Behavioral Economics

If we all make systematic mistakes in our decisions, then why not develop new strategies , tools, and methods to help us make better decisions and improve our overall well-being ? That’s exactly the meaning of free lunches – the idea that there are tools, methods and policies that can help all of us make better decisions and as a consequence achieve what we desire . In a never ending paradox of system versus cog, organization versus disorganization and reason in contrast to adrenaline guts, with such antonyms gaining wider denomination, throws open an evergreen phenomena of defining and redefining the edge to economics.

The job of economic theorists to prove theorems. The job of policy economists is to figure out which theorems to apply. But in real, much of this just forms the part of a mere say, as the base of economic conventions finds its strength in the human force which is highly temperamental, fluctuating and not standardized as what stands true to one, is in vice versa to that of another . So the question which emerges is that of the validity of economics as a whole, along with the priority status for both and about whether the usage of the same economic lens be able to filter the intangibles of human behavior.

Aristotle has very rightly pointed out that,  All human actions have one or more of these seven causes: chance, nature, compulsion, habit, reason, passion, desire. So does it mean that the fact of scarcity of resources is just a myth where people operate on their own will irrespective of the forces of demand and supply, or the common saying of “it is true that we live only once where we actually think about tomorrow and save up for it, or why the consumption of alcohol remains at peak despite sharp economic turns where people gulp spirits even at the event of boom, recession and funnily much more during depression”.

The answer to such questions in essence, lies at the certainty of the uncertain individuals when people often neglect the rational economic models, but adopt different cognitive biases to form a conglomerate identity; a mix between the individual persona and  societal elements. One such example is that of the demonetization drive in India which found its source in the economic disparity of wealth, but ended up becoming an action of wrath supported by the poor to take revenge upon the rich, or the #MeToo movement which found a voice of social revolution irrespective of individuals suffering such heinous motives from the very beginning.

So is the economics of the nation same as that of the economic regimes shaped by the thoughts of different people? In context to that of similarities, though the fundamentals keep changing with nothing as constant, certain theories do try to explain the unseen and the unheard impacts of human behavior. Firstly, the endowment theory which shows a true reflection of oneself, as the attachment of value happens only to those out of reach. An example is that of a tourist enjoying Singapore much in opposite to the citizen of the place, similar to that of Indian political leaders following the same dynamo, reiterating the history more than a hundred times; GST was already proposed by UPA government, but was reclaimed back again by the BJP government, or even the “Swachh Bharat Abhiyaan” which is much similar to the “Nirmal Bharat Scheme”.

This could also include the assumption of liberation patriarchy which is an oxymoron in itself, drawing humongous contrast among liberty and patriarchy, where one expresses freedom, but much in shackles of much as that of the society in par to that of the domino effect where social media creates a chain reaction effect with the existence of an invisible force of performance pressure, but in a flamboyant fashion, or the economic condition of the ‘now effect’, with the component of probability finding it space in the ‘no where’ situation evolving to futile investments and common business failures. So, in the tussle of rational versus irrational economics, it is the people who apply in it different capacities, giving a niche to that of the birth of the range of diversified economies.

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