Oh Behave! Behavioral Economics

Why we do what we do.

John Cousins
4 min readFeb 27, 2018

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Behavior: its Antecedents and Consequences

Behavioral Economics is a method of economic analysis that applies psychological insights into human behavior to explain economic decision making.

We are not Spock.

Behavioral Economics is an heroic attempt to refine the assumptions of classical economics when it comes to actual human behavior and decision making. It probably doesn’t come as a surprise to you that we humans are not always hyper rational in calculating the optimal solution to what is best for us. Sometimes we misbehave. Sometimes we make poor decisions. I know my closets and garage are full of less than optimal purchase decisions. Economics should take that into account.

It all started with The Wealth of Nations by Adam Smith published in 1776. Since then, Economics has made great strides in becoming a reputable applied science. It did so by abstracting human behavior relative to how we make decisions.

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