Behavioral economics today consists of a collection of basically disconnected “psychological” concepts grafted on to standard neoclassical economics. It is an attempt to account for some, though by no means all, of the failures of the neoclassical model. The result is a “kluge” – an engineering term for a certain kind of ad-hoc solution that works, but is otherwise a poor fit with the structure it has been grafted onto.
The core of behavioral economics was developed by Kahneman and Tversky. They set out to make the minimum possible extension required to account for the deviations their experimental data showed from neoclassical “rationality”. They did not, in other words, set out to create a new framework for economics, but rather to extend the existing one as necessary by using “mental process” concepts borrowed from cognitive psychology. Their approach has become the standard for researchers in the field.
We take the opposite approach from that of Kahneman and Tversky. We do not attempt to retain the basics of the existing paradigm and add structures and “fixes” necessary to account for the empirical deviations from the theory. Our goal is a formulation that incorporates from the outset the entire range of phenomena of human action, as they relate to economic phenomena. All economic phenomena and data are the outcomes of actions – economic and otherwise – by economic actors: persons. The central focus of any truly comprehensive theory of economics therefore must be action by persons.
Some may consider this radical, but that is not our intent. It is rather to start from first principles and develop a systematic, precise, and comprehensive conceptual framework for the entire range of economic phenomena, not merely those that fit the neoclassical concepts of homo economicus, a paradigm that we, along with many others consider to be a demonstrably failed paradigm.
We will develop here a new paradigm of behavioral economics, rooted in the complex conceptual system of Descriptive Psychology. We welcome your participation.
Joe Jeffrey and Tony Putman