Behavioral Economics Might Have Its Own Bias

While the study and concepts of behavioral economics has drawn much attention and interest over the past decade by “explaining all the mind-bending  ways people, try as they might, don’t act rationally,” a recent Bloomberg article argues that for a “small, but vocal group of skeptics, the field has quickly become a victim of its own astounding success.”

According to the article, critics of behavioral economics believe there is a tendency for those who have embraced its concepts to suffer from their own bias—one that leads them to see biases everywhere, even when they don’t exist.

Their beliefs are reportedly based in part on the work of longtime critic Gerd Gigerenzer of the Max Planck Institute for Human Development who, in a 2018 paper, concluded that most studies on cognitive biases either “rely on small sample sizes, misinterpret individual errors for systematic biases or underestimate how people absorb information based on how a fact or question is framed.”

The article describes Gigerenzer’s style as “combative”, adding that noted behavioral economists such as Nobel Laureate Daniel Kahneman (co-author of Thinking Fast and Slow) criticize what they view as a willful misinterpretation of their positions and ideas.

But Gigerenzer isn’t the only critic of behavioral economics, the article concludes: “As behavioral economics becomes increasingly ubiquitous in everyday life, even proponents have started to acknowledge the potential pitfalls.”