WHAT IS BE­HAVIOURAL ECO­NOM­ICS?

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Q I’m in­ter­ested in pur­su­ing a course in be­havioural eco­nom­ics. Can you throw some light on it? ATo

max­imise value and profit we would ex­pect hu­mans are log­i­cal, ra­tio­nal and self­in­ter­ested be­ings that con­sider costs and ben­e­fits be­fore tak­ing any de­ci­sion. How­ever, ac­tual hu­man be­hav­iour tends not to fol­low this ro­bot-like logic but of­ten tends to be ir­ra­tional, self-sab­o­tag­ing and even al­tru­is­tic, af­fected by bod­ily states and feel­ings. While Adam Smith recog­nised the role of psy­chol­ogy in de­ci­sion-mak­ing cen­turies ago, the sub-dis­ci­pline called be­havioural eco­nom­ics – the study of how peo­ple ac­tu­ally make choices, which draws on in­sights from both psy­chol­ogy and eco­nom­ics – was even only a cou­ple of decades ago con­sid­ered a mar­ginal, ex­otic en­deav­our. To­day, how­ever, be­hav­ioral eco­nom­ics is a young, ro­bust, bur­geon­ing sec­tor in main­stream eco­nom­ics.

A niche ca­reer in the arena of eco­nom­ics, it draws heav­ily on psy­chol­ogy and so­ci­ol­ogy, so in­di­vid­u­als in­ter­ested in a ca­reer in be­havioural eco­nom­ics should take cour­ses in these ar­eas in ad­di­tion to eco­nom­ics classes.

Al­ter­na­tively you could pur­sue a bach­e­lors de­gree in So­ci­ol­ogy, Eco­nom­ics, or Math­e­mat­ics. Fol­low­ing this, you will then be able to pur­sue a Mas­ter’s in Be­hav­ioral Eco­nom­ics or MSc. in Be­hav­ioral Eco­nom­ics and Fi­nance. Pre­vi­ous ex­pe­ri­ence of psy­chol­ogy, eco­nom­ics, or be­havioural sci­ence is not manda­tory. A back­ground in maths will be help­ful. Cour­ses may in­clude de­ci­sion-mak­ing, tax­a­tion in pub­lic economies, tech­ni­cal anal­y­sis, ethics, fi­nance the­ory and in­sti­tu­tional eco­nom­ics. De­gree pro­grams typ­i­cally teach the un­der­ly­ing psy­cho­log­i­cal fac­tors that drive the eco­nomic de­ci­sions of in­di­vid­u­als. Grad­u­ates go on to work in pub­lic pol­icy set­tings, busi­nesses, mar­ket­ing, fi­nan­cial risk anal­y­sis, in­vest­ment anal­y­sis and tax ad­vi­sory.

Uni­ver­si­ties that of­fer a grad­u­ate de­gree in be­hav­ioral eco­nom­ics in­clude Har­vard, UCL-Berke­ley, Brown, Monash and Not­ting­ham.

SAN­JEEV VERMA is an in­ter­na­tional ed­u­ca­tion coun­sel­lor

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