Books Everyone Should Read on Psychology and Behavioral Economics

Psychology and Behavioral Economics Books

Earlier this year, a prominent friend of mine was tasked with coming up with a list of behavioral economics book recommendations for the military leaders of a G7 country and I was on the limited email list asking for input.

Yikes.

While I read a lot and I’ve offered up books to sports teams and fortune 100 management teams, I’ve never contributed to something as broad as educating a nation’s military leaders.

Not only did I want to contribute, but I wanted to choose books that these military leaders wouldn’t normally have come across in everyday life. Books they were unlikely to have read. Books that offered perspective.

Given that I couldn’t talk to them outright, I was really trying to answer the question ‘what would I like to communicate to military leaders through non-fiction books?’ There were no easy answers.

I needed to offer something timeless. Not so outside the box that they wouldn’t approach it, and not so hard to find that those purchasing the books would give up and move on to the next one on the list. And it can’t be so big they get intimidated by the commitment to read. On top of that, you need a book that starts strong because, in my experience of dealing with C-level executives, they stop paying attention after about 20 pages if it’s not relevant or challenging them in the right way.

In short there is no one-size-fits-all but to make the biggest impact you have to consider all of these factors.

While the justifications for why people chose the books below is confidential, I can tell you what books were on the final email that I saw. I left one book off the list, which I thought was a little too controversial to post.

These books have nothing to do with military per se, rather they deal with enduring concepts like ecology, intuition, game theory, strategy, biology, second order thinking, and behavioral psychology. In short these books would benefit most people who want to improve their ability to think, which is why I’m sharing them with you.

If you’re so inclined you can try to guess which ones I recommended in the comments. Read wisely.

In no order and with no attribution:

  1. Risk Savvy: How to Make Good Decisions by Gerd Gigerenzer
  2. The Righteous Mind: Why Good People Are Divided by Politics and Religion by Jonathan Haidt
  3. The Checklist Manifesto: How to Get Things Right by Atul Gawande
  4. The Darwin Economy: Liberty, Competition, and the Common Good by Robert H. Frank
  5. David and Goliath: Underdogs, Misfits, and the Art of Battling Giants by Malcolm Gladwell
  6. Predictably Irrational, Revised and Expanded Edition: The Hidden Forces That Shape Our Decisions by Dan Ariely
  7. Thinking, Fast and Slow by Daniel Kahneman
  8. The Folly of Fools: The Logic of Deceit and Self-Deception in Human Life by Robert Trivers
  9. The Hour Between Dog and Wolf: Risk Taking, Gut Feelings and the Biology of Boom and Bust by John Coates
  10. Adapt: Why Success Always Starts with Failure by Tim Harford
  11. The Lessons of History by Will & Ariel Durant
  12. Poor Charlie’s Almanack
  13. Passions Within Reason: The Strategic Role of the Emotions by Robert H. Frank
  14. The Signal and the Noise: Why So Many Predictions Fail–but Some Don’t by Nate Silver
  15. Sex at Dawn: How We Mate, Why We Stray, and What It Means for Modern Relationships by Christopher Ryan & Cacilda Jetha
  16. The Red Queen: Sex and the Evolution of Human Nature by Matt Ridley
  17. Introducing Evolutionary Psychology by Dylan Evans & Oscar Zarate
  18. Filters Against Folly: How To Survive Despite Economists, Ecologists, and the Merely Eloquent by Garrett Hardin
  19. Games of Strategy (Fourth Edition) by Avinash Dixit, Susan Skeath & David H. Reiley, Jr.
  20. The Theory of Political Coalitions by William H. Riker
  21. The Evolution of War and its Cognitive Foundations (PDF) by John Tooby & Leda Cosmides.
  22. Fight the Power: Lanchester’s Laws of Combat in Human Evolution by Dominic D.P. Johnson & Niall J. MacKay.

Rory Sutherland Offers 4 Interesting Reads

Rory Sutherland

I asked Rory Sutherland (Vice Chairman: Ogilvy & Mather) what books stood out for him last year. I’ve had the privilege of chatting with Rory a few times now and I think you’ll agree, like most farnamstreeters not only is he exceptionally smart but he’s an awesome person.

I think you’ll enjoy his reply:

Gerd Gigerenzer’s Risk Savvy: How to Make Good Decisions is a wonderful book; the concept of defensive decision-making which he describes within it is alone worth the cover price. As an additional bonus, you get a very valuable lesson in the interpretation of statistics, a field of mathematics which – I think it is now almost universally agreed – is given too little time and attention in schools.

