Praxeology, Perspective is Everything

When you go to a drinks party and you stand up and you hold a glass of red wine and you talk endlessly to people, you don't actually want to spend all the time talking. It's really, really tiring. Sometimes you just want to stand there silently, alone with your thoughts. Sometimes you just want to stand in the corner and stare out of the window. Now the problem is, when you can't smoke, if you stand and stare out of the window on your own, you're an antisocial, friendless idiot. If you stand and stare out of the window on your own with a cigarette, you're a fucking philosopher. 

This is the reason I cannot really enjoy a drinks party since I don't smoke.

We too often forget:
1. Things are not what they are; they are what we think they are;
2. Things are what we compare them to;
3. Yet we make psychology subordinate to everything else;
4. Psychological value is often the best kind.

“Could I do with a little life editing? Would that give me a little more freedom? Maybe a little more time?” 

Because the nature of a wait is not just dependent on its numerical quality, its duration, but on the level of uncertainty you experience during that wait. Waiting seven minutes for a train with a countdown clock is less frustrating and irritating than waiting four minutes, knuckle-biting going, "When's this train going to damn well arrive?" 

Here's a beautiful example of a psychological solution deployed in Korea. Red traffic lights have a countdown delay. It's proven to reduce the accident rate in experiments. Why? Because road rage, impatience and general irritation are massively reduced when you can actually see the time you have to wait. In China, not really understanding the principle behind this, they applied the same principle to green traffic lights. Which isn't a great idea. You're 200 yards away, you realize you've got five seconds to go, you floor it. The Koreans, very assiduously, did test both. The accident rate goes down when you apply this to red traffic lights; it goes up when you apply it to green traffic lights. 

I propose that we can use psychology to solve problems that we didn't even realize were problems at all. This is my suggestion for getting people to finish their course of antibiotics. Don't give them 24 white pills. Give them 18 white pills and six blue ones and tell them to take the white pills first and then take the blue ones. It's called chunking. The likelihood that people will get to the end is much greater when there is a milestone somewhere in the middle. 

Charlie Munger: "If economics isn't behavioral, I don't know what the hell is."

Von Mises completely rejected this distinction. And he used this following analogy. He referred actually to strange economists called the French Physiocrats, who believed that the only true value was what you extracted from the land. So if you're a shepherd or a quarryman or a farmer, you created true value. If however, you bought some wool from the shepherd and charged a premium for converting it into a hat, you weren't actually creating value, you were exploiting the shepherd. 

Von Mises believes economics is just a subset of psychology, he refers to economics as "the study of human praxeology under conditions of scarcity".

So if you do something that's perceptually bad in one respect, you can damage the other. 

Rory Sutherland: Perspective is everything