Behavioral Economics

But, What IS Behavioral Economics, Really?

Glad you asked.

I’ll start with this: I was an Economics major. Anyone who has taken Econ 101 probably remembers (or, you know, doesn’t) the ten principles of economics. For your sanity’s sake I won’t list them, but for the purposes of this post, I will say this: they are based on RATIONAL and LOGICAL behavior. That’s right, you read it correctly. An entire infrastructure on which our society is built, is built on the assumption that humans act rationally and logically, all of the time.

NEWS FLASH! That is not reality. We are not robots.

As humans, we make these things called impulsive decisions sometimes. We do things out of love and compassion rather than logic and reason. We make choices that are altruistic and not self-serving because we care about the well-being of others. Shocker. Take that, Gregory Mankiw.

Behavioral economics is, in a way, the story untold and hidden science of economics; it relies on psychological and sociological research to determine its key principles. It completely challenges the rational decision-making assumptions about standard principles of economics and focuses on research and evidence on real human behavior and trends.

There are a plethora of examples I will weave into my posts over time, which I will use to provide guidance and recommendations on how you can apply behavioral economics practices to your own life.

Here are some noteworthy books to start with if you want to learn more:

Nudge, Richard Thaler

Scarcity, Eldar Shafir and Sendhil Mullainathan

Freakonomics, Stephen Dubner and Steven Levitt

More to come later on. I will continue to update the Resources page with similar materials well.

Subscribe or follow me on Instagram @theactionablemindset and Twitter @Action_Mindset to apply behavioral economics to your life and create positive change for yourself and others.

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