Pathological Altruism, edited by Barbara Oakley et al, is a wonderfully broad book – but built around a single insight. That, just as apparently self-interested acts can have benign consequences, the reverse is also true. We tend to think that altruism is something to be maximised – but in fact it needs to be calibrated. A very important book.

Peter Thiel’s Zero to One: Notes on Startups, or How to Build the Future is an excellent book from someone who seems to understand what Fitzgerald called “the whole equation” of a business: in this case it isn’t movies but technology. A very enjoyable book of just the right length.

Finally I immensely enjoyed the manuscript of Richard Thaler’s upcoming book Misbehaving: The Making of Behavioral Economics. I have not laughed so much in ages as when reading his chapter describing how the Economics Faculty of the University of Chicago tried to agree on the allocation of offices in their new building. No, it did not go well.

The Books That Influenced John Kenneth Galbraith

PX 82-5: JKG 1961 Portrait

John Kenneth “Ken” Galbraith, was a long-time Harvard faculty member. By long time, I mean he was a professor of economics for over half a century. A prolific author, with about 4 dozen books to his name, he also published more than a thousand articles and essays. Among his most famous works was the trilogy on economics: American Capitalism (1952), The Affluent Society (1958), and The New Industrial State (1967).

In The Harvard Guide to Influential Books: 113 Distinguished Harvard Professors Discuss the Books That Have Helped to Shape Their Thinking, we can find the books that influenced him.

In the preface to his brief response, he writes:

I do not urge economics; others will do that. Instead I urge the enjoyments and enlightenment to which the well-seasoned economist and citizen of the future are entitled and which have brought both pleasure and reward to me in the past.

Then he goes on to name the books that gave him enjoyments and enlightenment in point form.

By Anthony Trollope:
Barchester Towers
The Last Chronicles of Barset
The Warden

Decline and Fall by Evelyn Waugh

By W. Somerset Maugham:
Of Human Bondage
Christmas Holiday

Gullible’s Travels by Ring Lardner

A Farewell to Arms by Ernest Hemingway

The Naked and the Dead by Norman Mailer

By Paul Scott:
The Jewel in the Crown
The Day of the Scorpion
The Towers of Silence
The Division of the Spoils

The Deptford Trilogy by Robertson Davies

Follow your curiosity, for more in this series check out the books that influenced E. O. Wilson, B. F. Skinner, Thomas C. Shelling, Michael J. Sandel, Jerome Kagan, and Stephen Jay Gould.

Wall Street’s Must-Read Books of the Summer

What's wall street reading this summer?

Bloomberg asked a few prominent wall-street types what books were on their reading list. Participants were asked to give one recent book as well as an all time favorite. Never ones to follow the rules, some people have three recommendations.

What strikes me the most is what’s not on these lists. You won’t find The Three Marriages, Marcus Aurelius’ Meditations, or any philosophy for that matter. You won’t find any good books on meditation, stillness, or why managing your energy, not time, is the key to high performance. And you also won’t find books about happiness or meaning.

Stephen King says it better than I ever could:

Back in the days when I was an EW regular, I started a column titled ”25 Things That Piss Me Off.” I never finished, because I’m a fairly easygoing guy and I could only think of about a dozen. But on that abbreviated list, right between No. 7 (”When the Junior Mints fall off my toothpick”) and No. 9 (”People who think movies with subtitles are always works of genius”) was this, at No. 8: ”Snobby summer reading lists.” I’m talking about the guy who says he’s going to spend July rereading War and Peace or the woman who insists she’s finally going to dig into the complete works of George Eliot.

Really? Eliot or James Joyce while swinging in the backyard hammock? Maybe somebody thinks that’s the way to spend those lazy, hazy, crazy days of summer, but not me. … None of these novels will insult your intelligence, but all will take you away to new and interesting places full of excitement, danger, and maybe a few laughs. For me, that — and not A Complete History of Canada in Very Tiny Print — is what summer reading is all about.

Nevertheless there are some gems below.

Bill Ackman

Lloyd Blankfein

Jim Chanos

Mohamed El-Erian

Austan Goolsbee

Bill Gross

Sallie Krawcheck

Pablo Salame

Steve Schwarzman

Whitney Tilson

Take a minute and compare the list to the books recommended by the 2014 Re:Think Decision Making workshop or Bill Gates or Tyler Cowen.

Books on Decision Making

Books on Decision Making

At Re:Think Decision Making in February, I asked participants to offer up some books on decision making. (If you’d like to be one of the first to know when I open up registration for Re:Think Decision making 2016 in Austin, TX , join the list.)

