Debating the Merits of Neuroeconomics and Behavioural Economics

Prospect magazine hosts a debate on whether or not behavioural economics is as important as many of its advocates laud. As the BPS Research Digest says,

In this […] debate, Pete Lunn (author of Basic Instincts) argues that behavioural economics will “deliver a revolutionary new way of understanding the world.” In response Tim Harford (author of The Logic of Life) plays down the impact of behavioural economics, arguing that the field’s lab studies rarely translate well into the messiness of the real world.

Moving from psychology to neuroscience, a recent Economist article takes a critical look at neuroeconomics.

The fiercest attack on neuroeconomics, and indeed behavioural economics, has come from two economists at Princeton University, Faruk Gul and Wolfgang Pesendorfer. In an article in 2005, “The Case for Mindless Economics” (pdf), they argued that neuroscience could not transform economics because what goes on inside the brain is irrelevant to the discipline. What matters are the decisions people take—in the jargon, their “revealed preferences”—not the process by which they reach them. For the purposes of understanding how society copes with the consequences of those decisions, the assumption of rational utility-maximisation works just fine.

via Mind Hacks