We’ve all seen those faintly ludicrous reports of scientific studies confirming the obvious. Can something be so obvious that it doesn’t qualify as research? Where is the line across which we have to devote po-faced time and valuable cash to figure something out? That’s what I was wondering while reading Benjamin Friedman’s review of “Nudge”, the new Big Idea book (and obviously the one getting the most press, what with the Obama association) from Richard Thaler and Cass Sunstein. It begins:
Yes, there is such a thing as common sense — and thank goodness for that.
So far so good.
Few people will be surprised to learn that the setting in which individuals make decisions often influences the choices they make. How much we eat depends on what’s served on our plate, what foods we pick from the cafeteria line depends on whether the salads or the desserts are placed at eye level, and what magazines we buy depends on which ones are on display at the supermarket checkout line. But the same tendency also affects decisions with more significant consequences: how much families save and how they invest; what kind of mortgage they take out; which medical insurance they choose; what cars they drive. Behavioral economics, a new area of research combining economics and psychology, has repeatedly documented how our apparently free choices are affected by the way options are presented to us.
The knock on behavioral economics as a discipline is that it’s all a bit obvious. Even the things that are supposed to be revelatory are a bit “yeah, we know”; one classic example is the somewhat underwhelming finding that when people know they’re drinking a more expensive wine they like it better than one they know is cheaper. The two obvious questions: are we surprised that people’s enjoyment of a wine is influenced by its price? And is it research worth conducting?
Of course, sometimes “common sense” could be wrong, and the whole point of science is to confirm, reject or quantify phenomena in the world around us. For example, there was a lively debate – is it still ongoing? – about whether “institutions” or health was more important in fostering economic growth; the common sense answer is probably to say, well, neither good infrastructure or good health ever hurt anyone, did they? On the other hand, it would be nice to know, if it was possible, the hierarchy, especially if you really want growth but don’t have an infinite budget to encourage it.
Behavioral economics is asking questions on a different order of magnitude than that, but the same logic is probably applicable, that in that field, as in all in economics, we might sometimes seem to be masters of the obvious – a lot of economics is common sense with a fancy outfit on – but, I guess, someone has to do it.