When governments want advice on the likely impact of their policies, they traditionally turn to economists. Psychologists have been less in demand. The reasons are understandable: Economists have seemed to offer relatively clear and well developed models for predicting behavior, notably “expected utility theory.” In contrast, the lessons from psychology have often seemed less clear-cut, no matter how interesting or suggestive they may have been.
This situation is now changing. Officials are recognizing that their policies may stand or fall on social, cognitive, and emotional factors that economists have traditionally neglected. Given their position at the top table, it is perhaps unsurprising — if ironic — that economists themselves have communicated this point. Behavioral economics, essentially a combination of economics and psychology, has provided a new bridge between policymakers and psychological findings.
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