The Prof G Pod with Scott Galloway - Conversation with Dan Ariely — Why People Believe Irrational Things

Episode Date: February 1, 2024

Dan Ariely, a professor of psychology and behavioral economics at Duke University, joins Scott to discuss what makes rational people believe seemingly irrational things. He also shares how we avoid ce...rtain facts when we don’t like the solution, as well as how a lack of trust in one area can spiral into others.  Follow Professor Ariely on X, @danariely. Scott opens with his thoughts on the podcast space and then discusses why tech companies are still laying people off in droves.  Algebra of Happiness: the role of parents. Learn more about your ad choices. Visit podcastchoices.com/adchoices

Transcript
Discussion (0)
Starting point is 00:00:00 Support for this show comes from Constant Contact. If you struggle just to get your customers to notice you, Constant Contact has what you need to grab their attention. Constant Contact's award-winning marketing platform offers all the automation, integration, and reporting tools that get your marketing running seamlessly, all backed by their expert live customer support. It's time to get going and growing with Constant Contact today.
Starting point is 00:00:28 Ready, set, grow. Go to ConstantContact.ca and start your free trial today. Go to ConstantContact.ca for your free trial. ConstantContact.ca Support for PropG comes from NerdWallet. Starting your slash learn more to over 400 credit cards. Head over to nerdwallet.com forward slash learn more to find smarter credit cards, savings accounts, mortgage rates, and more. NerdWallet. Finance smarter. NerdWallet Compare Incorporated.
Starting point is 00:01:17 NMLS 1617539. Episode 285. Route 285 is a U.S highway known as the death highway in 1985 microsoft released the first version of its windows operating system window 1.0 and the breakfast club great teen movie hit theaters becoming an instant classic true story i have the body of a teenager it's amazing we can find on ebay developing markets. Go, go, go! Welcome to the 285th episode of The Prop G-Pod. In today's episode, we speak with Dan Ariely,
Starting point is 00:01:58 the James B. Duke Professor of Psychology and Behavioral Economics at Duke University and author of a number of influential books, including his latest, Misbelief, What Makes Rational People Believe Irrational Things. What is that, like 98% of America right now? We discussed with Dan exactly that, why people believe seemingly impossible things, as well as how we can avoid certain facts when we don't like the solution. Professor Ariely is sort of a role model of mine. I just love how he takes behavioral psychology and makes it compelling, and I think he's a great storyteller. I've actually seen him a few times on the speaking circuit.
Starting point is 00:02:32 He's literally like a bit of an aspirational role model. Okay, what's happening? I'm headed to New York. That's right. The dog's coming into the city. Little walking around Soho, little zero bond, little too much alcohol, little lot of alcohol. I'm having dinner.
Starting point is 00:02:49 Where am I having dinner? I'm having dinner. I think I'm having dinner at Babbo. I'm going to have dinner at Cafe Select, one of my favorite places. I'll do lunch or breakfast or brunch at either Jack's Wife Frida, which I love, and I'll get pastries from the Balthazar, the Boulangerie of Balthazar, where I find a $14 brownie. I absolutely love New York. Thrilled to get back there. And then I'm going to Tulum. Then I'm going to Tulum to be a total privileged douchebag on mind-altering drugs, minus the mind-altering drugs. I don't really do a lot of that stuff.
Starting point is 00:03:23 I love it down there. Everyone says it's turned and it's gotten. Whenever TikTok says something that they're over something and that it's so passe, that's when I start going. Like something's on its way out. That's when I move in. And if you go on TikTok, they'll just convince you that, oh, Tulum was amazing 10 years ago, but now it's not amazing. People say the same thing about New York.
Starting point is 00:03:43 I think New York's never been better post-COVID. I think it's just incredible. Okay, on to some serious news. Elon Musk tweeted that his company, Neuralink, successfully implanted its first chip into a human brain. According to Elon, initial results show promising neuron spike detection. What do you think he was going to say? Yeah, we're killing people left and right. It's not working. Anyways, what is Neuralink? And Elon founded a neurotechnology company that is building a brain-computer interface. The goal is to let those with traumatic injuries, such as loss of Elon, he definitely is an incredible innovator and doing really aggressive, amazing things. And this feels, I think there's enormous opportunity here. But I'd also like to point out that he seems to never be the one that goes into space or actually implant shit in his own brain. Anyways, the FDA approved Neuralink's plans for human trials last May. Nita Farhani, a professor of law and philosophy at Duke University and previous property guest, says the global market for
Starting point is 00:04:49 neurotech is growing at a compound annual rate of 12% and is expected to reach $21 billion by 2026. I'd like to have my friend Josh Wolf on. He's a venture capitalist who invests in what I affectionately call crazy shit, like this kind of stuff. And whenever he talks to me about his companies, I think that's too bleeding edge. But his returns to his LPs would indicate that he's that's not true. He's done really well. Anyways, moving on, there's some big news in the podcast space. Smartless, a show hosted by Will Arnett, Jason Bateman and Sean Hayes, is ditching Amazon for Sirius XM. Bloomberg reported that the three-year deal between Sirius and SmartLess is worth more than $100 million, $33 million a year. Amazon reportedly paid between $60 and $80 million for the show back in 2021. We haven't seen the big bucks associated with
