by Mitch Kokai
Senior Political Analyst, John Locke Foundation
While universities exist to teach knowledge that stands the test of time, professors invariably face pressure to teach the new hot topic.
In economics, a field built on the premise that people rationally respond to incentives, there has been a push to incorporate more elements about psychology and human irrationality in our effort to understand why things work in the way that they do. The result has been to create a subfield called “behavioral economics.” Defenders of this field of study claim that such incorporation allows economists to better explain and predict behavior and improve policy.
This sounds promising enough, but students signing up for courses shouldn’t take the bait. While some results from behavioral economics are rock solid, other popular results are overturned within a few years. Indeed, most behavioral-economics results are based on research that is too preliminary for early college students, who ought to be learning proven insights within the field. For that established body of scientific knowledge, they should instead turn to plain old economics.
The most recent scandal within behavioral economics shows the problem of reflexively jumping on its often trendy results. Dan Ariely, a famous researcher within the field and author of the best-seller Predictably Irrational, allegedly fabricated data for a 2012 paper about dishonesty. …
… Ariely is not the first big name in behavioral economics to have data issues. It’s common for research results not to replicate — meaning other researchers conducting the same experiment find different results. …
… Behavioral economics as a field of study still has merit. Over the years, its researchers have made positive contributions to economics writ large, earning many of them Nobel prizes. The question at hand, though, is whether it should be taught at the expense of timeless knowledge — i.e., theories of opportunity cost, trade-offs, and supply and demand.