“The idea that we’re choosing perfectly is preposterous.” Those were the words of Richard Thaler, often dubbed the father of behavioural economics, in a recent BBC World Service radio interview. On the face of it he has a point. People often make decisions that seem foolish.
Thaler’s premise is the foundation of the burgeoning field of behavioural economics. Its advocates claim that their approach, incorporating the insight that humans often act in predictably irrational ones, makes the discipline more powerful. Many, including Thaler, also argue that it can help experts ‘nudge’ us to behave in says that will benefit us. That includes encouraging saving for retirement and promoting healthy eating.
Even if we dislike these paternalistic conclusions, should we reject the behavioural approach entirely? It seems to many to be based on an eminently common sense view of human nature.
· To what extent does mainstream economics assume human rationality?
· Isn’t it true that there are predictable patterns of people making cognitive errors?
· Can’t behavioural economics help enhance our understanding of financial crises and recessions?
· What assumptions does behavioural economics share with mainstream economics?
· What are the historical antecedents of behavioural economics?
Listen to Daniel Ben-Ami’s introductory remarks
economics journalist; author, Ferraris for All and Cowardly Capitalism
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