Starting point is 00:05:36 podcasts in quite some time. In 2020 and 2021, these were the hot years for pod acquisitions, specifically for Spotify and Amazon that bid the market up. Back in 2021, Spotify reportedly only brought in $215 million in revenue from podcasts, despite investing more than a billion dollars in them. And the Financial Times noted that that was only 2% of Spotify's total revenue, and then they absolutely exited the business. The thing about podcasting, people ask a lot of questions about podcasting, is that I don't think there is a medium that has more income inequality. And that is, I would bet that the top 170 do 98% of the revenue and 150% of the profits. What do I mean by that? If you're not in the top 1,000 podcasts, it is not self-sustaining. The ad market here is very much crowded in kind of the top probably 500 podcasts. So unless you're in the 0.0001%, you're unemployed or it's a marketing vehicle,
Starting point is 00:06:37 not a revenue-producing vehicle. This is a very difficult market. Why? The good news is the barriers of entry are just non-existent. The bad news is the barriers of entry are non-existent. It kind of went through some different stages where initially it was sort of a few celebrities who were interested in doing stuff. That didn't pan out. I think the guy that's really busted this whole thing open is Joe Rogan, both long form. He's very talented at it. He kind of defines the medium. And I've often said that we should all send 10 cents or some sort of royalty every time we do a podcast to Joe Rogan because he kind of exploded the medium. What is also interesting about it is that it peaked in 2019. Everybody wanted a podcast. And what I found is even some very good podcasters have decided to get out because it's a decent amount of work and you effectively have a medium that's not really
Starting point is 00:07:25 growing as fast as the podcasts were. So in, you know, 20, call it 2015, there were maybe 100,000 podcasts. By 2020, there were a million new podcasts. Think about that. In 2020, obviously, we're at home a lot. A million new podcasts started. And last year, there were about 220,000 new podcasts. My guess is we're going to see a net decline in the number of podcasts over the next several years. So there's some good things about it. It's growing. The podcast medium is growing, I think, at low double digits. And it's getting pretty good CPMs. At Pivot and PropG, we get about $40 or $45 CPMs, which is actually really good for anything that I guess technically is digital.
Starting point is 00:08:07 It's even good for television or radio. Why is that? Because our audience reaches hard-to-reach demographics. Specifically on PropG, we reach upper-income young men, which are very difficult to reach and also very attractive to advertisers because they buy stupid things like BMWs and Nikes and coffees. And they are difficult to reach because they're not watching ad-supported television other than sports. And then on Pivot, we reach kind of the great white rhino of listeners, and that is very, very powerful tech executives whose software companies are looking to sell software into. I believe the market's coming back. Why? The key attribute, the key value out of podcasts, they can be the top 200 are relatively small businesses for media, but they're very profitable
Starting point is 00:08:56 once you hit, you know, a big production team at half a million bucks a year or maybe a million bucks a year. And then once you hit that, in terms of advertising, 80, 90% of it is gross margin falls to the bottom line. But even more than that, the reason why it gets higher CPMs is because it's intimate. What do I mean by that? When someone approaches me, I track this pretty carefully. I get about one and a half when I go out, when I decide to actually leave my apartment, which is one of the reasons I'm looking forward to going to New York and Tulum. For some reason, I actually leave the hut or the apartment, so to speak, in reverse order. Anyways, I don't get out much. And when I do go out, I get recognized. I'm now up to about 1.3
Starting point is 00:09:37 times a day. Some days I get three people, some days I get zero. And people come up to me, super nice, super friendly. It's one of the nicest things in my life. I can tell how they know me based on how they approach me and the tone and the complexion which they present themselves. If they come up and they're just like, hey, man, hey, Prop G, high five. It's a video. It's a video. It's something on TikTok or a clip of something or even TV. If it's, they want to like sit down and they kind of put their hand over their heart and they want to talk about how meaningful something I've done is to them, they read something I wrote, specifically something about family or relationships. The written word still moves to the heart faster and in a more impactful way than I think any medium.
Starting point is 00:10:25 If they come up to me and just start speaking to me, they don't even introduce themselves. They just come up and they're like, Scott. And I say, yes. And I turn around and it's almost as if I sit there and think, how do I know this person? Because clearly they know me. No, I don't. It's the podcast. People believe that they know you. And one, you're in their ears for an hour. And specifically, the operative term there is in. It's very intimate because you're inside of their ear. You're on their person. And also, they're usually doing something quite intimate or they're doing an activity that traditionally was reserved for people or things that meant a lot to them. They're fixing breakfast for their family.
