Friday, August 7, 2020

Misbehaving by Richard Thaler


Richard Thaler talks about the history of behavioral economics, and mainstream economics. Out of all the social sciences, Economics is the most influential, with how it has impacts on people’s lives. What happened was, from the 70s to the modern era, there was this classical economic model that humans were rational. Everyone made these basic, classical rational economic decisions, based on the utility of the products we had. In today's society, everyone is so economically different, not everyone is living the same. This is the culmination as Thaler describes as misbehaving and the study of misbehaving of others.

The way people misbehave is completely opposite as the way people in economists think how people misbehave, or how the way people in economic models misbehave. The people he (Thaler) studies are human beings, just ordinary people doing the most they can for their personal lives. Thaler talks about how we as humans do not always choose the right things. Sometimes we do not exercise properly, or we overeat. Some of us do not save the money we should be saving so we can retire at a very honest age.

My favorite part of this book and it really opened my eyes was more towards the end of the book. Richard Thaler dropped a lot of knowledge about how the standard economic models do not explain real-world behaviors. Behavioral economics has been accepted by the mid-2000s, and even Thaler harps on real-world problems, and the discipline we must have to tackle them. Whether it be paying your taxes on time or saving money for retirement, these go into what we talk about as a class with how science relies on Slow Thinking and Critical Thinking. A lot of people do not understand how the economy works. I even learned about what mainstream economics are and different traits of economics. You have to be think very thoroughly on the type of income you are bringing to the table, and make a decision whether it is enough to get by in life or if you want to make even more money. We discuss Slow Thinking in the lecture slides and how to have good habits of mind and what a selfish critical thinker is.

With being the person who is good at thinking but unfair to others, which is what a selfish critical thinker is, I think that is key in economics. It is always good to think of others in any point in time, but to focus on your own economic values and have your own set plan, that is more important. Knowing more about Economics and how it can affect yourself in the real world, I think people should pay more attention to economics, and get a better understanding in life a little bit more. Richard Thaler talks about in his text, that the textbooks for courses of economics are about 10 years behind. Kids today need to learn how to handle their own money and think for themselves in the long run.

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