Ivey prof’s book turns economics into child’s play

Neil Bendle hopes you get a good chuckle out of it.

Behavioural Economics for Kids, an e-book he recently published, isn’t exactly for kids. It’s for you, and other ‘big kids’ out there, meant to validate something we already know, on some level, to be true – when it comes to decision making, we sometimes behave like children.

In 15 short, illustrated chapters, Bendle, an Ivey Business School Marketing professor, covers behavioral tendencies which detail some of the most significant elements of modern behavioural research. His father-in-law, Philip Chen, provided the quirky illustrations.

BENDLE

BENDLE

Consider, for instance, the third chapter, Hyperbolic Discounting. With a tag line of “a marshmallow in the hand is worth two promised later,” the chapter succinctly describes a universal tendency toward immediate gratification. Much like a child who is offered one cookie now, or two cookies later, we tend to pick and heavily discount the immediate, rather than opting for a greater reward in the distant future. What we want, it seems, depends on when you ask us.

“The actions we see our children doing can help to explain our own behaviour,” reads the introduction to the book.

His ideal audience is students, but anyone could find this book of interest, Bendle said, noting each chapter is backed up by an academic paper, referenced at the end.

“The idea is, when an adult does something like this, it’s dubious decision making, but kids are just cute and they say things that are funny. I thought this book was a good way to illustrate this,” Bendle said.

One chapter, Competitor Orientation, discusses how ‘beating others’ is sometimes our only goal in a situation. Its tagline? “It’s not about how many toys I have. It is about having more toys than my sister.” For competitive children and adults, relative success matters. The competitively orientated person prefers earning $100 while another person earns $0 to earning $200 when the other person gets $300.

“My research is about all these ways we behave – which are actually not all that bad. One of the things I’m trying to emphasize is these ways of behaving that are identified can actually be quite useful – things like loss aversion,” Bendle explained.

“It’s generally a good thing to worry about what you’ve got and trying to keep hold of that. Some of these are quite useful decision-making foibles. I’m keen to emphasize there are a lot of mistakes in these behaviours, but they don’t make you stupid,” he continued.

“They’re what normal people do. They’re what kids do, and just because we grow up, doesn’t mean we stop doing these things the day we turn 18. One of the messages is that we are kind of all kids.”

At the end of the day, Bendle’s book is just another way of getting a simple message across.

In marketing and economics, we often talk about how people should behave. This is about how people do behave, he said.

“Economists tend to think about decisions as being all perfect and good, that we can assume people will make the right (benevolent) decisions. A lot of psychologists seem to start with the belief that a lot of people make pretty terrible decisions,” Bendle explained. “It’s somewhere in the middle.”

People sometimes have vague reasons for doing things, and sometimes they don’t make sense, Bendle added. This book points to some of those strange reasons, as childish as they may be.

He has used Behavioural Economics for Kids in his PhD seminar on decision-making and he hopes others find it entertaining and informative as well.

“I’ve enjoyed it. People find the book good fun.”