Starting point is 00:11:10 They're listening to it in the car with their son. They're with their dogs on a walk. They're working out. Whatever it might be, it's usually a space or a time and space where they don't typically have strangers speaking to them. So when you're in their life that way, they feel as if they know you. And as a result, host readovers get twice the CPMs of inserted ads. Why? Because if they hear your voice continuing to read an ad, they're sort of interested in the ad. The skip-throughs or whatever you call it, the percentage of people who actually listen to the ads, I think is above 70%. And for some podcasts, it's 80 or 90, which makes no sense to me because people can skip the ads pretty easily. But people don't seem to mind when it's the host reading the ads. Anyway,
Starting point is 00:11:51 so small but profitable business, still growing, unlike most of media outside of TikTok and kind of the digital guys. A huge income inequality, high CPMs because it's very, very intimate. OK, one last story before we get to our conversation with Professor Ariely. Layoff season and the year of efficiency continues for the tech sector. In just the first few weeks of the year, nearly 100 tech companies, including Meta, Amazon, Microsoft, and Google, have collectively laid off around 25,000 employees. As a reminder, 2023 was brutal for tech companies. Around 1,000 of them cut nearly 260,000 jobs last year. In 2022, we predicted that 2023 would be the year of the Patagonia
Starting point is 00:12:31 Vest recession. But in their last quarters or toward the back half of the year, the big guys would have their most profitable quarters because while their revenue growth wouldn't accelerate, it wouldn't decline, and they would be able to reduce costs. And we saw a tripling in the net income of meta. The bottom line is the market loves layoffs when they're not economically, they're not driven by a recession. And these are quote-unquote discretionary layoffs. And here's why layoffs or cost reductions, I don't want to say layoffs, but cost reductions can be so powerful. If you have 20% operating margins, meaning for every $100, you end up with $20 in gross profits, right? And that's pretty healthy. That's not tech-like margins of 40. Some of these companies have 40%, but it's not manufacturing operating margins of high single or low double digits.
Starting point is 00:13:21 So let's call it 20% operating margins. You have two choices to grow shareholder value. How do you grow shareholder value? You grow the company, you more strategically grow top line revenue or become more strategically advantaged to companies, whatever it might be, or you just increase earnings. One increases the multiple, one increases the earnings. So how do you increase earnings? Right? One of two ways. You either grow the top line, right, by five bucks, or if you have 20% operating margins, you reduce costs by $1. So when faced with growing, when Meta, Alphabet, and Amazon said, all right, we need to increase, we need to increase our profits by $10 billion, what would be easier? Growing the top-line revenue by $50 billion or cutting costs by $10 billion? So they said, you know what, it'd be much easier,
Starting point is 00:14:14 given that we've been stuffing so many calories on the esophagus of this company for the last 20 years, to cut $10 billion expenses as opposed to growing the top-line $50 billion. That's probably the wrong example, cut costs by $2 billion versus trying to grow the top line, 50 billion. That's probably the wrong example. Cut costs by 2 billion versus trying to grow the top line by 10 billion. And I think this is kind of rolling through the economy. And then they've been given this tool called AI and they think, we could probably lose 10 or 15% of our employees and not notice that the end consumer, the front end consumer, would notice that they're gone. This is all to say that as an entrepreneur and as a manager,
Starting point is 00:14:55 your job is to grow shareholder value. Your job is to grow enterprise value. And there's a bunch of ways to do that. I mean, example of Prop G, or we have Prop G Media. We have several lines of revenues. We have speaking, we have podcasts, we have books. What else do we have? Oh, revenue from our newsletter. And up until about two years ago, everything was basically a marketing
Starting point is 00:15:16 vehicle that was sort of break even to drive this incredibly high revenue, high margin business called my speaking business. Over the last two years, our speaking revenues have gone from 50% of our revenue to about a quarter of our revenue. And while that has slowed top-line growth, it has made the enterprise worth more because it's a media company, not an enterprise supporting one-person speaking business. My speaking business will never be acquired, or at least I don't think it will be. I don't see how a company would come in and say, we want to buy this company to get your speaking revenues. But they might want to buy a media company that has repeatable assets, that seems to have consistent revenue, and our podcast does generate within a certain confidence interval a certain amount of revenue each month, and it's growing, call it 20, 25% a year. If you were to describe, if you were to try and zero in on what drove an incredible year in the markets in 2023, you'd say, well, it was really just seven stocks that were AI-inspired. But even more than that, more than that, specifically talking about the operational efficiencies, if you will, or what was the financial, I don't know, construct or dynamics
Starting point is 00:16:17 that drove so much shareholder value was the following. It was, one, the great taste of reduced expenses without the calories of reduced revenues. These companies continue to increase their revenue growth or continue to have revenue growth as they were decreasing their costs. If you're ever in a situation where you turn around, this happened at a bunch of companies. Quite frankly, sometimes it wasn't their idea. Salesforce had an activist investor, Elliott, come in and say, we own a couple billion dollars of your stock now. We'd like you to take a hard look at your costs. Mark Benioff, who is very savvy, what is the rookie move among quote-unquote experienced CEOs when an activist shows up? They circle the wagons and they immediately put up the middle finger and say, how shareholder-driven, and said, sure, guys, what are your ideas? Listened to them and said, yeah, there's probably some fat to cut here. Cut some fat, didn't lose any revenue growth, and boom, champagne and cocaine, bottom line, explode. So, as a young entrepreneur, you're going to be totally focused on growth.
Starting point is 00:17:18 That makes a lot of sense. But adults also focus on costs. And I know firsthand that venture capitalists love entrepreneurs who throw nickels around as if they're manhole covers. Keep in mind, you push up revenues or you push down costs. Both are fantastic ways to grow shareholder value. We'll be right back for our conversation with Dan Ariely, a professor of psychology and behavioral economics at Duke University and the author of a number of books, including his latest, Misbelief, What Makes Rational People Believe Irrational Things. Professor Ariely, where does this podcast find you? I'm currently a duke in my office
Starting point is 00:18:11 in the Center for Advanced Hindsight, but my mind is scattered all over the place. I'm thinking about Israel. I'm thinking about Gaza. I'm thinking about London. I'm thinking about London, I'm thinking about what's happening in American universities, about Iran, Syria, what's
Starting point is 00:18:32 happening in South America. So the world is really troubling these days. I think if somebody wrote a book about this particular era that we're living in, we wouldn't believe them. I sometimes assign it to the fact
Starting point is 00:18:48 as I get older, I get more anxious. I was sort of sleepwalking through life from sort of zero to 30. I think from 30 to 50, I had the right amount of anxiety. I call it productive anxiety. And now I'm anxious about everything. But it feels, these times feel especially anxious.
