We are all economists
Mainstream and behavioural economics are two sides of the same coin
The term ‘economics’ tends to incite a lot of passion. For many people it typifies a cold, emotionless perspective on life that just looks at money. It represents the cynical world view of those who, as Oscar Wilde said, “know the price of everything and the value of nothing”.
There are undoubtedly people — probably even economists — who do fit that description. But the idea that economics is all about bankers and big business, about commerce and making profits, is not just undeserved. It is also inaccurate. Economics is in the first place a way of looking at human behaviour, to understand it and to explain it.
Behavioural Economics has been playing a big part in stressing the human dimension in the dismal science. Daniel Kahneman, Richard Thaler, Cass Sunstein and Dan Ariely have been doggedly chipping away at the concept of the homo economicus. (It is interesting to note that only one of these fine gentlemen is actually an economist.) But you would be wrong to think that this is a totally new development. The father of modern economics, Adam Smith himself, was well aware of human quirkiness, say Nava Ashraf, Colin Camerer and George Loewenstein. In a paper with the striking title, “Adam Smith, Behavioral Economist”, they show how he wrote…
