Psychology and Economics rather than Psychology versus Economics: Cultural differences but no barriers! (original) (raw)

The death and resurrection of 'economics with psychology': remarks from a methodological standpoint

Revista de Economia Política, 2009

The death and resurrection of 'economics with psychology': remarks from a methodological standpoint roBerTa muramaTsu* One of the merits of contemporary economic analysis is its capacity to offer accounts of choice behavior that dispense with details of the complex decision machinery. The starting point of this paper is the concern with the important methodological debate about whether economics might offer accurate predictions and explanations of actual behavior without any reference to psychological presuppositions. Inspired by an exercise of rational reconstruction of ideas, I aim to offer an interpretation of the process of freeing economic analysis from psychology at the end of the 19 th century and the contemporary resurrection of behavioral approaches in the late 1980s.

A History of the Fall and the Rise of Economics with Psychology

This paper is an attempt to make a rational reconstruction of ideas about the ties that bind economics and psychology together. Its aim is to offer a clearer understanding of the fall and the revival of analytical economic models with explicit behavioral assumptions. It advances the thesis that two methodological problems largely explain why economists from the late 19 th century and until the 1980s tried hard to construct models of choice freed from psychology. One problem concerns the difficulty in measuring (cardinal) utility; another refers to the philosophical implications of developing an economic approach to behavior committed to the questionable doctrine of hedonism. In addition, the current work suggests that two different methodological puzzles contribute to the revival of psychological economics, also known as behavioral economics. The first problem has to do with the difficulty in predicting economically relevant choice anomalies; the second refers to the difficulty in b...

The road not taken: how psychology was removed from economics, and how it might be brought back

The Economic Journal, 2007

This article explores parallels between the debate prompted by Pareto's reformulation of choice theory at the beginning of the twentieth century and current controversies about the status of behavioural economics. Before Pareto's reformulation, neoclassical economics was based on theoretical and experimental psychology, as behavioural economics now is. Current Ôdiscovered prefer-enceÕ defences of rational-choice theory echo arguments made by Pareto. Both treat economics as a separate science of rational choice, independent of psychology. Both confront two fundamental problems: to find a defensible definition of the domain of economics, and to justify the assumption that preferences are consistent and stable.

The Relationship between Psychology and Economics: Insights from the History of Economic Thought

MPRA Paper, 2017

Psychological ideas had always played a role on the formation of economic thought as can be seen in the works of many influential pre-classical and classical authors. Up to the beginning of the 20 th century, there was almost no methodological objection regarding the incorporation of ideas from psychology into economic theories. After this period, a fundamental shift in mainstream economics took place which is also known as the Paretian turn. This conceptual change, initiated mainly by Vilfredo Pareto and completed with the emergence of the theories of choice in the first decades of the 20th century, attempted to expel all psychological notions from economic theory. However, in the last three decades, the increasing appeal of subjective well-being research and especially of the new behavioral economics, re-brought the topic onto the surface. In order to better comprehend and to contribute to the recent discussion concerning the relationship between the two disciplines, the study of relevant views found in history of economic thought is necessary. The paper starts with a brief sketch of the history of the relationship between economics and psychology, focusing also to the recent literature which points to a reconsideration of this relationship. After an examination of psychological ideas found in influential pre-marginalist writers, the paper discusses the arguments supporting the case for the interaction between the two fields. It also suggests that the work of Richard Jennings can be seen as the peak of the early interaction between economics and psychology. Finally, it considers the relevance of these arguments for the current debate concerning the relationship between economics and psychology.

Classical and Pre- Marginalist Ideas on the Relationship between Economics and Psychology

History of Economic Ideas, 2019

The old issue of the relationship between economics and psychology has resurfaced recently mainly because of the rise of behavioral economics. The bulk of this literature deals with the relation between economics and psychology after the marginalist revolution. However, for many classical and pre-marginalist major authors, the issue of incorporating psychological elements in economic discourse was also an important theme. The paper discusses the relevant work of writers such as Bentham, Whately, Senior, Banfield, and especially Jennings. It is argued that their views concerning the issue of incorporating psychological elements in economic discourse laid the ground for the emergence of the systematic subjective theory of value of the marginalist school. It also shows how leading marginalist economists like Jevons and Edgeworth were at ease to draw from psychological ideas found in earlier authors. These observations regarding psychological ideas and their methodological justification might assist to the further understanding of the complicated issue of the interaction between economics and psychology.

A Survey of Economics and Psychology

Economics and psychology are both sciences of human behaviour. This paper gives a survey of their interaction. First, the changing relationship between the two sciences is discussed: while economics was once imperialistic, it has become a science inspired by psychological insights. In order to illustrate this, recent developments and evidence for three major areas are presented: bounded rationality, non-selfish behaviour, and the economics of happiness.

Cognitive science and behavioural economics

2010

. Cognitive science and behavioural economics. In K. Richards (Ed.), The new optimists (pp. 189-193). Birmingham, England: Linus. As cognitive psychologists working at the interface between economics and the psychology of decision-making and choice, we see many reasons for optimism about the future. An increasing