Mainstream economics is built on a convenient untruth: that humans act rationally when it comes to money.
Over the last couple of decades, however, behavioral economists have been showing how that’s simply not always the case. In making many of our financial decisions (and we’re talking significant ones like which car to buy, where to live, how much to spend heating our homes etc.) it turns out that emotion trumps logic.
With ever more books on the subject being published, behavioral economics is starting to gain some serious traction. That’s good news for anyone who believes that we need to change the way we run our economies.
It’s one thing to acknowledge that what we’re doing now is unsustainable. But to find a better way we need tools that reflect the way things are, not the way we’d like them to be.
[…] 26, 2008 by Simon We’re glad to see that John Tierney gets what we were saying about climate change and behavioral economics the other […]