Behavioural Economics is a rapidly expanding field and everyday new research is being developed in academia, tested and implemented by practitioners in financial organisation, development agencies, government ‘nudge’ units and more. This series (a collaboration between Etinosa Agbonlahor and Merle van den Akker) features 12 behavioural economists and behavioural scientists whose work and research is at the forefront of the field. In today's interview the answers are provided by Robert (Bob) Sugden.
Bob is a Professor in the School of Economics at East Anglia. His research uses a combination of theoretical, experimental and philosophical methods to investigate issues in welfare economics, social choice, choice under uncertainty, the foundations of decision and game theory, the methodology of economics, and the evolution of social conventions. He is the author or editor of eight (!!!) books, of which the most widely-read are Principles of Practical Cost-benefit Analysis, and Economics of Rights, Co-operation and Welfare. If writing books wouldn't keep a man busy, Bob is also the author of over 100 papers in refereed and high-ranking journals such as American Economic Review, and Quarterly Journal of Economics. He is one of the few UK economists included in the ISI Highly Cited list. In short, Bob is impressive. Let's hope his answers are as well!
Who or what got you into Behavioural Economics?
Graham Loomes and I got into behavioural economics in the late 1970s, long before the term was invented - we called ourselves 'experimental economists'. We were interested in Kahneman and Tversky's findings and thought we could explain them by developing a theory of regret. Having developed the theory and found that it had a lot of surprising implications, we wanted to test these and so started running experiments.
What is the accomplishment you are proudest of as a Behavioural economist?
The early work by Graham Loomes, Chris Starmer and me on developing and testing regret theory. I'm particularly proud that we kept on testing our theory and that when we found negative results we swallowed our disappointment and published them.
If you weren’t a behavioural economist, what would you be doing?
Since before I started doing experiments, I have been an economic theorist and philosophical economist, working in the liberal tradition of David Hume and Adam Smith, and being skeptical about the claims of rational choice theory to represent what it means for a human being to be rational. This work would have kept my busy.
How do you apply behavioural economics in your personal life?
It's the other way round. I see behavioural economics as an attempt to represent how real people actually behave in economic environments. Thinking about how you make personal decisions is one source of insights about underlying psychological mechanisms. Kahneman and Tversky used this method, and so did Hume (who, back in the 18th century, anticipated some of the most important findings of behavioural economics). I don't see behavioural economics as telling us how to be more rational.
With all your experience, what skills would you say are needed to be a behavioural economist? Are there any recommendations you would make?
You need to be curious about how people really behave and to follow the evidence wherever it leads.
How do you think behavioural economics will develop (in the next 10 years)?
Economics is very fashion-driven, with a short life-cycle for new approaches. The history of economics suggests to me that behavioural economics is now at about the peak of the cycle. As such, behavioural economics being replaced by something else is the fashionable thing for economists to do.