Q. How would you define behavioral economics?

A. Before you can answer that question, you first have to explain what “standard economics” is, which is a useful comparison of what behavioral economics is and is not. Standard economics is built around simple questions. For example, what kind of choices people should make in consumption or investment to get the maximum benefit from their decisions. This approach led to the formulation of the rational actor theory, whether that’s a consumer or a producer; and departing from that premise, it deduces political conclusions on how the economy should be run: which are the best institutions and decisions to allocate resources to.

Behavioral economics doesn’t take off from this point of view. It tries to describe how people behave in real-life situations. Its goal is not to define an ideal of rationality, but to analyze how people actually act. To do that, this field has developed experiments on the way people arbitrate between several choices when confronted with an economic decision.

For example, let’s start with a simple question: why are there obese people? The perspective of standard economics would lead us to say that these people are informed consumers, so they’re eating what they want to eat, after having calculated the advantages and the costs. And if they eat too much and become obese, that’s their choice.

But according to behavioral economics, people become obese for all kinds of other reasons. Many of them would like to eat less and to control their weight better, but when they’re in front of their plates, they have a hard time holding back. A lot of them try to lose weight, but they often crack. They’re subject to temptations that they have a hard time controlling; they make wrong evaluations of their future activities, like going on a diet. And that’s the fundamental difference between standard economics and behavioral economics.

Q. What are the principal influences that behavioral economists have studied?

A. First of all, emotions play an essential role in our buying behavior. Most of our actions are guided by emotion, not reason. If you have the disagreeable experience of finding yourself face-to-face with a tiger, your first reaction will be to flee, not to deliberate over the best action to take. Most of the time, that’s how people proceed in daily life.

An emotion like fear is a good counselor: it pushes us to confront a danger. But emotions push us to give in to the stimuli that we’re presented with. Most consumer products are conceived to elicit emotional reactions in us. For example, Dunkin’ Donuts is devised and presented to inspire sugar and cream cravings. Shop windows display products in the most attractive way possible to provoke temptation in the consumer. That’s why, at the supermarket, we often buy more things than we’d meant to at first: our cravings have been stimulated by the presentation of attractive products, thrust before our eyes, in arm’s reach.

Faced with these temptations, we of course do have a capacity for self-control. But self-control itself is limited because it’s subject to psychological mechanisms that have been well studied by behavioral economics.

Imagine that you give a chocolate lover this option: Would you rather be given half a box of chocolates now, or a full box next week? Even though it’s a gift, it’s in the interest of the person to wait until the next week. But in reality, most of the time, attracted to the chocolates, the person will prefer to sacrifice her long-term interest to satisfy her immediate desire.

We’re constantly subjected to dilemmas like this one in daily life. Take the student who puts off his homework and goes to the movies because he’s tempted by a film. His choice of staying in to work or giving in to his temptation is skewed. If he chooses to stay at home, the cost is immediate and the anticipated benefit (a better chance of doing well in his exams) is hypothetical and long-term. On the other hand, if he goes to the movies, the benefit is immediate and the cost of his decision is postponed to the distant future.

That’s why we often make immediate decisions that go against what we’d like to do in the long term. Procrastinators, who always put off until later what they should do at once, know this problem very well.

Q. Is there a way to master the emotions to manage your consumption better?

A. There’s no one, sole, simple solution to help people “control” their consumption. But you can find personal tricks to help you make better choices. A few years back, I got a very serious illness that put my life at risk. The doctors gave me a treatment that was really hard to take: the medicine gave me unbearable nausea for hours. A lot of sick people would rather skip certain doses, or even abandon the treatment in spite of the danger. So I invented something to help me get through the ordeal. Each time I had to take my terrible injection, I allowed myself to see a video (one I love). That way, not only was the sickness less horrible to endure, but I’d mentally associated the medicine with a reward instead of a torment. When I knew I was going to have to take the medicine, instead of thinking about distressing pain, I thought about my reward. And it worked! When I finished the treatment, my doctor was surprised: I was the only one of his patients who’d completed the whole course of treatment.

That’s one way to trick yourself and overcome your own weaknesses. When you try to control your consumption behavior, it can be useful to invent techniques of this type. But you can also use technologies that spur consumers to control their consumption. It’s been shown that Americans significantly lower their electricity consumption in their homes if the electricity company gives them a little glowing lightbulb that turns red when too many electrical appliances are on and consumption has passed a certain threshold.

Finally, there are also political measures that encourage or dissuade consumers or producers from consuming or making certain products rather than others, penalizing products that cause pollution, favoring ethically responsible products, and encouraging people to economize or to limit the debt of their households. Controlled personal choices and public incentives can promote behavioral economics, as reflected by consumption habits.

Interview by Jean-François Dortier.

THE PARADOXES OF ABUNDANCE

Here’s an astonishing marketing experiment. Six kinds of jam are presented to consumers on a display table. At the end of the day, they count the number of pots that were sold. The next day, they put out twenty-four kinds of jam. They compare the sales figures and . . . surprise, sales are higher when there are six types of jam than when there are twenty-four! Moral: Abundance of choice inhibits purchasing.

This experiment was conducted with appropriate controls by Sheena Iyengar, a professor at Columbia University and the author of The Art of Choosing. The book puts forth a paradox of our consumer society: the uneasiness provoked by abundance of choice.

When faced with too many options, the consumer is effectively paralyzed. This is an experience anyone might recognize. Back in the age of public television, when there were only three available channels, the television viewer chose his programs quickly. Today, remote control in hand, he can zap for fifteen minutes through the hundreds of channels that are available to him. The excessive range of possibilities reinforces indecision and even provokes a certain feeling of dissatisfaction: the feeling that you haven’t found the ideal program.

—

TOO MUCH CHOICE HARMS CHOICE

It’s often said that too much information kills information. Internet users know that the immensity of available resources on the web sometimes confuses the searcher who’s looking up a clear, simple fact. The more you refine the question, the more new paths pop up; notions that you thought you understood become more complex, the data accumulates, and you run the risk of suffocating in an avalanche of facts. That’s the paradox of the culture of abundance.

In other times, food was a rare commodity and many people suffered from hunger. Today we must learn to restrain ourselves in the face of the abundant and varied gustatory temptations that present themselves to us. The same is true of information: millions of sites are a click away, thousands of television channels can be accessed by the remote control, thousands of books can be found in libraries and bookstores.

In the area of marketing, abundance also harms decision making. In The Paradox of Choice: Why More Is Less—How the Culture of Abundance Robs Us of Satisfaction, the sociologist Barry Schwartz addressed the phenomenon of mental overload. In cultures of abundance—of food, information, entertainment—our problem is not to find resources, but to narrow them down. J.-F. D.