Behavioral Economics: Where Is It Heading?

Abstract

The addition of “behavioral” to economics has given rise to a highly successful field of research. But, is it just a fashionable new trend or is it here to stay? More to the point, how does it differ from its close relative psychology? To answer these questions, the present article considers what behavioral economics is, and where it started, with the aim of trying to forecast what the status of it will be in the future. In forecasting where behavioral economics might be heading, the argument proposed here is that the best clues can be found in psychological research. If, as has been proposed here, behavioral economics partners research trends in psychology, then the futures of both will almost certainly be moving in the same direction. Both are beginning to, and will start to rely on online tools/mobile phone applications to collect richer data revealing dynamic tends over long time horizons, and as technology continues to facilitate ways of looking at group behaviour online, then larger scale studies examining interactions amongst multiple groups of people will become the norm rather than the exception. More specifically this article speculates on the future research focus of researchers in behavioral economics and the extent to which this will overlap with psychological research on judgment and decision-making.