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What Causes Us to Make Illogical Choices?

We all like to think that we make rational decisions. Have you ever bought a bottle of aspirin or some spaghetti sauce just because it was more expensive than another brand, and in your mind that made it better? Dr. Dan Ariely, a behavioral economist and author of Predictably Irrational: The Hidden Forces That Shape Our Decisions, says even when we think we’re acting in our own best interest, our reasoning abilities are influenced by both our expectations and our emotions – and we often make illogical choices. Here are two things he says we should be aware of. We got these from the Bottom Line Personal.

• Belief #1: A $4 bottle of aspirin makes headaches go away, but a $1 bottle doesn’t. Our expectations have a HUGE influence over our physical experiences – that’s why placebos are so effective. When you take a pain reliever, merely expecting the medication to work causes the body to produce opioids – powerful chemicals similar to morphine, which numb pain. So if you believe expensive aspirin will get rid of your headache, it probably will. However, it’s not the aspirin itself taking effect. It’s your own body’s opioids. Generally speaking, we typically assume that higher priced products are better – even when the ingredients in both products are the same – like with aspirin or spaghetti sauce. So, if you’re debating between two or three choices, check the label. If the ingredients are basically the same, the cheapest one is your best bet.
• Another example of how our irrational mind works: A money-back-guarantee convinces us to buy something we don’t need. Dr. Ariely says that owning something changes our belief about it almost immediately. Once you become an owner, you place greater value on what you bought. Let’s say you’re shopping and a coffee table catches your eye. You don’t really need a new coffee table, but it comes with a 30-day money back guarantee. So, you decide to try it out. Why not – you can always return it! When you get home, rearrange your furniture and adorn the table with magazines – it feels like yours, and you’re less likely to return it. So, be skeptical about impulse purchases. Tell yourself, “The likelihood of me returning this is very low” – because it is. This should help you think harder about whether you truly need something.

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