Friday, September 4, 2009

Behavioral economics makes you a better person

There's a cliche, or a stereotype, about psychologists, that they're in the field to learn about and work out their own problems. I find this amusing and certainly containing more than a grain of truth, but what they should be doing if they want to analyze their own behavior is become an economist.

Psychology is mostly about pathology. It's less concerned with how normal people act, and very concerned with the origin and remedy for pathological deviations from that normal behavior. Studying psychology to understand yourself most often just leads to hypochondrial interpretation of normal actions or normal ranges of actions that can be pathological only in the extreme, just because that's all the literature is talking about.

Economics, meanwhile, is exclusively concerned with how people behave on average, and thus is much more relevant to the average person. And it tells you exactly where you're going wrong, how much it's costing you, and how to do better (well, we usually know how to do better anyway, but pointing out the mechanism and cost and TRUTH of the cost is a darn good impetus to actually make a change.) Procrastination? Overconfidence? Underconfidence? Underestimating the probability of bad events happening to you in particular? Overestimating the probability of winning the lottery or of that sniffle being a sign of ebola? Commitment? Follow-through? Failure to anticipate future desires when you have a chance to do something about them? A strange affinity for credit card debt or payday loans? Grass-is-greener syndrome? Taking too big or too little risks? Economics can help you!

Maybe I'll write a self-help book.