Starting point is 00:19:06 So it feels... Let me say one more thing about this. You know, I view my world, my job, as trying to promote small improvements. Big improvements are tough. Small improvements are possible. I think that within the realm of social science, there's lots of opportunities for small improvements.
Starting point is 00:19:27 We can get people to sleep slightly better. We can get people to save a bit more, to fight a little bit less, all of those things. But then these big things happen. They take us back. And, you know, it's very hard to say, okay, we make these small improvements and these big step back that are,
Starting point is 00:19:43 how do we find the energy to continue and driving these small improvements and these big steps back, how do we find the energy to continue driving these small improvements? We were speaking off mic about how the Holocaust deniers are now merging with the October 7th deniers, people who are questioning whether these events ever really happened. And that in itself is disturbing. But what I find more disturbing is when I hear these people and I see them interviewed, other than the words that come out of their mouth, their background, their education, it just doesn't fit. You think these
Starting point is 00:20:16 look like normal Americans that you would expect to be rational, and they're not. And that's where your work kind of comes in, what it means to be irrational. So let's start there. Give us an overview of what it means to be irrational. Yeah. So there's lots of ways to be, there's one way to be rational and there are many ways to be irrational. But what you said is very true about this notion of beliefs. And, you know, my latest book is called Misbelief exactly because of that. And we see these people and we say to ourselves, five years ago, we thought that we had the same beliefs. And now we look at the same people and say, we don't understand how are they and us looking at the world in the same way and coming to such
Starting point is 00:21:07 different conclusions. And it turns out that there's a psychological machinery that gets people to a state of misbelief. And as a metaphor, you can think about the cookie. And the cookie is a weaponized food that is designed to get us to want one and then eat another one and another one and another one. And somebody designed the cookie, not intentionally to create the obesity epidemic, but somebody designed the cookie
Starting point is 00:21:36 with an optimal combination of sugar, fat, and salt to get this behavior. And we have this machinery that gets us to believe very strange things, things that you would say, I don't understand how this happened, but this machinery is much more complex than the cookie because it attracts almost all of our psychology.
Starting point is 00:22:01 If you look at misbelief, it's basically kind of almost like an introduction to psychology textbook where it's about emotion and stress, cognition, personality, social, and all of these elements have a role in the descent of people from having standard beliefs to having some very strange beliefs. And the basic ingredient that starts this whole path is stress. And let's take us for a second away from politics and the world around us. Think about two tribes of fishermen. One tribe of fishermen fishes in the deep sea. One of them fishes in the lake. Those in the deep sea have a much more unpredictable environment. Those that fish in the lake, much more predictable. Which one of them develops more superstitions?
Starting point is 00:23:00 The ones in the deep sea. Why? Because a superstition gives people a sense of control. I'll clap my hands, I'll pray to a god, I'll do this and this thing, and it will give me some sense of control. And it turns out that when we're stressed, and I don't mean the stress of saying, oh my goodness, I'm so busy, I'm not sure how I'll manage. I mean the kind of stress that says,
Starting point is 00:23:21 I don't understand the world. I don't understand why the Houthis in Yemen are all of a sudden attacking Americans. I don't understand what's happening in South America. I don't understand why Russia is attacking the Ukraine. Like, I don't understand what ChatGPT is going to do for my future work. When people are living in an environment
Starting point is 00:23:42 that says, I just don't understand the world, they want a story. So superstition is one story, but we want a story. But we don't end there. It's not just a story. We want a story with the villain, right? Because now it's not our fault. It's somebody else's fault.
Starting point is 00:24:02 And we want a complex story. And why do we want a complex story. And why do we want a complex story? Because the complex story basically gets to say, I thought I don't understand how things are. Now I feel that I understand more than other people. I understand that there's a cabal, there's all kinds of things like that. So people want story with the villain and the story has to be slightly complex. And that's not the end of the final of misbelief.
Starting point is 00:24:29 It's not the end of the descent that will misbelieve. This is just a starting condition of what it starts. And if you think about COVID, I don't know what your feeling is, but my feeling is that we haven't finished even dealing with the emotional aftermath of COVID. I think about kids who are now in college, who spent the last two years of high school or the first two years in COVID. I think about people who are restricted, worried, concerned,
Starting point is 00:25:01 lost money, lost faith in other people helping them. Like think about all of this. It takes a long time to, to recuperate and we haven't recuperate from COVID. And now we get these other avalanches that are just making it very tough for us. Very tough psychologically, very tough to cope. I want to double click on that. I, I, I really, I find that really interesting, the notion that we become more vulnerable to conspiracy theory or misinformation or behaving irrationally when we're age groups. But the place I find it most surprising is with young people, because they're the most educated generation in history. And yet on some
Starting point is 00:25:50 of the biggest issues, I find that they're the most prone to misinformation or conspiracy theory. So taking that one step further, you know, the thesis I would put forward, it's not what's going on in Ukraine or even in the Middle East that stresses them. It's what you said, COVID. I think that's remarkably obvious, and I wish I'd thought of that. But also that the younger generation with Instagram, social media, bulldozer parenting, my colleague and your friend Jonathan Haidt has written eloquently on this, that you have the most stressed generation in arguably American history. I mean, maybe young people during World War II, but you see all the indicators are young people are depressed and anxious. I think you're absolutely right, but there's another component of it.
