This reading list is a balance to the one-dimensional view in many popular books, TED talks, or conferences. For those who feel they have a good understanding of the literature after reading Thinking Fast and Slow, Predictably Irrational and Nudge, this is for you. [In the time since I first wrote this, it’s fair to say that the balance has swung on Twitter.]
The purpose of this reading list is not to argue that all behavioural economics or behavioural science is bunk (it’s not). It is also not designed to be balanced – you can combine this list with plenty of good reading lists from elsewhere for that (for example).
Please let me know if there are any other books or articles I should add, or if there are any particularly good replies to what I have listed. I am sure I have missed some good ones. I have set a mild quality bar on what I have included – I don’t agree with all the arguments, but everything on the list has at least one interesting idea.
- General and methodological critiques
- Counterpoints to famous biases, effects and stories
- Applications of behavioural economics (and nudging)
- If you want some background
Gerd Gigerenzer, Peter Todd and the ABC Research Group’s Simple Heuristics That Make Us Smart: Simple heuristics can be both fast and accurate, particularly when we assess real-life performance rather than conformity with the principles of rationality.
Doug Kenrick and Vlad Griskevicius’s The Rational Animal: How Evolution Made Us Smarter Than We Think: A good introduction to the idea that evolutionary psychology could add a lot of value to behavioural economics, but has the occasional straw man discussion of economics and a heavy reliance on priming research (and you will see below how that is panning out).
David Levine’s Is Behavioural Economics Doomed?: A good but slightly frustrating read. I agree with Levine’s central argument that rationality is underweighted, but the book is littered with straw man arguments.
Phil Rosenzweig’s Left Brain, Right Stuff: How Leaders Make Winning Decisions: An entertaining examination of how behavioural economics findings hold up for real world decision-making.
Gilles Saint-Paul’s The Tyranny of Utility: Behavioral Social Science and the Rise of Paternalism: Sometimes hard to share Saint-Paul’s anger, but some important underlying points.
Robert Sugden’s The Community of Advantage: A Behavioural Economist’s Defence of the Market: A well balanced critique from someone who has worked in the field for decades.
General and methodological critiques
Nathan Berg and Gerd Gigerenzer’s As-if Behavioral Economics: Neoclassical economics in disguise: “As-if’ arguments are frequently put forward in behavioral economics to justify ‘psychological’ models that add new parameters to fit decision outcome data rather than specifying more realistic or empirically supported psychological processes that genuinely explain these data.” Includes a critique of prospect theory’s lack of realism as a decision-making process (pdf of working paper)
Ken Binmore’s Economic Man – or Straw Man? (pdf): The claim “economic man” is a failure can be both attacking a position not held by economics and ignoring the experimental evidence of people behaving like “economic man”.
Ken Binmore and Avner Shaked’s Experimental economics: Where next? (pdf): “[W]e urge experimentalists to … join the rest of the scientific community in adopting a more skeptical attitude when far-reaching claims about human behavior are extrapolated from very slender data”. See Avner Shaked’s webpage documenting the subsequent debate.
Gerd Gigerenzer debates Daniel Kahneman and Amos Tversky: Gigerenzer tees off (pdf). Kahneman and Tversky respond (pdf – this pdf also includes a rejoinder to Gigerenzer’s later piece). Gigerenzer returns (pdf). I’m a fan of a lot of Gigerenzer’s work, but his strength has never been the direct attack. Kahneman and Tversky get the better of this exchange. My post here.
Joseph Henrich, Steven Heine and Ara Norenzayan’s The weirdest people in the world?: “[W]e need to be less cavalier in addressing questions of human nature on the basis of data drawn from this particularly thin, and rather unusual, slice of humanity.”
Gerardo Infante, Guilhem Lecouteux and Robert Sugden’s Preference purification and the inner rational agent: A critique of the conventional wisdom of behavioural welfare economics (working paper pdf): Behavioural welfare economics does not model human psychology as it really is, but rather as “faulty Econs”. Daniel Hausman responds. Infante and friends provide a rejoinder (working paper pdf).
Owen Jones’s Why Behavioral Economics Isn’t Better, and How it Could Be: “… Behavioral Economics, and those who rely on it, are falling behind with respect to new developments in other disciplines that also bear directly on the very same mysteries of human decision-making.”
Douglas Kenrick and colleagues’ Deep Rationality: The Evolutionary Economics of Decision Making: Many of our biases are in fact deeply rational. (My post).
