A couple of weeks ago I stumbled upon this op-ed on the New York Times on behavioral economics and its limits. According to the author, the hype of this discipline is higher than its potential impact, and derives from the appealing combination of some psychological tricks with the rigor of economics. Such tricks seem to offer far smaller benefits than those achievable with more structural policy interventions, and the former should not distract from the latter. Also, the author criticizes the superficial understanding behavioral economics provides, which never digs into the “why” but only describes the “how” of people behavior.

I think such a depiction is completely unfair to the ambitions of behavioral economics. Its main goal is to reintroduce humans at the center of economics, a discipline which has been abstracting away from humans while having the ambition to tell them what to do. Economic models, from finance to climate change, have been computing future costs and benefits of alternative courses of actions excluding any behavioral anomalies, smoothing out heterogeneity and assuming humans always make the smartest choice. No wonder things might not always go as planned.

Also, I think it is too early to judge the boundaries of its merits. We have just scratched the surface and these early mixed successes are important steps to explore and redirect research where it can be more fruitful. We need to not confuse the hard work needed to combine the best of the two worlds of economics and psychology from the hype around it. And hopefully one day we will not need the label “behavioral economics” to defend such work. As Richard Tahler writes in his book “Misbehaving”, eventually, when the variables related to human behavior will be properly accounted in economic models, then:

all economics will be as behavioral as it needs to be.