The crowd at the event was, in the words of one participants, the finest crowd you’ll find at a public event. These people are paid to make decisions for a living and want to find every edge they can. So when I asked them what books on decision making they read and recommend, you can bet they had a lot to say.

Here’s the list:

Decisive: How to Make Better Choices in Life and Work
By: Chip & Dan Heath

How to Measure Anything
By: Douglas Hubbard

How to Make Sense of Any Mess: Information Architecture for Everybody
By: Abby Covert

Wiser: Getting Beyond Groupthink to Make Groups Smarter
By: Cass Sunstein & Reid Hastie

The Surprising Power of Liberating Structures: Simple Rules to Unleash A Culture of Innovation
By: Henri Lipmanowicz & Keith McCandless

Gamestorming: A Playbook for Innovators, Rulebreakers, and Changemakers
By: Dave Gray, Sunni Brown & James Macanufo

The Righteous Mind: Why Good People are Divided by Politics and Religion
By: Jonathan Haidt

Yes or No: The Guide to Better Decisions
By: Spencer Johnson

The Little Book of Talent
By: Daniel Coyle

The Worry Solution: Using Breakthrough Brain Science to Turn Stress and Anxiety into Confidence and Happiness
By: Martin Rossman

Shantaram: A Novel
By: Gregory David Roberts

The Art of Living
By: Epictetus

The Education of a Value Investor
By: Guy Spier

Devil Take the Hindmost: a History of Financial Speculation
By: Edward Chancellor

Click: The Art and Science of Getting from Impasse to Insight
By: Eve Grodnitzky

The Dictator’s Handbook: Why Bad Behavior is Almost Always Good Politics
By: Bruce Bueno de Mesquita

The Back of the Napkin & How to Solve Problems and Sell Ideas
By: Dan Roan

Crossing to Safety
By: Wallace Stegner

Paradox of Choice: Why More is Less
By: Barry Schwartz

Streetlights and Shadows: Searching for the Keys to Adaptive Decision Making
By: Gary Klein

The Social Animal
By: David Brooks

The Laws of Simplicity
By: John Maeda

Nudge: Improving Decisions about Health, Wealth and Happiness
By: Richard H. Thaler

Reminiscences of a Stock Operator
By: Edwin Lefevre & Roger Lowenstein

This Will Make You Smarter
By: John Brockman

A more Beautiful Question: The Power of Inquiry to Spark Breakthrough Ideas
By: Warren Berger

Red Notice: A True Story of High Finance, Murder, and One Man’s Fight for Justice
By: Bill Browden

The Man who Mistook his Wife for a Hat
By: Oliver Sacks

Imprudent King: A New Life of Philip II
By: Geoffrey Parker

Seeking Wisdom
By: Peter Bevelin

Mastery
By: Rober Greene

Synchronicity: The Innes Path of Leadership
By: Joseph Jaworski

The Culture Map: Breaking Through the Invisible Boundaries of Global Business
By: Erin Meyer

Ubiquity: Why Catastrophes Happen
By: Mark Buchanan

Family Fortunes
By: Bill Bonner

Influence: The Psychology of Persuasion
By: Robert Cialdini

Antifragile: Things That Gain from Disorder
By: Nassim Nicholas Taleb

Poor Charlie’s Almanack: The Wit and Wisdom of Charles T. Munger
By: Peter D. Kaufman & Charlie T. Munger

The Brain that Changes Itself
By: Norman Doidge

And there you have it — a list of books on decision making that should give you a great starting point.

The Books That Influenced Stephen Jay Gould

Stephen Jay Gould
Stephen Jay Gould was one of the most influential and widely-read writers of popular science of his generation, but you’d never know it from the short reply he gave when asked which books influenced him the most. He left the why part out.

As found in The Harvard Guide to Influential Books: 113 Distinguished Harvard Professors Discuss the Books That Have Helped to Shape Their Thinking:

As a kid growing up in New York City, I played stickball and poker instead of doing a lot of reading. I wasn’t a nonreader — I read at an average age and an average rate. The passion for reading came later in college.

The Origin of Species by Charles Darwin
The Meaning of Evolution by George G. Simpson
Lucky to be a Yankee by Joe Di Maggio
Daniel Deronda by George Eliot
The Bible. King James version

Follow your curiosity, for more in this series check out the books that influenced E. O. Wilson, B. F. Skinner, Thomas C. Shelling, Michael J. Sandel, and Jerome Kagan

(image source: nyt)