You began by saying that it is an exciting time to be an economist. I agree—not because economics is about to be replaced by psychology, but because of the big questions we are now struggling to answer. What are the fundamental causes of poverty? Are there solutions? How do ideas, habits and information spread across social networks? What makes innovation happen? Can governments help? Can anything improve the awful record of economic forecasting? How do economic clusters develop? What kills them off? How does competition work in the face of fallible consumers?

Behavioural economics is already making the running on the subject of consumer decision-making, but in other areas it has little to offer. That is no surprise, because there is so much more to economics than a theory of individual decisions.

Read the debate over behavioral economics that spawned this conclusion from Tim Harford.

It also contains an interesting sub-discussion on the literature around pay performance schemes which may be of interest to some of the management or info-econ wonks out there.

Categories: Behavioral Economics, Business and Economics, Information Economics, Managing