Thursday, April 21, 2011

Free e-Book!

Okay, it's a public policy textbook, but it's still worth checking out: Policy and Choice: Public Finance through the Lens of Behavioral Economics by William Congdon, Jeffrey King, and Sendhil Mullainathan.

Behavioral economics has been criticized as being a "negative" theory, meaning it focuses more on breaking down the rational-actor assumption of classical economics than explaining social phenomenon. While I think that's somewhat unfair, it does seem that applying psychology to normative questions of policy and economics is a better fit. I loved Nudge, which popularized the idea of government policy using lessons from psychology to help people make better decisions. Conversely, Identity Economics, which tried to incorporate psychology into more traditional explanatory theories of economics and management, totally failed at building useful models. I'm interested to see how Policy and Choice addresses these two realms of theory, and whether it succeeds in both.

Watch Sendhil Mullainathan talk about psychological nudges.

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