Irrationally Rational: Ten Nobel Laureat: Ten Nobel Laureates Script the Story of Behavioural Economics

When reviewing a book, one tends to dash into its supposed ‘core’. That can sometimes be a big disservice to a potential reader. In this rush one could gloss over the value of what sits 'outside' the core.Dr. V Raghunathan’s (Raghu) Irrationally Rational is one such work. His attempt at identifying and researching ten Nobel laureates - and possibly some non-laureates who may get there - the ‘digression’ of mainstream classical economics into behavioural terrain is a story by itself.Psychology - a key ingredientThe cue “thanks to behavioural economics, the fact that we are real humans, and not some artificial construct of economists, has made the study of economics far more interesting”, he tells us. Now, this is such a transformational insight. Would we not want to know how it all tipped this way?“It is being increasingly recognized that there can be no proper understanding of the economic behaviour of humans without understanding their psychology”. Raghu has had a long track record of teaching behavioural economics at the SDA Bocconi in Milan. Two of his books, in particular - Games Indians Play and The Good Indian’s Guide to Queue-Jumping, are closely connected to the field. I for sure would recommend Irrationally Rational to be read only after having read these.Raghu's biggest gift!“While there are indeed textbooks by very renowned scholars in the field, these are not books which are easily accessible for the average readership”, concedes Raghu.The Nobel laureates alone probably account for over 90 per cent of the works in behavioural economics. To be fair, he says: “I didn’t have the heart to entirely keep out the works of non-Nobel laureates who have made some amazing contributions to the field. So, I decided to include their works”, too.”In an easy style, ensuring that a non-expert, with elementary understanding of economics in high school, can readily grasp how the underlying psychology of humans injects a flavour of irrationality to the fundamentally rational behaviour traditional economics assumes for humans”. This is truly Raghu’s biggest gift.Apart from sharing the concentrate in an easy language, Raghu demystifies the gradual metamorphosis of economics into behavioural economics. By the 1960s and 70s, he points out, “some cracks started appearing in the assumed rationality of humans. Those to notice the cracks would come to be called behavioural economists. Rather than accept economics as a dry stream of specious science that tells the world how people should take decisions and pretend that is how they do take decisions, the behaviouralists started mending those cracks by demonstrating how people actually take decisions, armed with empirical evidence of how people actually behaved”.Psychology & Economics: Chalk & cheese?Why do neoclassical economists take such little cognizance of the role psychology plays in people’s behaviour in making economic choices? Why have mainstream economists battled the idea that research in the realm of psychology should even be considered part of economics? Why do many in mainstream economics and finance, even today, consider psychology and economics as chalk and cheese? Raghu helps us navigate through a road hitherto less taken.Having said that, Raghu’s own illustrious and eventful journey in the realm of behavioural economics commenced with his doctoral dissertation. One would expect it to rightfully scale greater heights - having served a delectable smorgasbord within our reach.I for sure wish to indulge in two parts. Having not rushed for the core, am indebted that my school boy thirst for behavioural economics, stands reasonably quenched and whetted. Some time for reflection - to be followed by the main course courtesy the master chef! That seven of the ten Nobel laureates covered by Raghu have Jewish origins - would by itself be a fascinating exploration to undertake!What a beautiful state of mind to be in: Irrationally Rational!

Irrationally Rational is undisputedly an engaging book. The beauty of the book is, without using much of technical jargon, it smoothly glides you through the significant contributions of over ten Nobel Laureates to the evolution of behavioural economics from neoclassical economics. Consequently, its appeal goes beyond the experts who may be policy makers, academics or students of economics to ordinary non-expert readers who have a slight desire to read a non-fiction book. I, as a non-expert, found the book reassuring, as I realized it was perfectly ‘normal’ to be ‘irrational’ about many of my financial decisions. As a library and information scientist, I loved Chapter 4, “The market for lemons” basically on information asymmetry which discusses the works of Michael Spence and Joseph Stiglitz on economics of information. Anyone from the field of psychology, sociology or social sciences in general, has a lot to take from this book. In fact, many a time, you don’t feel you are reading a book; you feel you are conversing with the author, especially while reading the interesting examples and anecdotes. When you finish reading the epilogue, you feel this book is a pure celebration of these wonderful Noble Laureates, behavioural economics, human emotions _rational or irrational_ and friendship!

Raghu (Prof Raghunathan) is one of the best when it comes to putting across topics that are otherwise inaccessible to many. He does this elan and in a manner that is captivating.Every single book he has written have been an absolute pleasure to read, reflect, and re-read.I have immensely benefited from his wisdom both personally and professionally.Irrationally Rational opens up the typically parochial mind to emabrace the fuzziness of what being human is all about.All this in the context of economics which is arguably at the very core of our focus/pursuit.Perhaps the next epic from Raghu will combine ethics and economics drawing on the rich lore of mythology on which he has written in a captivating way.Must reads from Raghu include: Games Indians Play, Dont sprint the marathon, Locks Keys and Mahabharata, Duryodhana.Swami Krishnan

I bought the book after going through the reviews by the who's who of the financial world. One of them caught my eye: it said the book was a "Tour de force". Now, after reading the book I can vouch for it. A difficult and new subject, which has had me looking for help with nowhere to go, this book is a godsend.Its written in a simple easy to follow style, with little by way of academic jargon or mathematical models.The book takes one through various areas of economics such as classical, neoclassical, developmental, financial and links them all to the behavioral aspect of economics and decision making in real life. With the writeup having numerous well thought out examples from everyday life, it has worthwhile gems in its pages, for the casual or even serious reader. For one, my ROI on this book is manifold. I did use the rental argument laid out in the book to my advantage.All said, it deserves its place in everyone's reading list before making it to their bookshelf/library.