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Book review

Misbehaving

How behavioural economics went from a list of anomalies on a blackboard to a Nobel prize, by the man who kept the list.

Misbehaving by Richard Thaler

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Growth, measured and unmeasured. Photograph: The Unreasonable Human

Understanding people turns out to be a more urgent task than changing them, and a great deal harder. In the studies we have, the effect is modest, reliable and almost entirely ignored by the people it describes. We describe the departure from the model as an error. We might equally describe the model as a hopeful guess about us. A better account of fairness would begin with the ordinary case rather than the laboratory one.

What it gets right

The textbook treats fairness as a preference to be revealed. In practice it is a story we tell ourselves after the fact. A better account of fairness would begin with the ordinary case rather than the laboratory one. A pattern this consistent is not a character flaw. It is a design feature, and design features can be worked with. If you want to see fairness at work, watch a queue form where there is no reason for one.

Nobody sets out to be governed by the slow lane, yet it shapes an astonishing share of the ordinary day. The honest conclusion is uncomfortable for reformers: people are not waiting to be corrected. A better account of fairness would begin with the ordinary case rather than the laboratory one. None of this is new. Adam Smith noticed most of it, and then the profession spent two centuries forgetting.

EconomicsBehaviour
Alina Petrova
Alina Petrova — Editor-in-chief

Alina Petrova is a Year 12 student preparing to apply to university, and the founder and editor of The Unreasonable Human. She reads across psychology, economics, behavioural science and neuroscience, and writes about the gap between how people are supposed to decide and how they actually do.

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