*Misbehaving: The Making of Behavioral Economics*

by on February 20, 2015 at 11:07 am in Books, Economics | Permalink

That is the new and forthcoming book from Richard H. Thaler, due out in May.  It is excellent and fascinating, and yes even if you have read all of the other popular books on behavioral economics you should read this one too.

The title is good but I find the subtitle even more alluring.  For me the very best parts of the book are about Thaler’s career as an economist.  Indeed much of the book traces the development of behavioral economics through a biographical lens.  Here is one excerpt:

…my thesis advisor, Sherwin Rosen, gave the following as an assessment of my career as a graduate student: “We did not expect much of him.”

And:

I spent a fair amount of time staring at the List and adding new items, but I did not know what to do with it.  “Dumb stuff people do” is not a satisfactory title for an academic paper.

Other figures of note make cameo appearances in the book, including Cass Sunstein and John Lott.

1 Picador February 20, 2015 at 11:18 am

“Dumb Stuff People Do”, as judged by economists, includes stuff like taking care of your children, taking out payday loans so your family doesn’t get evicted, etc.

I read Sunstein’s Behavioral Law and Economics book about ten years ago and was shocked by the stupidity of the analysis on display. Like many econ texts, it appeared to be written by people who had never experienced life as a human being in the real world, and spent lots of time chastising ordinary people for making rational decisions that didn’t square with the fantasy-land simplifications made by neoclassical economists 300 years ago.

It looks like this strain of obtuse condescension is still alive in the world of BE.

2 MIke February 20, 2015 at 11:43 am

Troll.

3 You're Poor February 20, 2015 at 11:50 am

Stay poor.

4 Jack PQ February 20, 2015 at 1:53 pm

I don’t know about Sunstein, but in general, on the contrary behavioral economics (or “psychology & economics”) aims to explain real-life behavior that is not predicted by neoclassical economics, but nonetheless reasonable taken in context (as you say, poverty and liquidity constraints for example).

5 Tom February 20, 2015 at 12:36 pm

I think I’ve about had my fill of behavioral economics books, but I’ll probably buy Thaler’s.

6 john February 20, 2015 at 8:39 pm

I read Winner’s Curse late in life. I was a moderately successful engineer, just starting to trade dot-com options. My reaction to that book was very much “where have you been all my life.” Same applied to Irrational Exuberance which I read, as I stared at the stock ticker and my vesting schedule.

I don’t know if 20-somethings read MR comment threads, but if you do, books like these will help you understand just how much human nature is an economic nature, and where it is not. They will also help you understand that “irrational” is not always bad, it may be a compassionate or cooperative bias, which is not bad at all.

Cross-read with Descartes Error and Cheating Monkeys and Citizen Bees for a wider perspective on human nature.

7 ChacoKevy February 20, 2015 at 1:39 pm

I guess it’s why I’m not an academic; “Dumb stuff people do” would not only jump to the top of my to-read list, but I would eagerly await its Hollywood adaptation. Then I would try to hide my embarrassment when I see the lead character is (not so) loosely based on me.
All of this is my long winded confession to being a Bears fan.

8 FG February 20, 2015 at 2:34 pm

I laughed.

9 derek February 20, 2015 at 3:18 pm

That book has already been written a number of times. The Bible, for example.

What you have to do is dress funny, put yourself apart from everyone else, talk in obtuse jargon, argue over minutia, and screw young boys.

Economists are 3/4 there already.

10 dearieme February 20, 2015 at 6:20 pm

You mean they’ll be all the way there if they put on clown shoes?

11 Paul February 21, 2015 at 2:46 pm

Amazon doesn’t let you look inside the book.

From the blurbs:
““The creative genius who invented the field of behavioral economics”
???
Excuse me, I believe Adam Smith invented that too.

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