David Levine and Jie Zheng’s The Relationship Between Economic Theory and Experiments (pdf): “[T]he impression that economic theory has little or no significance for explaining experimental results is misleading. Economic theory makes strong predictions about many situations and is generally quite accurate in predicting behavior in the laboratory. In situations where the theory is thought to fail, the failure is in the application of theory rather than the theory failing to explain the evidence.”
Steven Levitt and John List’s Homo economicus Evolves (pdf): “Economic models can benefit from incorporating insights from psychology, but behavior in the lab might be a poor guide to real-world behavior.”
Steven Levitt and John List’s What Do Laboratory Experiments Measuring Social Preferences Reveal About the Real World?: “[G]reat caution is required when attempting to generalize lab results out of sample: both to other populations and to other situations.”
Pete Lunn and Tim Harford debate Behavioural economics: is it such a big deal?: “[T]he idea that the very foundations of economics are being undermined is absurd.”
The Open Science Collaboration’s Estimating the reproducibility of psychological science (pdf): “Thirty-six percent of replications had significant results; 47% of original effect sizes were in the 95% confidence interval of the replication effect size; 39% of effects were subjectively rated to have replicated the original result.” Social psychology fares particularly poorly.
Ole Peters’s The ergodicity problem in economics: “[B]y carefully addressing the question of ergodicity, many puzzles besetting the current economic formalism are resolved in a natural and empirically testable way. See also the Ergodicity Economics Lecture notes and David Meder and friends’ Ergodicity-breaking reveals time optimal economic behavior in humans. My post here.
A note by Ariel Rubinstein on a couple of behavioural economics papers by Colin Camerer and Matthew Rabin: ” For Behavioral Economics to be a revolutionary program of research rather than a passing episode, it must become more open-minded and much more critical of itself.”
Counterpoints to famous biases, effects and stories
Choice overload: Mark Lepper and Sheena Iyengar’s famous jam study (pdf). A meta-analysis by Benjamin Scheibehenne and friends (pdf) – the mean effect size of changing the number of choices across the studies was virtually zero.
The Cornell Food and Brand Lab’s catalogue of eating biases (led by Brian Wansink): Jesse Singal catalogues the events. Stephanie Lee’s reviews emails from the lab. Corrections and retractions are flowing. It’s fair to say that we shouldn’t place any weight on results coming out of that lab.
Disfluency: The original N=40 paper (pdf). The N=7000 replication (pdf). Terry Burnham tells the story. (And interestingly, Adam Alter, author of the first paper, suggests that the law of small numbers should be more widely known).
The Florida effect: The poster child for the replication crisis. Ed Yong catalogues the story nicely.
The hot hand illusion: The original Thomas Gilovich, Robert Vallone and Amos Tversky paper arguing people are seeing a hot hand in basketball when none exists. Work by Joshua Miller and Adam Sanjurjo shows the original argument was based on a statistical mistake. The hot hand does exist in basketball. (Although I will say that there is plenty of evidence of people seeing patterns where they don’t exist.) ESPN explores. My post here.
Hungry judges: Shai Danziger and friends find that favourable rulings by Israeli parole boards plunge in the lead up to meal breaks (from 65% to near 0). Andreas Glockner suggests this might be a statistical artefact. Keren Weinshall-Margela and John Shapard point out that the hearing order is not random (Danziger and friends respond). And Daniel Lakens suggests we should dismiss the finding as simply being impossible. My post here.
Hyperbolic discounting: Ariel Rubinstein’s “Economics and Psychology”? The Case of Hyperbolic Discounting (pdf) – “[T]he same type of evidence, which rejects the standard constant discount utility functions, can just as easily reject hyperbolic discounting as well.”
Illusion of control: Francesca Gino, Zachariah Sharek and Don Moore’s Keeping the illusion of control under control: Ceilings, floors, and imperfect calibration (pdf) – “[B]y focusing on situations marked by low control, prior research has created the illusion that people systematically overestimate their level of control.” My post here.
Loss aversion: David Gal and Derek Rucker’s The Loss of Loss Aversion: Will It Loom Larger Than Its Gain? (working paper): “[C]urrent evidence does not support that losses, on balance, tend to be any more impactful than gains.” E. Tory Higgins and Nira Liberman respond, as do Itamar Simonson and Ran Kivetz. Gal and Rucker rejoinder (working paper pdf). My post here.
Eldad Yechiam makes a related argument in Acceptable losses: the debatable origins of loss aversion (pdf). My post here.
