#behavioral-economics

#behavioral-economics

Back in the 1980s, a young economist and future Nobel winner named Richard Thaler began writing a series of columns that challenged the dominant doctrine of his field. At the time, most of the economics profession was smitten with a cartoonish picture of human behavior. A depiction of humans as selfish, smart, calculating, and self-controlled creatures who optimally choose what's best for themselves. It had become a bedrock of the mathematical models economists used to describe and sometimes glorify the free market.

In the 70s and the 80s, you had this early explosion of behavioral economics led by people like Daniel Kahneman, Richard Thaler. And then 20 years ago was the Freakonomics phenomenon. So you had Steven Levitt, an economist, and Stephen Dubner, a journalist, who wrote a book that popularized all of this thinking that attempted to show the hidden side of everything, what truly motivates us as economic actors. And the field took off behind this basic tagline that conventional wisdom is wrong.

Everyone out there, raise your hands if you're swimming in free time! Anyone? This would likely be the appropriate moment to cue the proverbial crickets and then, for a number of you, probably chortles at the notion of having oodles of free time. That's why these days, a number of businesses will take tasks off your hands if you choose, freeing up your time in the process.

When faced with a difficult problem - and how to spend money in a way that will improve your life certainly is - it can help to work backward, reducing and excluding what doesn't work until what's left over is a decent approximation of favorable traits. Evolution works in similar ways, so thoroughly destroying what doesn't work that what's left over tends to work quite well.

Economists have some great tools for doing so, but Thaler got the field to appreciate that human beings, as impressive as we are in many ways, are subject to certain limitations that psychologists know a lot about. Those limitations, such as myopia, sloth and a fear of loss that exceeds the love of gains, have to be taken into account if we're going to truly understand economic decisions.

Scarcity design intentionally restricts availability or access to enhance user perception and navigation, creating valuable product experiences that drive growth and loyalty.

This study shows that providing a lottery for returning recyclables can enhance recycling rates and boost recycling participants' happiness compared to low fixed payments.

Money is not just a tool for exchange; it is a lens through which we interpret success, security, and even love.

People resent taxes when they feel estranged from their benefits.