Evening arrives, and the professor is not going to sing for his supper so much as debate for his dinner. He will argue about the first principles of economics at the aptly named Rules restaurant in central London. David de Meza, head of managerial economics at the London School of Economics, has gamely agreed to play a brutal rationalist. Will they really see the world so differently?
Let’s start with a nice easy one: What should the government do to stave off recession?
Ariely thinks US President George W. Bush has already grasped one behavioral truth: “After 9/11, Bush urged Americans to spend. He made it a patriotic duty. Avoiding recessions is partly about holding up confidence, so people still feel like spending.”
Confidence is hardly the issue, retorts De Meza: “One of the features of the boom was over-optimism in spending and markets.”
So how would they have avoided the bubble that landed us in this mess in the first place?
“Even for economists such as me, it’s incredibly difficult to compute how much borrowing is in your best interest,” Ariely said. “So you could tell people how much they can borrow.”
“But what about entrepreneurs?” De Meza asked. “They borrow a lot. Do you seriously want potential entrepreneurs to sit an exam before they get funding?”
“What’s the big deal?” Ariely says. “Let’s limit people’s ability to hurt themselves in borrowing like we do with seatbelts in driving.”
Finally, the biggie: Is tipping irrational?
Yes, thinks Ariely, it’s just convention.
No, argues De Meza: “What you’re often paying for is nice treatment next time around.”
The manager of the restaurant, John, is called on to provide expert testimony.
Poor man, there is a lot at stake: his own profession’s interests, as well as serious academic inquiry. Still, after a bit of squirming, he sides with the behavioralists.
“It is slightly irrational, I suppose,” he says.
But, of course, we leave a tip.
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