Money priming: Doug Rohrer, Harold Pashler and Christine Harris’s Do subtle reminders of money change people’s political views? – A replication finding no efect (pdf). Kathleen Vohs fights back (pdf). Miguel Vadillo, Tom Hardwicke and David R. Shanks respond – Analysis of the broader literature on money priming suggests, among other things, massive publication bias.
Moral reminders: The original paper co-authored by Nina Mazar, On Amir and Dan Ariely (pdf). The multi-lab replication by Verschuere and friends. The abstract of the paper: [P]articipants who were given an opportunity to cheat reported solving 0.11 more matrices if they were given a moral reminder than if they were given a neutral reminder (95% CI: -0.09; 0.31). This small effect was numerically in the opposite direction of the original study.
Organ donation: Does Austria have a 99.94% organ donation rate because of the design of their driver’s licence application? No.
Priming mating motives: Shanks and friends on Romance, risk, and replication: Can consumer choices and risk-taking be primed by mating motives? (pdf): A failed replication, plus “a meta-analysis of this literature reveals strong evidence of either publication bias or p-hacking.” (I have cited some of these studies approvingly in published work – a mistake.)
Scarcity: The book. My review. Reanalysis of the original scarcity paper (pdf) without dichotomising income eliminated the effect. The original authors managed to resurrect the effect (pdf) by combining the data from three experiments, but once you are at this point, you have well and truly entered the garden of forking paths. Then there is Leandro Carvalho, Stephan Meier and Stephanie Wang’s Poverty and Economic Decision-Making: Evidence from Changes in Financial Resources at Payday – “We find that participants surveyed before and after payday performed similarly on a number of cognitive function tasks.”
Applications of behavioural economics (and nudging)
Philip Booth’s Behavioural economics – a critique of its policy conclusions: “We seem to have gone … to a situation where we have regulators who use economics 101 supplemented with behavioural economics to try to bring perfection to markets that simply cannot be perfected and perhaps cannot be improved.”
John Cochrane’s Homo economicus or homo paleas?: “The case for the free market is not that each individual’s choices are perfect. The case for the free market is long and sorry experience that government bureaucracies are pretty awful at making choices for people.” Noah Smith responds.
Reuben Finighan’s Beyond Nudge: The Potential of Behavioural Policy (pdf): “Policymakers often mistakenly see behavioural policy as synonymous with “nudging”. Yet nudges are only one part of the value of the behavioural revolution—and not even the lion’s share”
Ted Gayer’s Energy efficiency, risk and uncertainty, and behavioral public choice: “[T]he main failure of rationality is not with the energy-using consumers and firms, but instead the main failure of rationality is with the regulators themselves.” And two related papers by Gayer and W. Kip Viscusi: Overriding Consumer Preferences With Energy Regulations (pdf) and Behavioral Public Choice: The Behavioral Paradox of Government Policy (pdf)
Tim Harford on Behavioural Economics and Public Policy: “The appeal of a behavioural approach is not that it is more effective but that it is less unpopular.” (Google the article and go through that link if you hit the paywall.)
George Loewenstein and Nick Chater’s Putting nudges in perspective: “This paper aims to remind policy-makers that behavioural economics can influence policy in a variety of ways, of which nudges are the most prominent but not necessarily the most powerful.” Richard Thaler responds.
George Loewenstein and Peter Ubel’s Economics Behaving Badly: “[B]ehavioral economics is being used as a political expedient, allowing policymakers to avoid painful but more effective solutions rooted in traditional economics.”
Robert Sugden’s The Behavioural Economist and the Social Planner: To Whom Should Behavioural Welfare Economics Be Addressed? (pdf): “The claim that the paternalist is merely implementing what the individual would have chosen for herself under ideal conditions is a common theme in paternalistic arguments, but should always be viewed with scepticism.” Also see Sugden’s Do people really want to be nudged towards healthy lifestyles?, Sunstein’s response (pdf) and Sugdens rejoinder.
If you want some background
I know this list is of critiques, but here the first four books I would recommend if you want a basic background.
Daniel Kahneman’s Thinking, Fast and Slow: Still the best overview of behavioural science. However, it is not standing the test of time particularly well. Here is a fantastic analysis of the priming chapter, and Kahneman’s response to that review in the comments (you can see why Kahneman is a giant in the field).
Richard Thaler’s Misbehaving: A pretty good (although very US-centric) history of behavioural economics.
Michael Lewis’s The Undoing Project gives a good accessible overview of Kahneman and Tversky’s work.
The Behavioral Foundations of Public Policy: Probably the best book I have read about effective applications (and not the same old stories you always hear).