Why do you eat junk food even though you know it’s bad for you?
Why don’t you save money even though it will set you up for a great retirement?
Why do you buy the more expensive wine even though you actually like the taste of the cheap version?
Why do you go to the crowded food stall even though another one is next to it, empty?
Why do you finally click on the article after seeing its fifth post on your feed, even though you didn’t think it was interesting the first time?
Richard Thaler will help you answer all these questions, and all the other ones you’re too embarrassed to admit. Behavioural economics, the domain over which he is master, scrutinizes the fundamental assumption of economics, that humans are rational beings. It forces economists to admit and accept that people make decisions that are irrational and that’s just the way it is.
Ever felt jealously possessive of a creative piece of work – a drawing, a sculpture, even a powerpoint slide – and refused to give it up even though all the evidence and feedback said it was not good? Behavioural economics revealed that we see greater value in things we create.
Or, ever made a well thought-through decision in a calm state of mind that went out the window as soon as you got excited? Behavioural economics again, showing how rational decisions get overthrown quite easily if you make minor, seemingly insignificant changes to your surroundings.
What about not quitting smoking/ not losing weight/ not exercising? Behavioural economics can explain this too (it’s too far out in time, that’s why we don’t take the task seriously now).
I studied economics in college and kind of hated it. I wish behavioural economics had been around at that time, I’m pretty sure I would have fallen in love instead and done a PhD.