Love the title of this presentaiton - "Behavioral Economics: New, or just new to you?" You will be familiar with Annie Pettit from her @lovestats Twitter feed and terrific blog of the same name.
She thinks it's a whole lotta hooey. Interesting start! [Can't say I agree totally, but I am a little tired of people trying to explain all of human motivation through loss aversion tendencies.]
Definition: Behavioral economics is the application of insights and research from psychology to economics.
Basic tenet behind BE: humans are irrational. No surprise there.
Next up: she shows a number of historical figures dating from Adam Smith and covering the next 300 years. People who all documented how human behavior is not fully rational.
Her real argument here, I think, is that there is a lot of documented psychology (e.g. Asch conformity studies in the 50s, MIlgram obedience experiments, Zimbardo situational studies with randomly assigned guards and prisoners) that show how people do things that aren't fully rational, and the power of the pull to conformity. Situational ethics and norms.
She did a little experiment with us about the number of peanuts in a jar. We had to guess. But she planted the first dozen guesses, to show that we would tend to conform to the prior guesses.
Cognitive dissonance. Festinger and Carlsmith, also in the 50s, showed that we evaluate a task as boring or fun based on how much compensation we received. (If less compensation, evaluated as more fun)
Halo effect, Thorndike in the 20s. Our overall impression can be based on one trait. (This has been re-demonstrated in many fields thousands of times. e.g. effect of appearances on perceived intelligence of children, impact of name gender on resume, and many other approaches.)
Impact of all of this - her take:
- people want to give you the truth, but they can't always do that.
- they misunderstand their own behavior
So -- stop asking questions like:
- would you...
- why do you ...
- hypotheticals of any type
Instead, ask what I have done. Ask about past behavior. What did you buy, when, what coupons did you use, etc. THIS is GREAT ADVICE.
Brian Singh, in his question, suggests that experimental design is something that is growing, because of wider acceptance of human irrationality.
I think Annie's point is a good one overall -- that psychology wasn't just invented, and we need to pay more attention to the substantial actual science that exists, and has existed for years.