Reading During the Pandemic
The Best Behavioral Economics Books
The current circumstances can be tough: being isolated from families and friends is difficult, and having to spend most of our time inside isn’t particularly healthy. However, there is one thing you can spend a lot of time doing which will improve your quality of life exponentially: reading!
If you’re on the hunt for a behavioural economics program, or if you’re currently studying and just want to make sure you stay in the know, it’s definitely worth browsing some of the best books which have been written on the subject over the last few years. Maybe it’ll make you feel as though you’ve done something productive today!
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Misbehaving: The Making of Behavioral Economics - Richard Thaler
Nobel Prize winning behavioral economist megastar Richard Thaler brings us a beautifully written, engaging, often funny look into the world of a discipline he helped get to its feet. Building on the work of a previous book, Nudge, which he cowrote with Cass R. Sunstein, it simultaneously deals with the principles of behavioral economics while also describing the troubles he had convincing other economists of the importance of irrationality when it comes to economics. Behavioral economics takes many of its cues from psychology, coupled with ‘a practical understanding of incentives and market behavior’, and Thaler attempts to help the reader make better decisions - in business, in government, and in life.
Most of us think that rational behavior guides our actions - that we are always making decisions that can be justified. But when we take a step back to think about chain smoking, junk food, extreme sports, and going back for sixths at all-you-can-eat buffets, it becomes clear this isn’t the case. Ariely, behavioral economist at MIT, attempts to answer the question of why seemingly intelligent humans don’t always act in their own interests (as orthodox economics believes) and instead make irrational decisions. Mixing everyday experiences with scientific research, he shows how emotions, societal norms, and expectations influence our decision making processes, and offers insights into how to break out of these cycles.
Based on Thaler’s idea of ‘nudging’ people (also known as libertarian paternalism) into making better, more rational decisions in their lives, the Nudge Unit (or Behavioural Insights Team) was created as a small part of the British government to promote this goal. Now a much larger institution, Halpern’s book describes the institution’s journey, from an idea to where they are now: saving us and the government millions of pounds by nudging us to make small changes to our behavior that we don’t even necessarily realise.
What Works: Gender Equality by Design - Iris Bohnet
Bohnet’s groundbreaking work takes behavioral economics and uses it for a more noble pursuit: that of gender equality in the workplace. Her findings reveal that trying to change mindsets doesn’t really work, due to the persistence of unconscious biases. To combat this, she builds on the work of behavioral scientists, showing that there are ways of changing organisations, rather than the people within them, which helps equality. Mostly, this involves changing - and not even by much - the practices with which companies pick their talent. Examples include making changes to interview procedures, being sure to have the right percentage of positive discrimination, and altering hierarchies. Most of all these changes are relatively small, and not particularly costly, but could make a huge difference - and create a more equal society for all.
The Ethics of Influence: Government in the Age of Behavioral Science - Cass R. Sunstein
Thaler’s coauthor of Misbehaving, Sunstein presents the ethical case for their famous idea of the ‘nudge’. Since the idea’s inception, it has been used to help people and governments better protect the environment, reduce poverty, and improve economic growth, as well as make people's personal lives happier and more fulfilling. Addressing ideas such as manipulation, welfare, and how far the state is allowed to reach, Sunstein presents the fors and againsts for nudges, recounting how governments have used them, and ultimately makes the case (unsurprisingly) that nudges should be used often by governments to improve society - while not ignoring the fact that sometimes, nudges can be manipulative and ethically wrong.
Once we realised that what advertising sells us isn’t happiness but pleasure, the next narrative was that we can become happy simply by changing our mindset. One example of this is meditation, an undisputedly positive activity which can increase wellbeing. However, Dolan has another trick for us: change your behaviour, rather than your mindset, by altering the environment around you - sometimes in extremely minor ways. The three steps he lays out to doing this are deciding, designing, and doing, showing how where we spend our attention - because focusing on one thing means we are unable, by definition, to focus on something else - is directly correlated to how happy we are. Scientific, amusing, and offering practical advice on how to change, Happiness by Design is a roadmap to creating a happy life, and turning off the autopilot with which many of us exist.