Interesting points from Scott Sumner:<\/p>\n
\nWhenever I speak with non-economists, they almost always seem more enthusiastic when the discussion comes around to behavioral economics. \u201cThat\u2019s what economists should focus on!\u201d They all seem to think that economists assume too much rationality, and that we should switch to a more behavioral approach. But here\u2019s the problem. Non-economists also tend to reject the central ideas of basic economics, and for reasons that are not well justified. For the economics profession, our \u201cvalue added\u201d comes not from spoon feeding behavioral theories that the public is already inclined to accept, rather it is in teaching well-established basic principles of which the public is <\/span>highly skeptical<\/em>. Thus we should try to discourage people from believing in the following popular myths:<\/p>\n
1. People don\u2019t respond very strongly to economic incentives. (I.e., the demand for life-saving drugs is very inelastic.)<\/p>\n
2. Imported goods, immigrant labor, and automation all tend to increase the unemployment rate.<\/p>\n
3. Most companies have a lot of control over prices. (I.e. oil companies set prices, not \u201cthe market”.)<\/p>\n
4. Policy disputes over taxes and regulations are best thought of in terms of who gains and who loses.<\/p>\n
5. Experts are smarter than the crowd.<\/p>\n
6. Speculators make market prices more unstable.<\/p>\n
7. Price gouging hurts consumers.<\/p>\n
8. Rent controls help tenants.<\/p>\n
These myths are all widely believed by the general public. Teaching behavioral economics is not a good way to get people to \u201cthink like an economist\u201d, indeed it gets in the way. Our primary goal should not be to add new information, it should be to have people <\/span>unlearn false ideas<\/em>about the world. I\u2019m not knowledgeable enough to have a good overview of the utility of behavioral economics. But even if it is useful it doesn\u2019t really belong in a principles of economics course, except as a way of briefly acknowledging that the rational choice model is a useful fiction and not a perfect description of human behavior. We first need to teach basic economic principles.<\/p>\n<\/blockquote>\n