2 reasons to read Thaler’s wonderful book about the creation of behavioral economics

July 7, 2015
Published in May, 2015.
There are at least two big reasons why those of us in the edtech profession may be interested in Thaler’s Misbehaving. (Whatever your reasons for reading this book you will be rewarded with an excellent tale well told).
Reason #1 - An Understanding of Behavioral Economics Is A Critical Component of Leading Organizational Change.
Reason #2 - We Can Learn A Great Deal from Misbehaving About How to Create a Discipline.
Leading Organizational Change:
The field of behavioral economics seeks to understand, and predict, why people behave as they do. The key insight of the behavioral economics is that humans are not very good at making rational cost/benefit type calculations. Rather, we tend make decisions that are sub-optimal at best, self-destructive at worst. 
For instance, most people are terrible at saving enough money for retirement. We overvalue consumption today, and undervalue the benefits of delaying present consumption for future security.  Unless policies are setup so that retirement savings are the default, few of us will save the appropriate amount. However, if the default is to put aside an adequate percentage of our paycheck, then most of us will happily live with the default.
This seemingly obvious insight, that people stick with defaults over rational decisions, is one of the key contributions of behavioral economics. So is the conclusion that people tend to overvalue what we already posses - the endowment effect. This behavior is closely related to loss aversion - the observation that people will be too risk averse as the risk of losing something outweighs the benefits from even large gains.
Anyone in academia seeking to lead organizational change should read Misbehaving. From Thaler’s (often very funny) description of how behavioral economics was created, we learn that describing the benefits of change will usually not be enough to motivate new behaviors. The people that make up organizations like colleges and universities will seek to avoid losses more than they will strive to create gains. 
Even if it is better for the institution as a whole if a diverse group of people engage in actions that may lead to setbacks, the natural tendency will be to play it safe. What higher ed leaders need to do is explicitly create incentives for risk taking, and then consistently reward failure as a well as success.  Experimentation cannot happen with some failure.  Is failure reward at your institution?
Creating A Discipline:
The other way that I read Misbehaving was as a how to guide for creating a new discipline.
I have this idea that learning technology is on the cusp of achieving disciplinary status. I’m talking about departments of learning technology. Degrees in learning technology. Professors of learning technology. The whole academic enchilada.
The idea is that learning technology is in the process of transitioning from a professional practice to an academic discipline.  Learning technology is developing a set of theoretical frameworks, a consistent set of methodologies, and a recognized community of practice. We have a language, a professional identity, and a research agenda.  
In many ways, the discipline of learning technology is in the same place that behavioral economics was 4 decades ago. When Thaler was trying to get behavioral economics off the ground the field was marginalized and its practitioners outsiders. There was very little interest in challenging the orthodoxy’s of the economics profession. The strange mix of psychology and economics that Thaler and his fellow travelers were cooking up appeared as both ridiculous and irrelevant to the economics establishment. It was Thaler’s status as an outsider, an unpromising new PhD from a non-top tier school, that gave him the freedom to learn from and collaborate with those outside of the economics mainstream.
If we are truly going to push learning technology into the ranks of academic disciplinary status, (and there is fierce debate amongst my colleagues and friends about the wisdom of this approach), then we must learn from those who have come before us in creating new disciplines. 
Misbehaving offers a terrific roadmap for those of us struggling to carve out a new space in the intellectual and organizational hierarchy of academe.  
What are you reading?


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