irrational: The Hidden Forces That Shape Our Decisions (2007) and The (Honest) Truth About Dishonesty: How We Lie to Everyone—Especially Ourselves (2012) – Dan Ariely
In Predictably Irrational, behavioural economist Dan Ariely, in exceptionally clear language, talks us through a range of experiments that refute the common assumption that we behave in rational ways. He explains why and how we deviate from the neo-classical economist understanding of rational behaviour in systematic and predictable ways. In The (Honest) Truth About Dishonesty: How We Lie to Everyone—Especially Ourselves, he discusses more experiments in an even clearer language.
Dan Ariely also maintains a predictably irrational blog, and has a series of videos on his website that will help you to further you understanding of behavioural economics and how it may apply to regulatory practice. Have a look at the six phone apps also—they range from one that teaches you all he knows about behavioural economics to another one that provides you with a moral compass when you have to take difficult decisions.
Willpower: Why Self-Control is the Secret to Success (2011) – Roy F. Baumeister and John Tierney
Roy Baumeister and John Tierney team up in Willpower: Why Self-Control is the Secret to Success to increase our understanding of self-control—an important virtue when making decisions. They explain how willpower is a finite resource that you deplete during the day by making choices and resisting temptation.
In sum, the lower your willpower, the less likely you make a decision, and the more likely you stick to the status quo. The book points out that our heuristics and biases may fluctuate over time, indicating that we humans may sometimes be less ‘predictably irrational’ than envisaged by the other books discussed here.
Subliminal: How Your Unconscious Mind Rules Your Behaviour (2012) – Leonard Mlodinow
(I presume this is roughly how Leonard Mlodinow, a theoretical physicist, would like to see his book introduced here among the other ones. The book discusses the accumulated knowledge base on the workings of our minds. Mlodinow refers to is as being conscious and unconscious. That relates to what Daniel Kahneman refers to as System 1 and System 2 thinking—our automated and reflexive decision-making processes.)
The Power of Habit: Why We Do What We Do in Life and Business (2012) – Charles Duhigg
In The Power of Habit: Why We Do What We Do in Life and Business, Charles Duhigg discusses a range of classic and contemporary studies in neuroscience, organisational psychology and marketing. Many of these recur in the earlier discussed books, but Duhigg ties them together in a novel manner. He argues that successful behavioural change requires a change of habit.
While that sounds like common sense, Duhigg presents a new way of thinking of how to change habits. The novel habit needs to be seen as familiar. The trick for regulators is then to understand how to make the novel seem familiar. The book provides some inspirational strategies for how this can be done.
Nudge: Improving Decisions About Health, Wealth and Happiness (2008) – Richard Thaler and Cass Sunstein
This book does not need an introduction in my series of blogposts dedicated to behavioural insights for effective regulation—or does it? The book, Nudge: Improving decisions about health, wealth and happiness, is of particular interest to government regulators and those they are working with because it is written by a behavioural economist (Richard Thaler) and a legal scholar (Cass Sunstein). It cuts straight to the chase and explains how government regulators can use insights from the behavioural sciences to develop regulatory interventions that are less intrusive than traditional command and control regimes.
The political philosophy that underpins the book—libertarian paternalism—somewhat detracts from what may be possible when insights from the behavioural sciences (see the earlier discussed books) are used in regulatory practice. It has resulted in some heated debates over the ethics of the use of these in government regulation (I will dedicate a blog post to these debates later).
The popularity of the book has, at least to my taste, also framed the debate a little too much as if ‘nudging’ is the only possibility of using insights from the behavioural sciences in regulation. ‘Nudging’ certainly is part of how that can be done, but there are many other possibilities—as some of the other books introduced here discuss.
* If I’m not mistaken, all the books on this list have won awards. Mentioning this fact only for Mlodinov’s book underscores the points he makes in it.