Talk:Behavioral economics

Socionomics

An anonymous user posted the following.

One of the very recent additions to the area of behaviorial finance is called Socionomics. Socionomics deals with the study of aggregate social mood in various countries and regions over time, and how that mood drives human perception of financial and economic value (prices, etc.) but also such disparate social indicators as entertainment attendance and the hem length of women's dresses. Robert Prechter has recently authored a book by that name.

The reason I removed it was not only because it was put, randomly, in the middle of the history section but because it's not really true. I haven't heard of either Socionomics or Robert Prechter but what is described there is basically the link between economic wealth and happiness. This has been analysed in detail by a number of economists ever since Easterlin (1974) published convincing data showing that the link between income and happiness was not particularly strong. An issue of the quarterly journal of economics was devoted to the topic in 1997, iirc. It is not a new field of investigation by any means, but it is worth mentioning. I have added it to the topics in behavioural economics (where it belongs) and will write a page on it when I have the time. Psychobabble 02:00, 25 Nov 2004 (UTC)

You didn't miss anything by not having heard about both prechter and "socionomics". Prechter is an esoterist, numerologue and astrologue, confusing fractals and the famous/infamous elliott waves and gann numbers, and selling that unappetizing fast broth to naive investors under the lofty "socionomics" trademark ;-)). --Pgreenfinch 07:59, 25 Nov 2004 (UTC)

The guy who posted that on the BF page has now made socionomics. It might be worth adding what you know about Pretcher and the subject on that page, it's rather fawning atm :) Psychobabble 23:34, 25 Nov 2004 (UTC)

OK, I brought some needed additions to help describe fully that - oh so impressive - "new science" ;-)).

'Failed' FAC

Well, this failed the FAC because no one really seemed to comment on it. I'll re-nominate it when I have addressed to some extent the only somewhat valid criticism - many of the sub-pages are incomplete. From the FAC page:

Partial self-nom - I added to pgreenfinch's original behavioural finance page. I think it's a good and well referenced article on a fairly interesting subset of finance/economics. But I might be biased :) Psychobabble

• Support - yeh its interesting AlbinoMonkey 12:38, 1 Nov 2004 (UTC)
• Object for now. Wiki needs definetly much more work on economic subjects and I am happy to see activity in this field, but this article is far from ready from featured status. Did you notice there are two 'Criticisms' sections?? I fixed various minor problems, but this needs more interlinks and expansion, especially where there are lists like 'Behavioral economics topics' or 'Key Figures'. --Piotr Konieczny aka Prokonsul Piotrus 20:16, 1 Nov 2004 (UTC)

The outline of the article is split between behavioral finance and behavioral economics, the two criticism sections are specific to each of those sub-sections. I realise more needs to be done in the sub-topics, I wasn't sure if that was a criterion for having the main page (which is a broad outline of the field) featured. A lot of that stuff I'll fill in when I finish exams. Psychobabble

• Comment on the picture: The only picture is a picture of Daniel Kahneman. The picture had no source/license information, but I've added a probable source and assumed the picture is fair use. Because of that I don't think we should use the picture in the article -- unless I'm mistaken about the license -- because I don't think we should use it as fair use outside Daniel Kahneman. ✏ Sverdrup 23:17, 1 Nov 2004 (UTC)

I don't know much about this sort of stuff. I assumed if it was OK for the Kahnenman wikipedia articke, it was OK for this one.Psychobabble

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I've gone and made a seperate page for Behavioural economics - I'm an Aussie so I spell the word with a U and didn't realise a redirect had been set up from behavoral economics to here. If people who know about this stuff can go look at the page I made and give some opinions as to whether we should merge the info on these two pages that'd be greatly appreciated. Finance and economics are obviously different fields, but the two movements are fairly closely related so it might be worth merging. I'd just like a 2nd opinion before doing so :)

Psychobabble

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EoT: it seemed to me that the "See also law and economics" didnt belong on the graph with criticisms. Feel free to try it someplace else.

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BF/BE is one of my pet fields, as you might see in my user's page. Imo, you made a very good job in your behavioural economics page. What is true is that BE and BF are studying more or less the same cognitive and emotional, individual and collective phenomena. But the anomalies that those biases create are a bit different if they take place in financial assets or in goods and services.

