There are Free Lunches Statement of Intentions

There are Free Lunches: Behavioral Clues to Live Happy in the Economic World is a blog that intends to present updated and relevant information about the "hidden" and only recently uncovered dimensions of the economic science: the behavioral factors. With this blog we intend to promote in Europe and in the rest of the World, the top research articles and perspectives on behavioral economics, decision making, consumer behavior, and general behavioral science. We aim to be followed by journalists, academics, managers, civil servants, and everyone who wishes to improve their daily interaction with the economic world and consequently, their lives' happiness.

Monday, 26 November 2012

O2 #2 Move Over Economists: We Need a Council of Psychological Advisers (via The Atlantic)

Much of governing involves predicting behavior or getting people to change it. Lawyers and economists need some help with both.

Though President Obama won reelection decisively, he won't have much time to celebrate. Many of the nation's problems -- stimulating employment, reducing the deficit, controlling health-care costs, and improving the quality of education -- are very serious, and some of them must be addressed with great urgency. And none of these problems can be addressed simply by waving a magic government wand. To a significant degree, they all involve understanding what motivates current practices -- of business-people, financiers, doctors, patients, teachers, students -- and what levers we may be able to use to change those practices.

Historically, when the need has arisen to change behavior, political leaders have turned to economists. That's one reason why presidents have a Council of Economic Advisers. When economists speak, presidents listen. And when economists have the president's ear, all their whispers are predicated on a set of assumptions about human behavior. Whether it's increasing GDP, reducing unemployment, sustaining Social Security, making sure people are financially prepared for retirement, or stabilizing the financial sector, economists commonly hold certain beliefs. They will for example argue that people are motivated by self-interest and are rational calculators of their interests, and that the most effective way to get people to change the way they behave is by creating the right material incentives.

Now, people are sometimes rational calculators, but often they are not. And self-interest and incentives certainly matter, but they aren't all that matters. The perspective of economists is importantly incomplete, sometimes even misguided.

Read this article, which I consider decisive, about the importance of Psychology to Public Policy: CouncilPsychologicalAdvisers

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