The Behavioural Economics Guide 2016 is out (including a couple of references to yours truly), with the introduction by Gerd Gigerenzer. It’s nice to see some of the debate in the area making an appearance. Here are a few snippets from Gigerenzer’s piece. First, on heuristics: To rethink behavioral economics, we need to bury the negative rhetoric about heuristics and the false assumption that complexity is always better. The point I want to make here is not that heuristics are always better than complex methods.

A bit over four years ago I wrote a glowing review of Daniel Kahneman’s Thinking, Fast and Slow. I described it as a “magnificent book” and “one of the best books I have read”. I praised the way Kahneman threaded his story around the System 1 / System 2 dichotomy, and the coherence provided by prospect theory. What a difference four years makes. I will still describe Thinking, Fast and Slow as an excellent book - possibly the best behavioural science book available.

David Levine’s Is Behavioural Economics Doomed? is a good but slightly frustrating read. I agree with Levine’s central argument that rationality is underweighted in many applications of behavioural economics, and he provides many good examples of the power of traditional economic thinking. For someone unfamiliar with game theory, this book is in some ways a good introduction (or more particularly, to the concept of Nash equilibrium). And for some of the points, Levine shows a richness in the literature that you don’t often hear about if you only consume pop behavioural economics books.

The classic Ariely, Loewenstein, and Prelec experiment (ungated pdf) ran as follows. Students are asked to think of the last two digits of their social security number - essentially a random number - as a dollar price. They are then asked whether they would be willing to buy certain consumer goods for that price or not. Finally, they are asked what is the most they would be willing to pay for each of these goods.

The growth in behavioural science has given a new foundation for paternalistic government interventions. Governments now try to help “biased” humans make better decisions - from nudging them to pay their taxes on time, to constraining the size of the soda they can buy, to making them save for that retirement so far in the future. There is no shortage of critics of these interventions. Are people actually biased? Do these interventions change behaviour or improve outcomes for the better?

Below is the text of my presentation to the Sydney Behavioural Economics and Behavioural Science Meetup on 11 May 2016. The talk is aimed at an intelligent non-specialist audience. I expect the behavioural science knowledge of most attendees is drawn from popular behavioural science books and meetups such as this. Intro The typical behavioural science or behavioural economics event is a love-in. We all get together to laugh at people’s irrationality - that is, the irrationality of others - and opine that if only we designed the world more intelligently, people would make better decisions.

I’ve just had a new article published in the Economic Record - Evolutionary Biology in Economics: A Review (pdf). Evolutionary Biology in Economics: A Review Jason Collins, Boris Baer and Ernst Juerg Weber As human traits and preferences were shaped by natural selection, there is substantial potential for the use of evolutionary biology in economic analysis. In this paper, we review the extent to which evolutionary theory has been incorporated into economic research.

I rate the third of Dan Ariely’s books, The Honest Truth About Dishonesty: How We Lie to Everyone - Especially Ourselves, somewhere between his first two books. One of the strengths of Ariely’s books is that he is largely writing about his own experiments, and not simply scraping through the same barrel as every other pop behavioural science author. The Honest Truth has a smaller back catalogue of experiments to draw from than Predictably Irrational, so it sometimes meanders in the same way as The Upside of Irrationality.

Oded Galor has pointed me to his forthcoming article with Quamrul Ashraf in The Journal of Economic Literature. The Macrogenoeconomics of Comparative Development A vibrant literature has emerged in recent years to explore the influences of human evolution and the genetic composition of populations on the comparative economic performance of societies, highlighting the roles played by the Neolithic Revolution and the prehistoric “out of Africa” migration of anatomically modern humans in generating worldwide variations in the composition of genetic traits across populations.

Ego depletion is the idea that we have a limited supply of willpower. As we use it through the day, we become depleted and more likely to experience a willpower failure. There is a mountain of published experiments providing evidence of ego depletion. Meta-analyses of the studies have supported the concept. The typical trick in these experiments is to get someone to engage in an ego depleting task - such as resisting chocolate - and then you watch them cave in more quickly on a later task than those who haven’t been subject to the earlier ego depletion.