Learn some psychology

That’s Harvard economist Greg Mankiw’s advice to students of all ages:

Economists like me often pretend that people are rational. That is, with mathematical precision, people are assumed to do the best they can to achieve their goals.

For many purposes, this approach is useful. But it is only one way to view human behavior. A bit of psychology is a useful antidote to an excess of classical economics. It reveals flaws in human rationality, including your own.

This is one lesson I failed to heed when I was in college. I never took a single psychology course as an undergrad. But after the birth of behavioral economics, which infuses psychology into economics, I remedied that mistake. Several years ago, as a Harvard faculty member, I audited an introductory psychology course taught by Steven Pinker. I don’t know if it made me a better economist. But it has surely made me a more humble one, and, I suspect, a better human being as well.

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  • dmtorbi

    Love the NUDGE. We all need it sometimes – depending on how it’s done. :)

    • http://www.henshawconsulting.com.au psychologist perth

      I would say that almost every situation now be it economics, politics or to our daily lives we need a little bit of psychology.