Review by Choice Review
Economic theory explains which choices best help people achieve their goals, and though economists have long recognized that people make mistakes, they assumed these mistakes canceled out in aggregate. Using insights from psychology about how humans process information and make decisions, behavioral economics shows that these mistakes may not cancel each other out but can be predictably wrong in one direction. In his book, Thaler (Univ. of Chicago; president, American Economic Association) recounts his central role and highlights the importance of collaboration and networking in the field's development. Early chapters review central themes in behavioral economics, such as mental accounting, which ignores the fungibility of money; loss aversion, or the greater emotional impact losses have than gains; and self-control. Although behavioral economics has challenged traditional economics, making practitioners more aware that traditional theory is limited when predicting how people act, it has not spawned an entirely reliable alternative economics. Recent attempts to utilize insights of behavioral economics--nudging--to improve policy have occasionally had unintended consequences. Thaler ends with a plea for economists to experiment and develop further evidence-based economics. Full of anecdotes and stories, this well-written history of behavioral economics will prove valuable and comprehensible to all audiences. Summing Up: Highly recommended. All readers. --Robert E Schenk, emeritus, Saint Joseph's College (IN)
Copyright American Library Association, used with permission.
Review by Booklist Review
Thaler, an academic cited in the media as a founding father of behavioral economics, describes his four-decade journey pursuing his preoccupation with the many ways people behave that do not conform to the fictional creatures that exist in economic models. The author recommends enriching the approach to economic research by acknowledging that humans exist and are relevant. Humans do a lot of misbehaving, and that means that economic models make a lot of bad predictions, predictions that can have . . . serious consequences. . . . Virtually no economists saw the financial crisis of 2007-2008 coming. Misbehaving chronicles Thaler's participation in the development of behavioral economics, describes how it happened, and details some of what he and his colleagues learned along the way. This challenging book is written in an understandable manner and contains valuable insight for those interested in economics, psychology, other social sciences, public policy, and business.--Whaley, Mary Copyright 2010 Booklist
From Booklist, Copyright (c) American Library Association. Used with permission.
Review by Kirkus Book Review
The dean of behavioral economicsthe study of how people behave in practice rather than in theory when it comes to dollars and centsgives a spry account of his field. "The real point of behavioral economics is to highlight behaviors that are in conflict with the standard rational model," writes Thaler (Behavioral Science and Economics/Univ. of Chicago Graduate School of Business; co-author: Nudge: Improving Decisions About Health, Wealth, and Happiness, 2008, etc.), who carved out his own field at the University of Chicago in the 1970s and, with a few other renegades, brought it to academic respectability in the '80s. Now the branch is pretty well orthodox, and its heavy hitters command all kinds of respect, even if the young wild-eyed acolytes of the Freakonomics set steal the thunder these days. Without the oldsters there would be no such acolytes, just as without Thaler's explorations of how people tick, irrationally and against expectation, there wouldn't be any Levitts and Dubners. Thaler's accounts of what he spends his days thinking about are illuminating: if controlling your impulses involves a metaphorical angel on one shoulder and a devil on the other, why did this not have an appropriately twofold theory behind it? "Self-control," writes the author with customary clarity, "is, centrally, about conflict. And, like tango, it takes (at least) two to have a conflict. Maybe I needed a model with two selves." People are risk-averse by nature; does that have any sort of evolutionary component? And why, conversely, are people so bad at making the right choices? In part, it's because we're not very bright, but it's also because there's a rub in that "right choices" businessassuming that we're capable of rationality when, as Thaler writes, "the premises on which economic theory rests are flawed." Readers with even the remotest interest in how the world really works will enjoy this work of the dismal science pleasingly, and even exuberantly, done. Copyright Kirkus Reviews, used with permission.
Copyright (c) Kirkus Reviews, used with permission.
