This week’s book learning is from ‘Predictable Irrationality’ by Dan Ariely.
Dan Ariely asks us to picture a scene –
You are at your Mother-in-law’s house for Thanksgiving. There’s a sumptuous spread – golden brown turkey with great stuffing, amazing potatoes and dessert. The kids love it, the whole family loves it and everyone’s sipping wine after a great meal.
Gazing fondly at your Mother-in-law you say ‘Mom, for all the love you put into this, how much should I pay you?’ and you take out your wallet and wave some notes ‘300? No, wait.. I should give you 400.’
What follows next is something we can all imagine. Your Mother-in-law walks out of the room. And next year’s thanksgiving is a frozen dinner in front of the TV.
What just happened though? Why does an offer for payment kill the party?
As Clark, Judson and Mills suggested long ago, we live simultaneously in 2 words – of social norms and market norms.
Social norms exist from our need for community. Instant paybacks and reciprocity are not immediately required.
Market norms is the world of wages, prices, costs etc – a world of comparable benefits and prompt payments.
When they are kept separate, life hums along. But, the moment they get mixed up, trouble sets in.
This beautifully explains why some of the toughest/most annoying situations we face in our daily lives are when social and market norms collide eg: when a friend/family member repeatedly owes us money or when our social help in making a business connection leads to big financial gain for the friend/family member we helped.
This is part I of this learning on social and market norms. More to follow next week. I’m curious to hear about your insights from the story in the comments.
And, of course, here’s to keeping a watch out for social and market norms this week!
A Learning a Day 