Naijanomics will be starting a new series on Behavioural Economics. I’m not sure what to title it yet, so suggestions are welcome. So what’s this new series all about?
Listening to Nigerians argue during the previous election made me realize that a number of us confidently make series of of cognitive biases that we’re completely oblivious to. Perhaps illustrating some of these biases might make us more aware of the quality of the decisions we make. Why’s this awareness important? Because it affects the outcome of one’s life in imperceptible and perceptible ways. You might begin to observe how you make these errors and hopefully it’ll give you a new perspective on how you’re not as smart as you think you are. Controversial and humbling? Exactly.
If you need another reason why these behavioural insights are important – well, because very brilliant people think it’s important. Daniel Kahneman – the psychologist who pioneered research on cognitive biases – won a Nobel Prize for ‘his groundbreaking work in applying psychological insights to economic theory, particularly in the areas of judgment and decision-making under uncertainty.’ His work has been applied to a number of fields in the economics, policy and business spheres. Also, if you know what it takes to win a Nobel prize, then I need not say more.
I’ve previously touched on a number of these cognitive biases we make. Here are a couple – ‘Why we’re on the losing end when we haggle prices’, or ‘Why we’re susceptible to superstitions’. However…I’ve always wanted to go through the whole list of such cognitive biases.
Fortunately for me, a brilliant friend of mine (who I also write for) gave me a book on such behavioural biases. It’s called ‘The Art of Thinking Clearly’ by Rolf Dobelli. It lists and explains a number of these cognitive biases. They’re scores of such books out there, but I enjoy the flow of this one, so I’ve decided to adopt it and find examples and stories suited to Nigerians. My aim is to tackle a cognitive bias each week and hone in on how it affects our personal lives, our business decisions, and our policy and economic decisions. I’ll make it as interesting as I can – and funny…if possible. I miss writing on Behavioural Economics, so I’ll be having fun writing this series, and I hope you have fun reading it.
NB: For the Macroeconomics lovers, don’t fret, you’ll still see most of that in the Bricklayer Series.