Seven key principles from behavioural economics and psychology which highlight the shortfalls in the neoclassical model
Emma Dawney, Hetan Shah
22 September 2005
Standard neoclassical economic analysis assumes that humans are rational and behave in a way to maximise their individual self-interest. While this ‘rational man’ assumption yields a powerful tool for analysis, it has many shortfalls that can lead to unrealistic economic analysis and policy-making.
This briefing distils many concepts from behavioural economics and psychology down to seven key principles, which highlight the main shortfalls in the neoclassical model of human behaviour.
The seven principles:
Our aim is to change the analytical framework for policy as well as to maximise the impact of policy interventions. We also hope to reduce unintended outcomes arising from making decisions based solely on a neoclassical economic analysis.
If you value great public services, protecting the planet and reducing inequality, please support NEF today.
Communities coming together to challenge fuel and food poverty – a film by Greenpeace in partnership with NEF
22 November 2022
How second-rate economic analysis proliferates in the UK’s planning system
21 November 2022
The government isn't fixing the public finances, it's worsening the recession
Alfie Stirling, Dominic Caddick
16 November 2022
Ayeisha Thomas-Smith is joined by Jeevun Sandher and Ann Pettifor
07 November 2022