Tell Me About Behavioral Economics

I find myself increasingly interested in this field, if only at the layman’s level, and would like to read and learn more about it. Over the past several months, I’ve read Malcolm Gladwell’s books, plus Predictably Irrational, and Freakonomics. Just yesterday, I read SuperFreakonomics from cover to cover after receiving it for Christmas.

Granted, these books are certainly no rigorous economic texts, and they’re certainly very reliant on the narrative form. Nevertheless, they seem to be very basic introduction to this field. Can anyone recommend some more reading that might be at a little higher level, but not as dry as a freshman economics textbook? I’m an engineer in training, so math doesn’t scare me (much), but I think anything overly mathematical would be over my head anyway due to my limited knowledge of economics.

I haven’t seen any really good pop science treatments yet. The bible of the field is Kahneman & Tversky, but that may require more of an economics background than you’re comfortable with.

I haven’t read it myself by Animal Spirits written by a couple of eminent economists ought to be the perfect introduction to the field. I have heard great things about it and it should be very accessible.
Nudgeis another good book on the topic oriented towards practical applications.

My daughter studied this in U of Chicago with Thaler, and now is working on it in grad school. It interested me so much that I figured out how to apply it to engineering, and we’ve published two papers together on it and gave a tutorial.

Thaler has had a few other books about it. Try The Winner’s Curse also. You might also want to search for important concepts, like The Endowment Effect, Anchoring, and Defaults.

The first chapter of Nudge sums up the argument very well, which is that classical economics assumes that people have skills and make decisions based on pure logic, which is provably not the case.

In addition to those listed above*, here are few others for your consideration:

How We Know What Isn’t So - Gilovich
Overall a very good book, reasonably accessible but with good academic credibility.

The Wisdom of Crowds – Surowiecki
A good book - lots of interesting theories and a reasonably good set of academic references. Does a good job of describing the conditions under which group decisions can be better than the average individual decision (and under which conditions group decision fallacies take over).

Paradox of Choice - Schwartz
Many references to academic studies, but presented in a very approachable manner with a “just the facts” style. Main thesis is that having too many choices is often suboptimal.

200% of Nothing - Dewdny
A relatively non-technical analysis of various math fallacies we are likely to encounter on a daily basis. Not a pure behavioral book, but still interesting.

You may also find the following an interesting page to browse through:

Finally, searching for Behavioral Economics (or Behavioral Finance) on Amazon.com will give you lots of hits. Even if you do not order from them, looking through the reviews and suggested titles can be interesting and help you get an overview of the field.

I hope this helps a bit. :slight_smile:

  • Thaler’s books (Nudge, The Winner’s Curse) are very approachable, but Kahneman and Tversky’s book (although seminal) will most likely be too dry and academic for your interests.

Some great suggestions, everyone, thanks!

Voyager, you’ve really piqued my curiosity. I must know more about the papers you’ve written!

I have a suggestion that doesn’t precisely fall into the category of behavioral economics, but which I’m sure you would enjoy reading: Small is Beautiful: Economics as if People Mattered, by E. F. Schumacher. It was a revolutionary book when it was first published in the late 60’s, because it aggressively question some of the underlying assumptions of economic theory. For example, Schumacher questioned whether higher levels of consumption actually made people happier, whether increased economic efficiency was necessarily a good thing, whether more choices actually gave people the choices they wanted, and so forth. In addition, the book covered a lot of ground on issues of the environment, limited resources, and international politics. In all these areas, it’s remarkably prescient in how it relates to what’s really happening today.

You can get a taste for Schumacher’s style in his essay Buddhist Economics, which is also a chapter in the above book.

PMing you.

Can you send me the info as well?