Thus the two texts would enrich each other, I think, if merged, with a common section about the human biases at play, and separate sections about the applications in finance and in economics. Btw, I think those biases and anomalies are found not only in markets, but also in public choice.

I suggest that the first of us who find the time to make this combination just do it, or at least start it, but I see no hurry as I think it would need a careful job to make something consistent and comprehensive for the readers.

Btw, not being an English speaker, I have no preference about how to spell behavio(u)ral), even if I use the American spelling that I found more common in the web. Funny thing from a froggy, isn'it ? ;-)--Pgreenfinch 15:35, 8 Oct 2004 (UTC)

• Ok, i've got some down time at work, I'm going to make a start on a merger. Thanks for your input. Psychobabble
  • Done. I copied the history section from the other page almost wholesale, expanded the methodology section and created seperate topics/criticisms sections for finance and economics. I added some stuff in the finance section on the equity premium puzzle cause I've looked at it a bit. I'd appreciate feedback :) Psychobabble

Thanks!

Thanks for those who assembled the information on this page. What I'd like to see is more of the following:

The behavioral component of economics most likely has a strong connection to the development of the human brain in the Environment for Evolutionary Adaptation. Some authors have explored the connection between evolution and politics (Darwinian Politics by Paul Rubin), but the evolutionary origins of topics like Prospect Theory seem to have had limited scrutiny.

Pyschologists like Dan Wegner have developed comprehensive summaries of human behavior based on automatism. How much of this connects with behavioral economics?

Thanks once again.

Thanks for the feedback :) Most of what I've written here comes from articles and material covered in my Behavioural Economics subject. We did not look at anything to do with a link between evolution and any of the material (including prospect theory) nor with automatism. General behavioural models assume conscious but not necessarily rational decision making. As explained heuristics, rules of thumb and social norms are taken into account, but it is generally assumed that a decision are being made consciously. Psychobabble 01:08, 5 October 2005 (UTC)

Andrew Lo has an interesting paper outlining a theory of Adaptive Markets, which extends the idea of a market as ecosystem in this working paper with a nice tribute to Herbert Simon. It takes a formal approach and does not explore evolutionary traits and trade-offs in the development of the human brain. Fear has obvious roots in evolution, however a Google Scholar search for evolutionary origins of greed yields almost nothing. Perhaps it's misplaced aggression in the context of markets.

For the relationship between brain function and economics, see the article on Neuroeconomics, which is linked from the behavioral economics article. Jeremy Tobacman 17:15, 16 July 2007 (UTC)

Should Behavioral Finance and Behavioral Economics Split Soon?

I assume that most folks here would expect that the two topics would eventually divide, say, when the total article reached 32k or possibly earlier. Are there advantages to dividing sooner in terms of the coherence and unity of the articles? Higher coherence and unity might make it easier for more people to participate as well. DCDuring 23:50, 4 September 2007 (UTC)

Behavioral Economics as main title?

It seems to be sort of perverse that to read about behavioral economics, you have to go to an article on behavioral finance. Finance is a subfield of economics, and likewise behavioral finance is a subfield of behavioral economics. I suggest either making this switch, or splitting the article. y 05:35, 9 September 2007 (UTC)

I agree. Behavioral economics is generally the study of deviations from standard rationality (i.e. loss aversion, time-inconsistent preferences, altruism, overconfidence, etc.) and finance is only one of a couple areas that it has applications to (albeit, perhaps the most lucrative area...). There are applications in labor, public policy, general consumer theory, etc. as well. Does anyone have a good reason for why the title should stay at "behavioral finance"? If I remember, I'll try to come back and make the change. HalfDome 14:13, 14 November 2007 (UTC)

Most behavioral research took and still take place in financial matters. --Pgreenfinch 14:22, 14 November 2007 (UTC)

Do you have a source for that? I think that is not true at all from all of the academic seminars that I have attended. It might be true in your disclipline of banking, but of course banking is only going to focus on behavioral economics that relates to finance. And actually regardless though, behavioral economics is still the broader, more general chacterization. HalfDome 18:50, 14 November 2007 (UTC)

Title changed

No one seemed to have any real objections over the past week and a half, besides an unsupported claim that behavioral finance is the largest part of behavioral economics, so I made the change. If anyone has any objections now, please voice them here so we can arrive at consensus one way or another. Cheers, HalfDome (talk) 09:53, 25 November 2007 (UTC)