For decades, economists have been known for their commitment to theories that treat ordinary consumers and workers as highly rational decision-makers. The very idea that psychological ideas and research methods could be useful in economics was not taken seriously. However, this psychological approach, initiated in the 1980s by a few groups of wayward economists, is now one of the fastest-growing fields of economics with Richard Thaler winning the 2017 economics Nobel Prize for his work on the topic. Thaler (with co-author Cass Sunstein) proposed the now-fashionable policy approach of ‘nudging’. The central idea behind this proposal – and something that runs counter to the long-standing tradition of liberal, anti-paternalistic ideas in economics – is that people are prone to make mistakes in their economic behaviour and it is the job of governments to guide them towards choices in accord with their ‘true’ preferences. But is the idea that individuals have true preferences, distinct from the psychological processes that explain their actual behaviour, misguided?
Robert Sugden (a behavioural economist since the 1980s and an opponent of paternalism in economics for even longer) believes so, arguing in his thought-provoking new book for a different understanding of the implications of behavioural economics. He argues that cases in which individuals think that they themselves are deficient in self-control are much rarer than most behavioural economists suppose. Offering a defence of the market which does not use any concept of preference, Sugden does not address his work to an (imagined) government or ‘social planner’ that is benevolently trying to give people what is good for them. Rather, he asks what, in the domain of economic policy, citizens can agree they want the government to do for them. Whether or not people act on ‘rational’ preferences, it is normally in each citizen’s self-judged interest that opportunities for voluntary interaction with other citizens are not restricted. To quote Victorian economist John Stuart Mill, a properly regulated market economy is a ‘community of advantage’ – an institution within which individuals cooperate for mutual benefit.
Robert will discuss his new book with Jason Collins, a behavioural and evolutionary economist facilitated by Henry Leveson-Gower, founder of Promoting Economic Pluralism and editor of The Mint Magazine. We will explore the insights and limitations of ‘nudge’ or behavioural economics, and how and when markets can actually be a ‘community of advantage’.
Join the webinar and you can put your questions to Robert and Jason. This webinar will also be available as a video on Youtube.
Robert is Professor of Economics at the University of East Anglia, Norwich. He has been a prominent behavioural and experimental economist since the pioneering era … Read more
Jason Collins has a PhD combining economics and evolutionary biology, and blogs on economics, evolution and behavioural science at jasoncollins.blog. He is data science lead … Read more
Henry Leveson Gower
Henry is Founder and Chief Executive of Promoting Economic Pluralism and editor of The Mint. He has been a practicing pluralist economist and policy analyst … Read more