Welcome to all our book recommendations and interviews that shed light on behavioural economics. If you find the term confusing, you're not alone. It essentially means using the insights of psychology about how human beings really behave to not only understand economic decisions better, but also, possibly, to 'nudge' us into behaving more sensibly (like saving money for our retirement). Traditional economics always presumed we behaved that way, but of course we don't.
A sign the field of behavioural economics was finally being taken seriously was the award of the Nobel Prize for Economics to Daniel Kahneman in 2002. Kahneman was a psychologist by background, and had never taken an economics class in his life. Below, you'll see a discussion of the ground-breaking work he published with Amos Tversky, as well as our interview with Yale economics professor Robert Shiller, who won the Nobel economics prize in 2013 for his work on 'irrational exuberance.'
Some of the funnest and most practical books on behavioural economics are written by Dan Ariely, professor of psychology and behavioural economics at Duke University, who recommends his best books on behavioural economics. Yes, the insights of the field can even help you lose weight.
The choices of our interviewees are varied, but the most popular book so far is Nudge by Cass Sunstein and Richard Thaler. It's informative but also a great read.
What can we draw from behavioral science to help us better understand each other? Nicholas Epley, Professor of Behavioral Science and Faculty Director of the Center for Decision Research at the University of Chicago Booth School of Business, recommends the five best books for learning about an interdisciplinary field that draws from psychology, sociology, economics and anthropology.
“You have to understand people first before you can understand how to devise an economic system for them” argues Robert J Shiller, the Yale economics professor and Nobel laureate. He chooses five books that explore who we fundamentally are, as human beings, and how that will determine the shape of a successful capitalism.
Extraordinary Popular Delusions and the Madness of Crowds
by Charles Mackay
Judgment under Uncertainty: Heuristics and Biases
by Daniel Kahneman & Paul Slovic and Amos Tversky
How We Know What Isn’t So
by Thomas Gilovich
The Winner’s Curse
by Richard Thaler
by Dan Ariely