We are a product of our environment. What we may term rationality is bounded on all sides by our emotions, our peers and the incentives on offer.
The Why Axis is the latest book to peel back these layers and jump into the fray of populist takes on behavioural economics, a trail blazed by Freakonomics back in 2005.
As a read, it is highly entertaining. Gneezy and List have an obsession with moving economics into the ‘dirty’ real world and the book is a catalogue of their experiments over the years as they delve into the mysteries of what drives us. Important and emotive social questions such as the gender pay gap, the role of education in tackling inequality and how to encourage charitable giving are tackled. The results are sometimes surprising, such as that the stick often works better better than the carrot when it comes to motivating students. Sometimes, they are depressingly confirmatory – charge more for your wine and we will automatically assume it must be better.
The book is at its finest when it challenges conventional wisdom, often straying into controversy, and seeks to provide answers. For example, the authors argue through experiment that women in Western society are fundamentally less competitive than men. They then go on to study extreme patriarchal and matrilineal societies, arguing that this gap is not nature but rather the product of generations of social norms, which have dug deep into the cultural psyche. Similarly, the exposition on the rise of economic discrimination is something that stays.
There is, however, one flaw that was frustrating for this reader.
For a book that expounds the importance of context and framing, the authors often give precious little background to their research. The section on economic discrimination was all the richer and more rewarding to read thanks to their discussion of Gary Becker’s pioneering work in the field. Kahneman and Tversky make a couple of illuminating cameos but Schelling and Simon, for example, are conspicuously absent.
In this, the book does a disservice to the quality of its research by straying to the intellectually light side. The success of Kahneman’s Thinking Fast and Slow demonstrated that readers enjoy being challenged and digging deep into the detail, and The Why Axis suffers by comparison. While the book’s focus is clearly on their research, more background and little personal experiments on key related concepts (such as temporal myopia and public choice) help enrich the overall experience. Debunking other theories and rebutting some of the critiques advanced against behavioural economics deepen the pleasure. And where Gneezy and List offer simple solutions, understanding why we persistently refuse to take them on board is a troubling question that goes unanswered.
If books were incentives, The Why Axis works today, drawing the reader into its fascinating world. But whether it stays, influencing us for the longer-term, is a question yet to be answered.
Bob Swarup is the author of Money Mania: Booms, Panics and Busts from Ancient Rome to the Great Meltdown and a London-based investor.
