We like to think of ourselves as reasonable. Yet the same person who budgets carefully in January will overspend in December, and the same manager who prizes evidence will hire on a hunch. This is not hypocrisy. It is the ordinary texture of a human mind at work — a mind built for a world of small groups, immediate dangers and scarce calories, now asked to file tax returns.
Economists spent most of the twentieth century modelling a creature that does not exist: a tireless calculator of expected utility. The behavioural turn corrected the caricature, but it left a subtler error in place. We still describe our departures from the model as mistakes, as if the model were the standard and we the deviation.
Three kinds of mistake
It helps to separate three things we lump together. There are errors of information — we did not know. There are errors of computation — we knew, but could not work it out in time. And there are errors of motivation — we knew, could work it out, and did something else anyway. Only the third is a moral question, and it is the rarest of the three.
“Human beings are not maximisers. They are satisficers, and the difference is everything.”
Consider the checkout. Our data story on loss aversion at the checkout found that shoppers would pay a premium of roughly 12% to avoid a loss they would not pay to secure an equivalent gain. Nothing about this is stupid. In the environment that shaped us, losses could be fatal and gains merely pleasant.
What follows
If most bad decisions are errors of information or computation, the remedy is not exhortation. It is design. Make the better choice the easier one; make the consequences visible sooner; make the numbers legible to a mind that thinks in stories. This is the quiet, unglamorous programme of a more human economics — and the reason this journal exists.