Starting point is 00:26:39 And the component is, we've been thinking about the inputs to stress, right? And you were writing, you write about them. What's the cure against stress? What's the remedy? And the basic remedy against this kind of stress is resilience. Now, think about resilience. What is resilience?
Starting point is 00:27:01 Usually we think about, okay, we go through life, something bad happens, like in my case, an injury. Life gets really bad. And then the question is, do you bounce back? How long it takes you? And do you bounce back to where you were, a little bit below, a little bit above? That's usually what we think about resilience is coming back from a tragedy. But resilience is not just about coming back from a tragedy. It's also about just about coming back from a tragedy. It's also about the way we go about our life and do we feel that if something bad happens,
Starting point is 00:27:32 somebody will catch us. I think of it as like an umbrella policy for everything, but not with the insurance, but as a social contract. And the standard way to think about it is what is called secure attachment. So imagine you're a parent,
Starting point is 00:27:50 you have a kid, they're three years old, you go with them to the park, and you say, kid, go to the swing. If the kid goes to the swing and come back 45 minutes later, you have a kid with secure attachment. But if the kid goes, and every two minutes they look behind their shoulder to see if you're still there, you have not been so successful.
Starting point is 00:28:11 And that for me is the process of resilience. Do we think that as we go about our lives, whatever we do, do we think that if something bad will happen, somebody will catch us. And I think that that feeling is at an all-time low. How much time do people spend with their buddies? How much do people spend meaningful time with their buddies? How many friends do we have that we think will travel 3,000 miles and spend $20,000 to bail us out of jail? Not that this is the only test of friendship, but the reality is that we're getting into a situation that we have less and less resilience in society. And another interesting input is that as economic inequality increases, resilience goes down.
Starting point is 00:29:10 Why? Because even at the level of a neighborhood, people with high income inequality in the neighborhood are less likely to ask their neighbors for help. So we are less together. Of course, there's the Democrat-Republican separation. There's all kinds of other things. But we're less together. Of course, there's the Democrat-Republican separation. There's all kinds of other things, but we're less together. We feel that there's less things to rely on. So all of this stress is not just increasing, but we have less resilience. So we have less things to defend ourselves. Like our psychological immune system against stress is weaker.
Starting point is 00:29:44 So all of this is creating lots of tension. And then if you think about it, so we said, you know, misbelief is about stress, cognition, emotion, and social. If we jump for a second to the social, think about a young person who hasn't heard much about Israel or Hamas or the Palestinians, but they heard the phrase from the river to the sea. And they don't necessarily know what river it is or which sea it is, but that statement is basically a community statement for them. We have these people, we're marching, we are a group, we're together.
Starting point is 00:30:26 All of a sudden, it fulfills a need. It fulfills a need. They belong to something. They have a group. And you said earlier that it's not the people that you would suspect. They're intelligent and caring and creative and so on. That's right. One of the things I learned through this journey of misbelief is that we shouldn't discount those people and we shouldn't discount their opinions. And what I mean by that, it's not that they're correct, but those beliefs answer real needs that people have, right? Yes, we can say, okay, they're descending to the path of misbelief.
Starting point is 00:31:07 They're ending up believing in something else. But what function do these beliefs have? Why is it that people have a need to believe that the world is flat or the World Health Organization is doing something or they're Jeep 5? Whatever it is, nobody wakes Jeep 5, whatever it is, nobody wakes up in the morning and say,
Starting point is 00:31:30 I want to have some misbelief today. People have some deep psychological needs and they find these misbeliefs as a remedy for those needs. Now, it's not the ideal remedy, but it is a remedy. I love that. I love the notion that you become more susceptible to misinformation and conspiracy theory when you're stressed. And that the resilience, just as you were talking about, you know, it's a lack of resilience. I was thinking, the thing that popped into my mind is the thing that gives you resilience is deep and meaningful
Starting point is 00:32:02 relationships. And you articulated that, you know, beautifully, the notion of a kid who feels like someone is there for them and doesn't have to be in the proximity, feels more resilient, more trusted. The thing you didn't touch on that I wonder is part of this is that people no longer trust institutions, which used to serve as a form of security. Any thoughts? Yeah, absolutely. So, you know, of course, the mistrust in journalism makes it very hard to know who to trust online. Lack of trust in politicians, lack of trust in academics,
Starting point is 00:32:43 and lack of trust in physicians. You know, basically the feeling is that we are on the road. And even the court system, right? You would want to believe that if something happens, there is a sense of justice out there. And when the sense of justice is eroding, that's very, very tough. And one other interesting thing about misbelief is that in my definition, it has two components.
