This week I attended one of Diamond Management & Technology Consultants' Diamond Exchange meetings. Senior IT and other executives from major companies, senior members of the US military, and others listen to talks about, and discuss, some relevant topics.
This meeting revolved around the behavioral economics research of MIT professor Dan Ariely. Dan, like Gordon Bell, Alan Kay, myself, and a few others, is a "Diamond Fellow" and usually attends these meetings as one of the interesting parts of the community that develops (a reasonable subset of the attendees are the same from year to year). This time, Dan had his new book, titled
"Predictably Irrational: The Hidden Forces That Shape Our Decisions" [
link to Amazon] that just came out a few days before. It is (as of this writing) number 21 on Amazon and number 5 on the NY Times bestseller list.
Dan is interested in the decisions people make everyday, such as when shopping, but,
unlike a normal economist, as a behavioral economist he doesn't assume that people make decisions rationally. He looks at different facets of life and looks at people's expectations, and their passions (or lack thereof) for work.
The book addresses a variety of areas in which Dan performed a lot of experiments. He uses things as mundane as beer, wine, pencils, and chocolate in his research. For example, to see how people treat money differently than non-money, he put 6-packs of Coke in college dorm refrigerators and figured out the "half-life of Coke" (i.e., how long it took for people to steal it). Quite quickly. He then left plates of money. No one took any.
His experiments are all quite simple and clever. They cover areas such as how we assign values to things, how we treat financial relationships differently than social ones, how sexual arousal affects decision making, and more.
Dan gave me a prepublication copy of the book a while back, so I've already read it. It's a wonderful book. Not only is the research fascinating and important, but Dan's entertaining and very personal voice comes through in his writing. I highly recommend it to all sorts of readers. It is not a technology book, nor a dry economics one -- it is a book about people.
Dan has already been interviewed by NPR and some major publications and will certainly be interviewed much more as he goes about his book tour, but I thought it would be interesting to cover something you wouldn't find in the popular press:
How do his findings apply to Open Source software? Dan and I sat down to talk in one of the lounges for almost an hour during the conference after one of the activities for non-golfers (sandcastle building after a short demonstration by a professional on a beach in Monterey, California). I recorded the whole thing as a
podcast.
[The original post on
Dan Bricklin's Log has a photo of Dan Ariely, right after our interview]
Here are some of the things we covered, which you should be able to see are usually related to Open Source software and its development:
For most people, when it comes to purchasing something, there is a big difference between free (as in "free beer") and even one cent.
Also,
according to his experiments, there is a big difference between how hard people will work for free (without pay) vs. different amounts of payment. People will work hard (such as moving furniture) for free, and just as hard for lots of money (e.g., $60 per hour). They won't work anywhere near as hard for a small amount (e.g., $2 per hour).
He distinguishes between the "social realm" and the "financial realm". When things move from the social realm to the financial realm they are viewed differently. People don't think "This is the same as free, plus I'm getting a little bit of money." They think "I'm being paid very little."
When comparing things, it is easier to compare things that are in the same "bucket". For example, it is easy to figure out what you would pay for a shirt similar to another you've bought previously. But if something is "free" or is in the social realm, then it is considered in a different bucket from the "money" realm and comparisons are done differently, as if you were comparing different types of items. They are different mindsets. When you switch from the money realm to another, things change and not just in ways related to price. So, Open Source software is often not compared head to head with proprietary software and other factors come into play when deciding its value.
Feeling that your work is useful, even if you know it's an illusion, has motivational power with respect to that work.
People have an over tendency to keep doors open: We love options and over value them. We love keeping our options open even when it is clearly not in our interest. The fact that a piece of software is Open Source, and thereby gives you options, is an attraction (such as being able to make changes yourself, even if you never actually take advantage of that option).
Normal, financially-based contracts are usually pretty fully specified. In contrast, socially-based contracts are less fully specified but are more flexible and you know that when things go really bad the other party won't abandon you. (For example, see the difference between a marriage contract and one with your gardener.)
Proprietary software has explicit contracts while Open Source software usually has incomplete social ones that are more flexible.
Once you move from a social contract to a financial one, it's very hard to go back, so you have to be careful if you want to stay in the social realm.
Gifts are viewed more like in the social realm than being paid in cash, though being told how much the gift costs brings it back into the financial realm.
Open Source can be about the pride we take in our work and in the pride of knowing other people are taking what we've done and building upon it. Paying for the work, even paying some people but not others, can change that view and amount of pride for everybody.
Money has side-effects. There are different norms of what is and isn't appropriate when money is involved, including moral aspects.
Just knowing a piece of software you are working on is covered by a socially helpful license (especially if it says it at the top of every file) may possibly affect your attitude while working on it. (This is my idea that stems from his research that says that just being asked to list some of the Ten Commandments cuts down cheating on subsequent tasks when compared to listing some book titles.)
We talked about the intoxicating "high" of doing programming.
He is interested in the meaning of labor.
The old philosophy that you do a job just to be paid is wrong. However, we don't understand labor enough as an academic discipline -- about passion, affiliation, and motivation. The area of Open Source software is interesting, he feels, because in many places it removes the issue of money and just leaves the "payment" of joy.
We overvalue what we have or what we create. Ownership or authorship moves things from financial-based to pride-based. The inefficiencies from the author's perspective of continuing to develop and support a project even after there are "better" alternatives could be very efficient for users worried about switching costs. These effects should be much stronger in Open Source than proprietary software because of the financial nature of deciding to keep proprietary software projects alive.
Dan sees a real importance in doing experiments, and in taking social forces into account, in corporations -- but most companies ignore it. Open Source software removes money from the equation and opens the opportunity to take other forces into account.
We talked a bit more about gifts vs. money, including donations to Open Source projects. He looks to Burning Man, which is a gift economy and not a monetary one.
Finally, because of the way in which people do things by relative valuation and not absolute, he sees that the initial emerging social norms, such as in an Open Source community, are very strong and of long lasting influence, since they become the baseline that future behavior is measured against.
That's my overview of what we talked about. I really recommend that you listen to the podcast. Dan has a very special way of expressing things. Also, if you end up reading the book (which you should), you'll hear his voice in your head because of his writing style. People who have heard him give a speech and then read the book comment upon how much they can hear him clearly in his writing and how much that adds to reading the book.
The podcast is available on my Podcast page as "Dan Ariely, author of Predictably Irrational, about Open Source".