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It's FREE! but so what ...

May 18, 2011 - Lee Smith
Have you ever seen people you know, and otherwise respect, go a little “nuts” when an offer of something FREE! appears before their eyes? Did they ever scoop up pencils or key chains at a conference? Stand in line and wait for a free scoop of ice cream? Buy two of a product they didn’t really want, just to get a third one for free? Why do they do this?

That’s a question Dan Ariely wanted answered too. He is a behavioral economist and author of the best-selling book “Predictably Irrational,” which delves into a wide range of human decision-making. Ariely contends we consistently overpay, underestimate and proscrastinate. But not for random or senseless reasons.

Why do people go nuts for FREE!? Ariely conducts some neat experiments (you’ll have to read the book) and concludes: “Most transactions have an upside and a downside, but when something is FREE! we forget the downside. FREE! gives us such an emotional charge that we perceive what is being offered as immensely more valuable than it really is.”

In another chapter, Ariely tackles a modern problem: With every person seemingly on a cell phone or tapping away at their computer or iPhone, he offers this: People’s constant checking of email (Facebook, etc.) is akin to the gambler playing a slot machine. Both are waiting for emotional thrill of a payoff. In the case of the email-checker, he or she is seeking that “special” email that tops all others. This “special” email is different for everyone.

There are so many other fascinating insights in this book, dealing with social versus market norms (why and when we expect or offer payment versus doing things without compensation); gift-giving; dating and sex; getting our work done rather than putting it off; preventative health care; saving for a rainy day; and what owning something means to us versus what it means to others; and so much more.

I can’t say I agree or disagree with EVERY conclusion. Sometimes I think Ariely discounts rational decision-making too much. But the book is obviously thought-provoking. I highly recommend it.

 
 

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