As I prepare to lecture on behavioural economics in public policy tomorrow, I’ve been riffling through the books I have in the room here & am struck by how similar they all are. The most recent is Richard Thaler’s , which is as the subtitle suggests about the debate within economics about foundational assumptions as well as the content of behavioural economics. It’s very good and accessible. Daniel Kahneman’s Thinking Fast and Slow is still my favourite. There’s , of course, by Thaler and Sunstein. The Dan Ariely books – I have here – are jolly reads. Mullanaithan and Shafir’s is an important book. A more scholarly volume is Eldar Shafir’s edited volume . Somewhere too in here is Colin Camerer’s . And I have by Julian LeGrand and Bill New, somewhat cautious in its embrace of behavioural policies.
[amazon_image id=”1846144035″ link=”true” target=”_blank” size=”medium” ]Misbehaving: The Making of Behavioural Economics[/amazon_image] [amazon_image id=”0141040017″ link=”true” target=”_blank” size=”medium” ]Nudge: Improving Decisions About Health, Wealth and Happiness[/amazon_image] [amazon_image id=”0007256531″ link=”true” target=”_blank” size=”medium” ]Predictably Irrational: The Hidden Forces that Shape Our Decisions[/amazon_image] [amazon_image id=”0141049197″ link=”true” target=”_blank” size=”medium” ]Scarcity: The True Cost of Not Having Enough[/amazon_image] [amazon_image id=”B00P6ZJ6LS” link=”true” target=”_blank” size=”medium” ]Government Paternalism: Nanny State or Helpful Friend?[/amazon_image]
The thing that strikes me looking at these volumes covering a dozen years is how much overlap there is in the material they cover, often exactly the same examples. Does this mean behavioural economics has not really moved on from the central insight about people’s inability to calculate probabilities as if they were Mr Spock from Star Trek, and hence the “irrationality” of much decision-making concerning uncertainty and predictions of the future? The big questions I have – and can’t readily find the answers to – are:
1. What do we know about the boundaries between situations in which people are “rational” and “irrational” (ie individual choices lead to the market outcome as predicted by conventional economic theory, or not) – is it as simple as any situation involving having to predict the future?
2. What do we know systematically about the interaction between individual decisions and social influencing (other than that it exists)?
3. What do we know about whether people adjust over time to ‘nudge’ policies and change their behaviour, as they do to any traditional economic policies?
If those who have read more of the behavioural literature know where I can find relevant material, I’d be very grateful.