The Limits of Behavioral Economics
Interesting: George Loewenstein, one of the pillars of the behavioral economics movement, co-authors a Times op-ed highlighting the field’s limitations. Highlight:
As policymakers use it to devise programs, it’s becoming clear that behavioral economics is being asked to solve problems it wasn’t meant to address. Indeed, it seems in some cases that behavioral economics is being used as a political expedient, allowing policymakers to avoid painful but more effective solutions rooted in traditional economics.
Several years ago, I wrote about a conference where the leading lights of behavioral economics made their case to the Federal Reserve Bank of Boston. Loewenstein was easily one of the most powerful presenters. I do not read his op-ed as a sign of capitulation in the least, but rather of the field’s potential strength — for there is little long-term value in overpromising and underdelivering.
FWIW, we threw a few stones at the behavioral glass house in SuperFreakonomics.