Leave it to Pixar to come up with what might be the most tangible expression of the foundational principles of Behavioral Economics we’ve ever seen. On the face of it, “Inside Out” is an entertaining personification of the interplay between five universal human emotions as they seek to process daily life in the minds of the characters of the movie–principally eleven-year-old Riley and, to a lesser extent, her parents. At the same time, however, it is a lively depiction of how and why humans are not the strictly rational beings that traditional economics had for centuries presumed them to be.
In their book Nudge, Richard Thaler and Cass Sunstein introduced the language of “Econs” vs “Humans,” which is shorthand for the Nobel Prize-winning work of Daniel Kahneman, who upended the old assumption that, if left to their own devices, people will make decisions that are both rational and in their own best self-interest. In human reality vs. economic theory, when people face uncertain situations, they don’t examine and process information in ways that would be characterized as “rational,” often relying on mental shortcuts or the emotions that can drive decision making.
There are no “Econs” in the movie “Inside Out.” Rather, the film does a magnificent job in characterizing the mental processing that directly influences human decision making over the lifespan. And this movie is particularly strong in its depiction of the “Optimism Bias,” one of the decision-making biases most frequently and accurately described by behavioral economists.
As a child, Riley’s mind is very clearly controlled by Joy—a blue haired, infinitely optimistic component of Riley. Sure, Anger (little red fire-cracker, literally) shows up now and again, and green-faced Disgust keeps her safe from perceived poisoning (aka broccoli), and teeth-chattering Fear protects her from impending disaster by imaging worst-case scenarios. But Joy is clearly in charge. She stands at the center of the console of Riley’s mind and either calls upon the others as needed (they are often wandering rather aimlessly about) or permits the others to take over for short stints as necessary to keep Riley safe. Joy is so much in charge, in fact, that at one point she actually draws a circle on the ground—far away from the console—and orders Sadness to stand within it so as not to tarnish any of Riley’s memories with melancholy. Through Joy, this movie very clearly demonstrates how optimism becomes the core for human decision making at the very earliest stages of life, interrupted only as necessary by the others and only insofar as they are required to keep us safe.
The movie also challenges us to imagine what happens to our decision making when optimism is not present. Left to their own devises during the critical core of the movie, Anger, Disgust, and Fear must jointly make decisions for Riley independent of Joy. Without the optimism of Joy to assuage their fears about going forward, their only recourse is to go back to the past and try to re-create it. An entirely fruitless endeavor, and, yet, in so doing, they send Riley on a potentially perilous journey that even Fear cannot save her from. The message: Without the override of optimism, we just can’t make sense of an unknown, uncertain, and unpredictable future.
Throughout the movie, we also get a glimpse into the parents’ cast of characters. For both mother and father, the biggest difference you see is that all of the players are seated side-by-side at the console (rather than wandering in and out of the room as needed as they were for Riley), and the interplay between them is smoother and involves more of what we would consider rational thought. While neither parent is any longer driven so singularly by Joy, and other emotions sometimes get the best of them, all of their emotions work more collaboratively with one another. Despite the fact that the adults’ sense of joy and optimism may not remain the driving emotion, the role of optimism as a foundational and powerful part of their adult decision-making—most principally as they embrace the opportunity for any unknown future challenge—is preserved.
Translating all that to the world of Behavioral Economics, it is each of our foundational “Joy” that does important things for us—both good and bad. On her most important days, she helps us get out of bed in the morning and face another potentially harrowing day with courage. And she helps us smile through situations that would otherwise reduce us to tears. But on many other days, and in many small ways, she also undermines our rational decision making. We don’t get all of our cancer screenings because, of course, other people get cancer, not us! And we don’t save enough for retirement, because the future is long and there is plenty of time! Too much unchecked optimism, it turns out, isn’t good for us and our rational decision making. And it wasn’t, ultimately, good for Riley either. Riley needed Sadness in order to deal effectively with the trauma of a cross-country move. In the end, this is the value that the personification of Joy in “Inside Out” brings to the world of Behavioral Economics. She has had made it possible to have the kind of discussion we just did—a much easier way to talk about the Optimism Bias than in the first in a series of behavioral economics briefs we have for you (above).