Modern economics V/S Behavioral Economics : How decisions are made? - Short review of book 'Misbehaving'

Title: Misbehaving: The making of Behavioral Economics

Author: Richard Thaler

Publication: W. W. Norton & Company

 I understand that behavioral economics is still called 'emerging discipline' even after systematic development of this branch started at least five decades back. And this book takes you through that roller-coaster ride of emergence of Behavioral  Economics. 

Ever wonder what Noble Prize can do...well it made me read this book authored by Dr. Richard Thaler- Noble Prize winner of 2017 in economic sciences for his contribution to Behavioral Economics.

Coming to the short review:

Well, truly the author takes the reader through the journey of Behavioral Economics from an academician’s perspective. Book is divided in various time line as developments-controversies – conflicts arising from shaping of Behavioral Economics. 

What I loved about this book is (it can be perfect reason for other reader to hate this book!), it gives complete account of how the new branch developed in US–academia world. But I guess this very fact can make this book little boring for those who are not into academics or not much interested in academic perspective of development of this new branch.

Thaler’s talk about how he initially got lucky & bumped into the two superstars of the field namely; Amos Tversky & Daniel Kahneman gives goose bump. (These trio's initial discussions has led to emergence of many development in this field) 

The book nicely depicts the constant clash between modern economics - which believes that people are rational & they always take most rational decisions and try to optimize given resources, while behavioral economics - which theorizes & tries to empirically prove that human beings are human beings and not all of them are rational and most of time many of larger part of population take irrational decisions with thinking about most rational choices in real world setting.

Also unsurprising to see in the book, how the stalwarts of modern economics were at every step or discussion or at conference defending modern economics & made fun of behavioral economics. But with passage of time along with more evidences surfacing, many started taking note of behavioral angle in decision making. 

Book shares many stories of different walks of life over which there is an invisible print of  irrationality into decision making. Book also sheds insight into the functioning of academia world of US.

The most interesting part comes at the end, where author dwells into how UK govt. has started Behavioral Insight Unit (called The Behavioral Insights Team now)  to make governance more impactful.(Needless to say that author was also heavily engaged with the team)

Author also shares the future scope of this discipline in various new domain along with how policy making at country level can benefit from behavioral economics. It ends with highlighting how behavioral economics is rooted in behavioral science & psychology actually.

Last words...As UK govt. shows most promising application of behavioral economics can be at governance level in formulating more sensible policies and strategies as well as designing the delivery mechanism which factors into people's habit of irrational decision-making.

 If rightly done who knows outcomes can be profounding!