What is Behavioural Science / Behavioral Economics? Why should I care?
Behavioural Economics looks to understand and discuss human decision making by analysing it through psychological and economic principles.
According to the traditional neoclassical economics approach, individuals are fully rational in that they are infinitely able to process information available to them, and can foresee the consequences of their actions. Economists such as Adam Smith and David Ricardo argued that individuals are intrinsically rational meaning they make decisions based on perfect information. With this information they can weigh up the probabilities of each outcome and make decisions to maximize their satisfaction. In short, people are making decisions in order to gain the most value or satisfaction from that decision.
With the understanding of psychology and economics advancing, James (1890) argued that an individual’s decision making was impacted by rational impulses and motives. Pareto (1906) theorised that economics should be understood from a perspective of an individuals’ choices and preferences, rather than simply how much utility they gain from that choice.
Fast forward 50 years, Simon (1957) argued that humans have only limited knowledge about making a decision and look to satisfy their utility rather than optimise it. Kahneman, Slovic & Tversky’s (1982) finding suggest that individuals are affected by certain heuristics and biases that can change their perspective and judgment. These influences can affect many aspects key to decision making including human rationality, self-control, choices over time, etc.
From these understandings, behavioural science looks to understand how the individual makes decisions and how these decisions can be improved in different economic and social settings. It is important for us an individuals to understand the way in which our judgements are affected by our own internal heuristics and biases. As well as this we can explore how external factors can play on these mental shortcuts, causing us to make less effective choices.
During this series of articles I intend to discuss some of the behavioural concepts highlighted above, by relating them to food and our consumption choices. By doing so, I hope to help readers understand themselves and their environment better, and in turn make more informed food choices.
James, W. (1890). The Principles of Psychology. New York: Henry Holt.
Kahneman, D., Slovic, S. P., Slovic, P., & Tversky, A. (Eds.). (1982). Judgment under uncertainty: Heuristics and biases. Cambridge university press.
Pareto, V. (1906). Manual of Political Economy. Kelley: New York.
Simon, H. A. (1957). Models of man; social and rational. New York: Wiley and Sons.