What behavioral economics really does?

Behavioral economics combines elements of economics and psychology to understand how and why people behave the way they do in the real world. It differs from neoclassical economics, which assumes that most people have well-defined preferences and make well-informed, self-interested decisions based on those preferences.

Why is economics important to study?

The study of economics helps people understand the world around them. It enables people to understand people, businesses, markets and governments, and therefore better respond to the threats and opportunities that emerge when things change.

Why is economics important in our daily lives?

Economics affects our daily lives in both obvious and subtle ways. From an individual perspective, economics frames many choices we have to make about work, leisure, consumption and how much to save. Our lives are also influenced by macro-economic trends, such as inflation, interest rates and economic growth.

How does economics help in decision making?

The study of economics may help you make better decisions. As with most things, the more informed a person is, the greater the chance that wise decisions will be made. If you study economics, you will learn how supply and demand affect things such as price, wages, and the availability of goods.

How does behavioral economics differ from traditional economics?

Behavioral economics is about understanding common decision mistakes that people make and why they make them. This misconception stems from the fact that traditional economic theory assumes all people are rational, while behavioral economics does not make this assumption.

Why is economics so important to society?

Economics provides a framework for understanding the actions and decisions of individuals, businesses and governments. It provides a means to understand interactions in a market-driven society and for analyzing government policies that affect the families, jobs and lives of citizens.