Behavioral economics is a relatively new field of academic study — and, beginning this fall, Wagner College is offering what may be the only undergraduate behavioral economics program in the United States.
The program, several years in the making, is an interdisciplinary major that draws equally from Wagner’s offerings in economics and psychology to look at how people make economic decisions.
It’s not certain whether the program is the only one of its type in the country — but when we asked Alain Samson, editor of the Behavioral Economics Guide, if he knew of any, he replied, “I’m not aware of any undergraduate degrees in B.E. offered in North America.”
Early 20th century economists sought a purely mathematical system of understanding the economic behavior of what they called the “rational actor.”
But as the 20th century progressed, and the study of microeconomics became more common, scholarly thinking began to change.
“Maybe we really need to take a look at this whole ‘rational actor’ model, because it’s not always very accurate in predicting and explaining behavior,” said Wagner College economics professor Utteeyo Dasgupta, summarizing the reason behind the new field of behavioral economics.
One classic example of the application of behavioral economics is the Dictator game, where a decision-maker is asked to share an amount of money with a random stranger. Rational choice suggests that the decision-maker should not share any amount with the stranger. In reality, data on such allocation choices suggest that the decision-maker shares about 20 to 30 percent of their income.
Another important insight in applying behavioral economics is when explaining the shortfall in American retirement savings.
“If you ask people if they can save 15 percent of their income, they say no,” said Wagner psychology professor Amy Eshleman, “but if you ask them if they can live on 85 percent of their income, they say yes.”
This insight has fostered public policy specifically geared toward addressing such irrational behavior. And it’s that intersection of economic policy with personal psychology that behavioral economics claims as its home turf.
“Behavioral economics combines psychology and economics to look at the ways that people make economic decisions,” the Wagner website explains. “Using psychological theories, you’ll dissect the social, emotional and cognitive influences on economic behavior and decisions. This interdisciplinary approach helps you understand why people’s economic decisions are often irrational, inconsistent, and against self-interest.”
Complete information on Wagner College’s behavioral economics major begins on this gateway Web page.
Further reading on behavioral economics:
- “Thinking, Fast and Slow,” by Daniel Kahneman
- The New York Times review of “Thinking, Fast and Slow”
- “Nudge: Improving Decisions About Health, Wealth and Happiness,” by Richard H. Thaler and Cass R. Sunstein
- The Nudge Blog, by Richard H. Thaler and Cass R. Sunstein