Thursday, October 27, 2016

Review: Misbehaving: The Making of Behavioral Economics

Thaler's Misbehaving is a good history of the "Behavioral Economics", and it goes over some of the main ideas of behavior economics. However, it is apparent that it never really unifies together. It is a "module" that rides atop standard economic theory. It is a list of phenomena that trace themselves to basic human psychology, but end up costing society billions of dollars.

The closest it seems behavioral economics has ever gotten to giving us an answer to how to govern our society's is through libertarian paternalism. But what it really does is destroy the right-wing notions that the economy is a perfectly smart distributor of goods and services. Instead it is made out of humans, and humans are dumb.

I recommend this if you want a overview of the history of behavioral economics and how it fits with regular economics, but I think you ought to read Nudge by Thaler if you want any of the guidance it contains.

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