Starting point is 00:33:15 One component is the belief in something that is ain't so, that's the outside. But the second thing is that it's a very deep belief that colors the way we view the world in general. So imagine that I will just take the example of the earth is flat. Imagine I think that the earth is flat. It doesn't end there. It says that NASA is lying and every airline pilot is lying, and every government is deceiving us, and every school system knows the best,
Starting point is 00:33:49 and the space program is a hoax, and satellites, and just think about what it is. And it's all of a sudden not just the belief that the Earth is flat. It's a lens from which you view life, and you say, I don't trust any of the institutions. And that's why it doesn't stop there. Then it goes to other things and other things and other things. And then you hear a little piece here and there and you make the picture.
Starting point is 00:34:13 Because if you already don't trust, everything you see creates another level of mistrust. As a society, we're losing a lot because of it. Can you explain the concept of solution aversion? Yes. So when we get to the cognitive components of how we change our opinion, there's, of course, a very simple component, which is we watch the news that we like. You decide if to watch NBC or Fox. People decide what to watch.
Starting point is 00:34:49 And if you watch TikTok, TikTok takes you to one of those paths depending on their algorithm. But then there's a second component, which is not about selecting which information. Like imagine this is all the information you want. Confirmation bias is about selecting part of it. It's like, oh, I'm just going to pay attention to this
Starting point is 00:35:07 or just pay attention to this. Solution aversion is part of another component which says even when I get exposed to all the information, I'm able cognitively to discount the information I don't like and focus on the things that I like. So this is what is called motivated reasoning. And maybe the nicest study was done in the context of climate change. And the idea is that, you know, if I try to argue with somebody who is climate change
Starting point is 00:35:39 denier, let's say, the standard strategy is to say, here's a paper, and here's another paper, and here's another paper. But what if it's not, the standard strategy is saying, here's a paper, and here's another paper, and here's another paper. But what if it's not about the evidence? These are smart, intelligent people. They can read. What if it's about their cognitive system, who says, I am going to ignore this. I'm going to discount it. I'm not going to pay attention.
Starting point is 00:35:59 And solution aversion basically says that when we don't like the proposed solution, we reject the evidence. So maybe what we need to do is we need to start with solutions that we might agree on and only then try to convince people. So maybe, not maybe, but a better approach would be to say to people, no, if climate change was real, let's talk about solutions. What would be reasonable? Let's come up with something.
Starting point is 00:36:27 And then come up with something that would not upset them, that they will be willing to do, and then take it from there. So there's another, by the way, interesting trick in that regard, in the cognitive regard, and we call it the illusion of explanatory depth. And the illusion of explanatory depth basically says that people think they understand many things in the world, but we have only a very superficial understanding. And when you push people,
Starting point is 00:36:59 they basically realize that there's a big gap between what they think they know and what they know. So I demonstrated it with a flash toilet. I said to people, do you understand how a flash toilet works? They said, yes. Scale it from 0 to 100. I said, no, it's not. Great. Luckily for you, I have all the pieces of a flash toilet here.
Starting point is 00:37:21 Please try and assemble it. Of course, nobody ever managed to assemble it, and then I say, how much do you think you understand flush toilet? And people say, not so much. And again, the idea is that when we try to convince people, we usually go head to head. But let me ask you, in the last five years,
Starting point is 00:37:40 how many people have you convinced deeply that they were wrong? Let's agree that not many. I worry that sometimes I come on so strong that I just end up cementing their position. That's right. I think that's usually what happens. Usually what happens is we argue with people. And the other person is not even finished listening to our sentence they're
Starting point is 00:38:06 already counter-arguing they're already thinking why we're wrong so we think we spend an hour expressing our opinion but the other person spend an hour cementing their own beliefs so we are not convincing other people we're not convince ourselves the illusion of explanatory depth, basically don't fight people, come from their side. Now these coming at people's perspective and exploring that process. And by the way, another context of course is the war between Israel and Hamas. So I thankfully have lots of friends from all over the world, some from Arab countries. And a lot of them contacted me after October 7th wanting to talk.
Starting point is 00:38:52 And I basically say, look, I don't want to talk about history. I don't want to talk about 1948 and 67 and so on. Not now. I also don't want to talk about who is more morally wrong. It's just not a healthy discussion. I want to talk, what do we do from here forward? What do we think that is the right thing to do from here forward? And they say, fine. And then I say, what would you like to see happen? And usually people say, I want an immediate ceasefire and I want Israel to leave Gaza. And I say, okay, I can't grant it, but let's say you got this.
Starting point is 00:39:29 Let's say you got those two. So what's next? And usually they stop. They say, what do you mean what's next? This is it. It's over. I said, no, no, no, not over. If there's a ceasefire and Israel left Gaza, does Hamas get to rule Gaza again?
Starting point is 00:39:46 And usually they say yes. And I say, do we let them arm? And they say yes. And I say, nuclear weapon? They say no. Air force? They say no. Navy? Navy?
