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Behavioral Economics
Program Description
The Behavioral Economics program began in 1986 as a joint activity with the Alfred P. Sloan Foundation with the aim of strengthening the accuracy and empirical reach of economic theory by incorporating information from neighboring social science disciplines, especially psychology and sociology. The program started at the intersection between economics and cognitive psychology, looking at the ways in which real economic decisions fall short of the rational standards assumed in economic theory. In subsequent years, the program grew to include sociological work on the economic effects of social networks and norms. Since 1992 the Foundation has supported two principal activities in behavioral economics: the Behavioral Economics Roundtable, a forum for discussing new ideas and encouraging younger social scientists to enter the field, and a series of workshops run by the National Bureau of Economic Research (NBER).
The Behavioral Economics Roundtable
The Behavioral Economics Roundtable, made up of prominent researchers in the field, sponsors two main activities: a two-week summer workshop taught by Roundtable members for graduate students and junior faculty interested in entering this new interdisciplinary field, and a small grants program for younger scholars undertaking behaviorally oriented research. Please note that there is no deadline for the Small Grants Program in Behavioral Economics; applications are accepted on a rolling basis.
The Roundtable's most recent summer institute was held in June 2006 at the University of Trento, Italy. A select group of young scholars gathered in June 2006 to learn about a variety of behavioral topics, such as incentives and pro-social behavior, affect and affective forecasting, as well as reputation and credit market formation from the Roundtable's experts. Inquiries about participation in future summer institutes should be directed to RSF program associate Caroline Carr (Caroline@rsage.org).
Recent grants in Behavioral Economics have supported emerging scholars studying such topics as the impact of cognitive biases such as overconfidence in decision making or the effects of diversity, institutions and sanctions on public goods contribution. The Foundation has also funded a group of books that bring together the state of research in behavioral economics. The Handbook of Economic Sociology, Second Edition, recently co-published by the Foundation and Princeton University Press, brings together eminent scholars and practitioners to provide the most comprehensive interdisciplinary assessment of the economy and economic decision-making to date.
NBER Workshops
With support from the Foundation, NBER has hosted conferences on topics such as macroeconomics and decision-making, and behavioral finance. The most recent behavioral finance conference was convened in 2006 by Robert Shiller of Yale and Richard H. Thaler of the University of Chicago, and included papers on overbidding in mergers, the origins of bubbles in the market and the effect of dividends on consumption.
Current Activities
The Foundation is now working to establish a working group in "prescriptive behavioral economics." Led by Harvard professor Sendhil Mullainathan, the group will apply behavioral economic theory in an attempt to improve the effectiveness of social programs by brokering connections between behavioral economists and non-profit organizations of various kinds. This will allow researchers to test their theories in real-world economic situations, and will allow non-profits to benefit from the insights of behavioral economics in shaping more effective programs. The kinds of projects that the group plans to explore include programs to increase the use of checking accounts by the poor, programs encouraging taxpayers to save a portion of their federal tax rebates, pre-release programs to decrease recidivism among ex-prisoners, programs to improve portfolio decisions in retirement pension accounts, and programs to increase participation in the Medicare prescription drug benefit.
Members of the Roundtable are elected by standing members, which currently include three Nobel laureates. The members are: Henry Aaron, Brookings Institution; George Akerlof, University of California at Berkeley; Linda Babcock, Carnegie Mellon University; Nicholas C. Barberis, Yale University; Marianne Bertrand, University of Chicago; Roland J. M. Benabou, Princeton University; Colin Camerer, California Institute of Technology; Peter Diamond, Massachusetts Institute of Technology; Jon Elster, Columbia University; Ernst Fehr, University of Zurich; Robert H. Frank, Cornell University; Christine Jolls, Harvard University; Daniel Kahneman, Princeton University; David Laibson, Harvard University; George Loewenstein, Carnegie Mellon University; Brigitte Madrian, University of Pennsylvania; Sendhil Mullainathan, Massachusetts Institute of Technology; Edward D. O'Donoghue, Cornell University; Terrance Odean, University of California at Berkeley; Drazen Prelec, Massachusetts Institute of Technology; Matthew Rabin, University of California, Berkeley; Thomas Schelling, University of Maryland; Eldar Shafir, Princeton University; Robert Shiller, Yale University, Cass Sunstein, University of Chicago; Richard Thaler, University of Chicago; Jean Tirole, Universite des Sciences Sociales at Toulouse, Richard Zechhauser, Harvard University; and until his death Amos Tversky, Stanford University.
Recent Visiting Scholars
2005 - 2006
Robert Barsky, University of Michigan
Barbara Mellers, University of California, Berkeley
Philip Tetlock, University of California, Berkeley
2002 - 2003
Xavier Gabaix, Massachusetts Institute of Technology