Behavioral economics is an interesting branch of economics that combines economics and psychology. It studies personal decision making in the context of economics. Perhaps the best way to view the field is as the field that studies why people do not follow the “economic rules of life,” which I’ve generalized in my previous entry. Why do people make economic decisions that do not appear to be rational? Why do they not respond to certain incentives? Does realization of opportunity cost make a huge difference in decision making?
Individuals in many humanities and social sciences fields tend to strongly dislike this field (including several of my history professors). In my experience, their main question tends to be: “How accurately can one use science to examine human decision making?” Can we really decipher human decision making on the basis of a scientific model? Those in the humanities are more inclined, I think, to view the human mind on a, well, humanist level. Specifically, I think they view the human mind as being filled with a lot of human values and concerns that science cannot necessarily detect and quantify scientifically.
How abstract is the human mind? To what level can we use the scientific method to predict human choices? Are we really as “human” as we perceive ourselves to be?
Just some thoughts as I am forced by Maruel to think about how economics can be used to bring about some sort of institutional reform to Hawaii’s public sector and education systems.