Dan Ariely arrived at the behavioural-economics conversation about thirty years after it started. He has done useful experimental work — the famous study on the price of placebos, the work on free as a special number, the studies on cheating and the cost of small lies — and he has the talent of making them readable. What Predictably Irrational does not quite do is locate itself. The book is a tour of the field's findings without the field's history. The three books below supply the rest.
Thinking, Fast and Slow — Daniel Kahneman
Farrar, Straus and Giroux, 2011
Kahneman won the Nobel Prize in 2002 for work he and Amos Tversky began in the 1970s — work that founded the field Ariely now writes in. The book is his late-career synthesis, written for a general audience but without compromise on the substance. System 1 and System 2, the heuristics-and-biases programme, prospect theory, the planning fallacy: every concept Ariely uses casually has a chapter here that explains where it came from and how well it actually replicates. Some of the priming research Kahneman discusses has since failed replication; the book is honest about this in its later printings.
Nothing in life is as important as you think it is, while you are thinking about it.
We have a longer note on what to read after Kahneman if you want it. Read this first — it is the book Ariely's book is downstream of.
Misbehaving — Richard Thaler
W. W. Norton, 2015
Thaler shared the 2017 Nobel for founding behavioural economics with Kahneman and Tversky. Misbehaving is the memoir of the field — the personal history of how a Chicago economist began noticing the strange ways real people behave around money, the academic battles that followed, the slow rehabilitation of psychology inside the dismal science. It is funnier than the genre standard and unguarded about the politics of getting an unwelcome idea taken seriously. Ariely's stories have more polish; Thaler's stories have more institutional weight.
Read after Predictably Irrational as the prequel. The reason Ariely can write his book at all is that Thaler spent forty years making the field exist.
Nudge — Richard Thaler and Cass Sunstein
Yale University Press, 2008 (updated 2021)
The book that took behavioural economics into governance. Thaler and Sunstein — economist and law professor respectively — make the case for "choice architecture": that institutions cannot avoid shaping the decisions citizens make, so they may as well do it deliberately and toward people's own goals. The Obama administration created a Nudge Unit on the strength of this book. The UK government created another. The framework has been criticised, defended and refined for fifteen years and is now part of how serious states think about policy.
Read for the applied version of every finding in Predictably Irrational. The 2021 edition is the one to get — Thaler and Sunstein use it to address the replication-crisis questions about which findings still hold up.