, Columnist
Finance Has Caught On to Behavioral Economics
Finance researchers look for what works, not grand theories.
Looking for what works.
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A lot of ink has been spilled (some of it by yours truly) about behavioral economics on the occasion of of Richard Thaler’s new book, "Misbehaving." The debates echo others that have been reverberating through the halls of academia since the 1980s. In general, behavioral economics has failed to penetrate the field of macroeconomics. University of Michigan macroeconomist Christopher House -- typically a staunch defender of the status quo in the field -- wrote last year that behavioral econ was a “fad” and has been largely a failure.
But while macro has resisted behaviorism, finance has accepted the new ideas without even breaking stride. Behavioral finance chugs along mostly undisturbed.