Starting point is 00:40:03 So I say, okay, so what do we let them do and then if october 7th repeats in three months what what do you want the reaction to be then because it's it you know there's no question that something like this would would happen again and it's not that those approaches move people from right to left or left to right. They just get us to the right state of being less sure in ourselves. And I think one of the dangers in polarization and discussion is that too many people are 100% sure. And what we, like, where is the nuanced understanding of how complex the world is? And the moment you get to a higher nuanced understanding of,
Starting point is 00:40:48 this is a really complex situation. There's lots of wrong ways to go forward. It's very unclear. I think it's a better reflection of the situation. And it's also much more likely that we as a public, we are not decision makers in the politics, but it's much more likely that we as a public, we are not decision makers in the politics, but it's much more likely that we as a public would, whatever our desires to pressure the political system, they would be
Starting point is 00:41:12 aimed at the right direction. Well, you talk about this. You talk about a means of combating misbelief requires a strategy rooted in empathy. And we talked about asking questions. Isn't it oftentimes also really important to acknowledge points on the other side and acknowledge the other viewpoint? Acknowledge the other viewpoint and the suffering. Like, you know, the discussion is like on both sides. There were some really wonderful academic papers showing that both sides
Starting point is 00:41:46 just want somebody to say you were wrong this was terrible this shouldn't have been like this you were wrong now let's talk about what do we do moving forward but hearing our pain having some sympathy because because the other way we we just think we're fighting. Couldn't you hear me? Here's what I just said. Why can't you acknowledge anything? But people treat discussions as if it's a battlefield.
Starting point is 00:42:17 It's not a battlefield. At the end of the day we should come up with a new joint understanding of what we are. And people are just not collaborative in this process. We'll be right back. You speak a lot about motivation.
Starting point is 00:42:40 You've written and spoken a lot about it. What gets us to care about things and act on them? So lots of things. I'll tell you, this is slightly out of the context of this discussion, but in the last seven years, I have been tracking how companies treat their employees, how the employees feel about the company, and what it means for the company's performance in the stock market. So, for example, I'll ask you a few things.
Starting point is 00:43:14 Do you think that companies that pay their employees better have a higher return to their stocks? I'd like to think yes. So the empirical answer is no, not much. And what about health benefits? Do companies that give better health benefits have higher return to their stock? Well, I mean, I'm cheating here. I know the answer is no, because McDonald's has gone up 12x and doesn't have healthcare. I mean, yeah, the answer is no.
Starting point is 00:43:53 Yeah, so the reality is that there is forking a road between extrinsic motivation and intrinsic motivation. And intrinsic motivation is salary and bonuses and chairs and tables and health benefits and retirement benefits. And all of those things that are called extrinsic motivation don't end up mattering so much. This is research that we had data from 2006 ongoing. So for this period and hundreds of companies. The things that do matter end up being about intrinsic motivation.
Starting point is 00:44:36 And one of the things that is the most important is, do you feel appreciated? Now, think about what does it mean to feel appreciated? By the way, I think that when I heard about this, when we saw the results for this, I thought about all the waste in the world in which we just don't get people to feel sufficiently appreciated. Think about all the people who work with us. Sometimes it feels to me that people behave as if we're born with a limited amount of compliments.
Starting point is 00:45:05 And if we gave all of our compliments away, we would die. But it's not true. There's an endless amount of appreciation, endless amount of thanks. And it really matters. People do lots of things and they want to know that somebody is watching. They want to know that somebody is watching and it's worthwhile. Another thing is psychological safety. Psychological safety is basically people's ability
Starting point is 00:45:32 to express their opinions. It's a little bit like resilience. And they feel that nobody would attack them. Nobody would cancel them. Nobody would attack them. Nobody would cancel them. Nobody would attack them. That it's a safe environment to express thoughts and feelings. Alignment with the company is important. We work somewhere, but we need to know that we're aligned with the company.
Starting point is 00:45:59 That we care about what it is that they are doing. That we feel connected. Bureaucracy, by the way, is one of the things that kills motivation. Almost nothing kills motivation as much as bureaucracy. Because when we add bureaucracy, we basically say to people, we don't trust you, we don't care about your time, and we don't want you to do anything different. You see an opportunity for improvement, don't care about your time. And we don't want you to do anything different. You see an opportunity for improvement, don't do it.
Starting point is 00:46:29 Just do what's easy without tackling the bureaucracy. Of course, all of those are very, very negative in terms of motivation. So we have extrinsic motivation, intrinsic. What's really important is intrinsic. And then within intrinsic, there are these two subcomponents. One is goodwill. Think about your current amount of efforts in quality 100. Not you, but somebody.
Starting point is 00:46:58 Think about your current level of effort at your job in quality 100. Now ask yourself how much lower you could get and still not lose your job. For many people, it's quite a lot. And then think about how much up you can go if you were truly excited about what you do. That range between the minimum you had to do not to lose your job and the max you could do if you could be very excited. That's I call goodwill. Because that's the part where the employee controls. I decide if to sit here and drink coffee or to try very hard. So that's one, the first component.
Starting point is 00:47:41 Then the second component I call utility embracing. And think about the following story. Imagine a janitor in a hospital. The janitor has a job description. So water, toilet paper, whatever. One day, our janitor walks in the hallway, and they hear a patient crying. Should they go and check on him?
Starting point is 00:48:03 You say yes. One day, the janitor walks, and they see a family getting lost in the corridor. Should we redirect them? Yes. In fact, we understand that there's lots of things that are not in the janitor's job description that we want the janitor to do. We want the janitor to take the utility of the hospital.
