In an excellent article over at Behavioral Scientist (read the whole piece), Koen Smets writes:
A widespread misconception is that biases explain or even produce behavior. They don’t—they describe behavior. The endowment effect does not cause people to demand more for a mug they received than a mug-less counterpart is prepared to pay for one. It is not because of the sunk cost fallacy that we hang on to a course of action we’ve invested a lot in already. Biases, fallacies, and so on are no more than labels for a particular type of observed behavior, often in a peculiar context, that contradicts traditional economics’ simplified view of behavior.
A related point was made by Owen Jones in his paper Why Behavioral Economics Isn’t Better, and How it Could Be:
[S]aying that the endowment effect is caused by Loss Aversion, as a function of Prospect Theory, is like saying that human sexual behavior is caused by Abstinence Aversion, as a function of Lust Theory. The latter provides no intellectual or analytic purchase, none, on why sexual behavior exists. Similarly, Prospect Theory and Loss Aversion – as valuable as they may be in describing the endowment effect phenomena and their interrelationship to one another – provide no intellectual or analytic purchase, none at all, on why the endowment effect exists. …
[Y]ou can’t provide a satisfying causal explanation for a behavior by merely positing that it is caused by some psychological force that operates to cause it. That’s like saying that the orbits of planets around the sun are caused by the “orbit-causing force.” …
[L]oss aversion rests on no theoretical foundation. Nothing in it explains why, when people behave irrationally with respect to exchanges, they would deviate in a pattern, rather than randomly. Nor does it explain why, if any pattern emerges, it should have been loss aversion rather than gain aversion. Were those two outcomes equally likely? If not, why not?
And here’s Richard Feynman on the point more generally (from What Do You Care What Other People Think):
We used to go to the Catskill Mountains, a place where people from New York City would go in the summer. The fathers would all return to New York to work during the week, and come back only for the weekend. On weekends, my father would take me for walks in the woods and he’d tell me about interesting things that were going on in the woods. When the other mothers saw this, they thought it was wonderful and that the other fathers should take their sons for walks. They tried to work on them but they didn’t get anywhere at first. They wanted my father to take all the kids, but he didn’t want to because he had a special relationship with me. So it ended up that the other fathers had to take their children for walks the next weekend.
The next Monday, when the fathers were all back at work, we kids were playing in a field. One kid says to me, “See that bird? What kind of bird is that?”
I said, “I haven’t the slightest idea what kind of a bird it is.”
He says, “It’s a brown-throated thrush. Your father doesn’t teach you anything!”
But it was the opposite. He had already taught me: “See that bird?” he says. “It’s a Spencer’s warbler.” (I knew he didn’t know the real name.) “Well, in Italian, it’s a Chutto Lapittida. In Portuguese, it’s a Bom da Peida. In Chinese, it’s a Chung-long-tah, and in Japanese, it’s a Katano Tekeda. You can know the name of that bird in all the languages of the world, but when you’re finished, you’ll know absolutely nothing whatever about the bird. You’ll only know about humans in different places, and what they call the bird. So let’s look at the bird and see what it’s doing—that’s what counts.” (I learned very early the difference between knowing the name of something and knowing something.)
Knowing the name of a “bias” such as loss aversion isn’t zero knowledge – at least you know it exists. But knowing something exists is a very shallow understanding.
And back to Koen Smets:
Learning the names of musical notes and of the various signs on a staff doesn’t mean you’re capable of composing a symphony. Likewise, learning a concise definition of a selection of cognitive effects, or having a diagram that lists them on your wall, does not magically give you the ability to analyze and diagnose a particular behavioral issue or to formulate and implement an effective intervention.
Behavioral economics is not magic: it’s rare for a single, simple nudge to have the full desired effect. And being able to recite the definitions of cognitive effects does not magically turn a person into a competent behavioral practitioner either. When it comes to understanding and influencing human behavior, there is no substitute for experience and deep knowledge. Nor, perhaps even more importantly, is there a substitute for intellectual rigor, humility, and a healthy appreciation of complexity and nuance.