Psychology courses and Behavioral Economics

[Seiryu]

Since behavioral economics is the intersection of economics and psychology, having working knowledge from psychology should be pretty important for this line of research.

 

My question is, as a PhD student, how much can undergraduate psychology courses contribute to this line of research? Also, how much psychology do you think is expected of from someone doing behavioral?

 

Any thoughts?

[Andronicus]

The main area of psychology that is important is judgement and decision making (JDM). I never took any undergraduate psych but I took a grad course in JDM that was very helpful. Some key concepts are cognitive biases (e.g. confirmation bias, overconfidence), heuristics (e.g. representativeness, availability), and prospect theory. I don't think taking a lot of undergrad psych is needed to understand the JDM literature.

[scienceofsleep200]

I think having some intuition about what makes people tick is VERY important, but this is not necessarily best achieved by taking courses in psychology. "Behavioral economics" can mean many things, but in the traditional economics sense of the word it is quite different to psychology (see a paper called "The case for mindless economics" by Gul and Pesendorfer for their take on the differences). While empirical observations from psychologists can motivate economic theories, a thorough understanding of the theories of psychology is not helpful since the two fields have radically different objectives and tools (see the paper for details).

 

One idea (which was suggested to me by one of my advisers) is to spend some time observing people and their interactions to build up intuition.

[thesparky]

Economists do not expect you to have the kind of broad or thorough knowledge of psychology you would get from psych courses to work on behavioural economics. I think you should have one all the same.

[dreck]

Undergraduate courses in psychology are notoriously inconsistent. I've always gotten the impression that psychology as a discipline is a joke until one reaches the graduate level, or starts doing original research. Much worse so than economics. I do not think psychology will help you much if you want to get admitted to a school with a good behavioral program (it sure as heck didn't help me...).

 

That said, the psych most used in economics right now is cognitive, especially JDM, and Social Psychology, especially subjective well-being (though this isn't really used in behavioral).

If you're interested in learning, rather than sending signals, though, all you need is this reading list:

MIT OpenCourseWare | Economics | 14.127 Behavioral Economics and Finance, Spring 2004 | Readings

[zurich_econ]

Social Psychology is certainly important as well (e.g. ingroup bias is a hot topic in expecon), and if you're into neuroeconomics, a course in cognitive neuroscientce couldn't do harm. But (apart from the neuro-stuff) psychology is very easy to pick up, instead of taking a course, you can just as well read a textbook. Although I was surprised by how great the extent is to which psychology and economics are not really compatible, so unless you're interested in the psychology per se, it's probably not worth doing.

[walt526]

FWIW, my sister is a grad student in Cognitive Science at MIT and has TAed for Psychology courses that she never took as an undergraduate and found that it was very easy knowledge to acquire on one's own (knowing it well enough to teach undergrads).

[treblekicker]

a base understanding of heuristics and biases seems to be provided in canonical behavioral papers -- like kahnemann and tversky's, for instance -- so reading those will help you at least grasp why you should consider departing from neoclassical assumptions. like others in this thread, i've found it easy to jump right into scholarly papers on the subject (obviously at times you might get a little lost in experimental methodology, but that's not the end of the world). i'd suggest taking a look at the reading lists of seminars in behavioral econ, choice theory, and/or decision theory and start working through what looks of interest to you.

[behavingmyself]

The literature in behavioral economics is accessible without coursework, but I think it's useful to take a course in cognitive psych just to develop more intuition about how minds and brains work. Social psych would be a second choice. Biology-oriented classes, developmental, and abnormal are not really useful for aspiring economists.