Starting point is 00:48:22 This is good for the hospital. It's not good for me right now because it takes time for me and I'll have to go back to my duties later, but it's good for the hospital. This is good for the hospital. It's not good for me right now because it takes time for me and I'll have to go back to my duties later, but it's good for the hospital. And when you think about it, there are lots of cases in which we want people
Starting point is 00:48:35 not to do their job description. We want people to look around and say, where else can I be helpful? What can I do to be helpful for the organization that is not in my job description? So those two components, utility embracing, opening our eyes and looking around,
Starting point is 00:48:53 and goodwill make a huge difference. And the thing about it, it's good for everybody. People who go to a workplace where they love going to are happier and more productive. Everybody wins. But nevertheless, lots of organizations are not doing it the right way. So on a larger scale, what global societal issues, and I imagine there's a lot to pick from right now, have occurred as a result of our own irrational behavior?
Starting point is 00:49:23 What are self-inflicted wounds here? Well, right now, I think one of the big ones is social media, and it's multiple wounds. The class action lawsuits in the U.S. against tobacco are about $200 billion, I think, something like that. What would the number be if there were class action lawsuits against social media? It'll be hard to quantify, but we talked about loneliness
Starting point is 00:49:50 and depression and social polarization and fake news and people are not getting vaccinated. You can just name the thing. Imagine we would quantify that. That would be much more, I think. And it's self-inflicted in the sense that, you know, when I started writing this book, in the proposal I wrote, it will be a chapter on solutions.
Starting point is 00:50:19 I don't have a chapter on solutions, I have these little sections in the middle called, hopefully helpful. Because I think that the real solutions have to be much broader and bigger. We have to control social media. We have to create new standards for truth. I think that freedom of speech is a wonderful idea, but when it can be weaponized in a way that it is now, we have to reconsider it. It's one of the biggest problems, I think, of modern society is misinformation and polarization.
Starting point is 00:50:53 Like 10 years ago, if you asked me what are the big problems facing humanity, this wouldn't be one of them. Now, I think that in order to go forward in anything, we need to unite. If whatever decision we make, the other half is going to say, I'm not accepting it, or I think this, like, we're not going to move forward in any meaningful way. So I think that will be number one for me now is the way that our information systems are working. And we need to do something really big to fix them.
Starting point is 00:51:26 Dan Ariely is a professor of psychology and behavioral economics at Duke University and a founding member of the Center for Advanced Hindsight. He's also the best-selling author of a number of books, including Irrationally Yours, Predictably Irrational, and The Upside of Irrationality. His latest book, Misbelief, What Makes Rational People Believe Irrational and the Upside of Irrationality. His latest book, Misbelief, What Makes Rational People Believe Irrational Things, is out now. He joins us from the great University of Duke. Professor, it's always good to speak to you. And I came late to writing books. I wish I'd started earlier. It's been something wonderful, me. And your book, predictably, I think it was predictably irrational, was motivation for me to write the book because your agent reached out to me
Starting point is 00:52:11 and said, you remind me of Professor Ariely, and you should write a book. So thanks for that. And Jim Levine is an amazing, amazing, amazing guy. What a mensch. Yeah, exactly. Thanks again. Best of luck to you. Adder of happiness, something that struck me.
Starting point is 00:52:37 I'm not, I don't know much about Michelle Obama. I've always thought she was a really impressive first lady and an impressive person. And like most people, I'm very fond or have very, I don't know, positive memories of the Obama administration. Something she friends, that we would hang out and do stuff together and talk together. I remember I said to my kid, it's time to have, you know, the sex talk. And I have never seen a look of horror like I saw in his face. And he literally screamed out reflexively, no. And I think I was sort of upset because I thought, well, we should be able to have these conversations. And the reality is I'm not his friend. And that might be a conversation that a dad and a son have. It probably should be. But it's probably not necessarily a conversation a dad and a son need to have. But I was upset because I thought maybe he'd think of me as a friend who could give
Starting point is 00:53:39 him good advice. I get my kid, my youngest, out of bed every day. I have my boys, and it's a freaking nightmare. My kid is like me. He's nocturnal. We start this three-hour process called putting him to bed at about 9.30 p.m., and by 1 a.m., he's finally in bed. I want to get milk. I need to brush my teeth. Oh, I need to check my phone. I mean, it's just like the like delay and stall tactics that would make any professional athlete, I don't know, whimper or cower in impressiveness. Anyways, he's very good at stalling around then. And then I wake up, you know, my alarm goes off at 715. I feed the dogs. I come down and I get him. The first thing I go in, I wake up the shades and I say, Nolan. And I turn off the sound machine and he's like, yeah, a little bit longer. And then I go down and eventually it just digresses to at some point me screaming at him and sometimes even throwing the covers off of him and not physically dragging him out of bed, but basically dragging him out of bed. And it's upsetting for me. I don't like it. The reality is you're not your
Starting point is 00:54:45 kid's friend. You're their dad. You're their mother. And that's what you're here for. You're here to make sure they know their love, but you're here to logistically get shit done, put guardrails around them, give them values, make sure they have confidence and self-esteem. And I think a certain amount of discipline and guardrails and forcing them to have a certain set of objectives such that they know how to get things done. They know what's required to get things done. They know things involve a trade-off and still a certain level of discipline, know that there
Starting point is 00:55:15 is a hierarchy and authority in every situation, including a household. I think that's really important. And sometimes it hurts. And a lot of times it's not as fun. Sometimes I'd rather just rather have a couple of friends to hang out with. But here's the thing. Here's the thing the Vox Media Podcast Network. We will catch you on Saturday for No Mercy, No Malice, as read by George Hahn, and on Monday with our weekly market show.

There aren't comments yet for this episode. Click on any sentence in the transcript to leave a comment.