BE

BEBehavioural economics is not (a) about controlling behaviour (b) conservative or liberal (c) about irrationality. So what exactly is it?

People are complex; they defy easy summary. Like Walt Whitman, we all contain multitudes. As a discipline, economics has been successful in part because it has ignored this complexity. Instead it has focused on explaining the institutions in which decisions are made — with institutions ranging from capitalism to communism, from perfect competition to monopolies, and from rock-paper-scissors to the prisoner’s dilemma. Behavioral economics differs from standard economics in that it uses a more realistic (and more complicated) model for people; it differs from psychology in that it maintains the focus on institutions and the contexts in which decisions are made. Behavioral economists study how the context of decisions interacts with our expanding understanding of human psychology. By combining the insights from these two very different perspectives, behavioral economists have been able to reveal new depths in ourselves.

From a new CGD essay.

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About Ben Ramalingam

I am a freelance consultant and writer specialising on international development and humanitarian issues. I am currently working on a number of consulting and advisory assignments for international agencies. I am also writing a book on complexity sciences and international aid which will be published by Oxford University Press. I hold Senior Research Associate and Visiting Fellow positions at the Institute of Development Studies, the Overseas Development Institute, and the London School of Economics.

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Accountability, Economics, Evaluation, Evolution, Innovation, Institutions, Knowledge and learning, Public Policy, Reports and Studies