A recent article in the Minneapolis Star and Tribune, my former hometown newspaper, made the kind of statement that is all too common in popular reporting on behavioral economics: “The idea that we humans are not that smart comes from behavioral economics.”
Really? Behavioral economics discovered stupidity? Irrationality? The limits of human intelligence?
That is total nonsense. As I wrote about in my book Free Market Madness, basically every social science discipline other than economics had long ago recognized the limits of human rationality, and had made these limits central to their theories of human behavior. It was only economics that, in its mainstream, adopted the idea that humans are largely rational decision-makers. The field of behavioral economics grew out of research conducted by psychologists, and then adopted by economists who knew how to translate this research into the kind of language – often highly mathematical – that economists understand and respect.
To claim that behavioral economics discovered irrationality is baffling, and reveals both the dismal state of respect people have for fields like psychology, and the undeservedly loftier reputation we afford to economics.
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