At the next Perspectives on Science seminar on Monday 18.10., Michiru Nagatsu (University of Helsinki) will give a presentation titled “Behavioral economics for sustainability? A critical review”. The seminar takes place in Zoom from 14:15 to 15:45.
Perspectives on Science is a weekly research seminar which brings together experts from science studies and philosophy of science. It is organized by TINT – Centre for Philosophy of Social Science at the University of Helsinki. More information about the seminar here.
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It is now widely accepted that behavioral economics is not one of so-called heterodox schools of thought anymore, but a part of mainstream economics with nontrivial impact on policy: ‘we are all behavioral economists now’, as Angner (2019) provocatively declares. Experimental anomalies such as the framing effect and preference reversals shock the axiomatic foundations of economic theory some fifty years ago, but a new academic equilibrium has now been established around the idea of new behavioral synthesis: psychology understood as cognitive and affective mechanisms that make people’s behavior deviate from the models of rational choice can be fruitfully integrated into the economic analysis of individual and interactive decision making by pragmatically and flexibly modifying assumptions, up to a point. Although the minority still complain that this approach is a ‘neoclassical economics in disguise’ (e.g. Berg and Gigerenzer 2010), the main focus has shifted largely from the empirical questions of whether some assumptions of choice models need to be modified or abandoned, to normative implications of stylized behavioral anomalies (e.g. Sugden 2018).
In contrast to the ascent of behavioral economics, ecological economics, which emerged around the same time (Boulding 1966; Spash 2013), remains strikingly heterodox, despite the prominence of the sciences on which it is based (e.g. Rockström et al. 2009). In this talk, instead of directly exploring reasons for the contrasting trajectories of the two schools, I start from another type of questions arising as a side-effect of this contrast: How can behavioral economics—which has been more ‘successful’ in a way than ecological economics so far—help us solve the ongoing ecological crises? I provide a preliminary review of a range of approaches, such as (1) nudge and boost for pro-environmental behavioral change; (2) improve neoclassical environmental economics by behavioral insights; to (3) argue for economic policy change (e.g., abandoning GDP as an indicator to guide policy) based on behavioral insights. I argue that none of them, independently or jointly, guide us in systematically and sufficiently resolving the cur- rent crises, which makes it urgent for methodologists to tackle the original question: Why are we not all ecological economists yet? Is there something fundamentally wrong with economic thinking?
Michiru Nagatsu is an associate professor in Practical Philosophy (Faculty of Social Sciences) and Methodologies for Inter- and Transdisciplinary Sustainability Science (Helsinki Institute of Sustainability Science). His work includes philosophy of emotion, experimental philosophy of science, as well as philosophy of economics.