Reflecting on my journey through the complex world of economics, I recall how my foundational understanding and critical perspective were shaped significantly by my academic experiences a decade ago. It was during my Masters in Public Policy that I was first introduced to the intricate workings of macroeconomics, thanks in large part to Professor Dodo. He was instrumental in laying the groundwork for my understanding of the broader economic landscape, but more importantly, he taught us to approach these concepts with a critical eye.
Professor Dodo's influence was profound. His elective course on "Environmental MacroEconomics" was a pivotal moment for me, opening my eyes to the often-overlooked environmental and societal aspects within the macroeconomic framework. This course, coupled with my role as a Teaching Assistant in Macroeconomics, allowed me to delve deeper into the subject, fostering a keen sense of curiosity and skepticism towards traditional economic models.
Years after my formal education, my encounter with Richard Thaler's "Misbehaving: The Making of Behavioral Economics" marked a significant turning point in my understanding of economics. This book, discovered a few years back, challenged the very foundations of what I had learned. Thaler's critique of the traditional model of the "homo economicus" resonated with the doubts and questions that had been instilled in me by Professor Dodo's teachings.
Thaler's assertion that "A purely economic man is indeed close to being a social moron" humorously yet poignantly captured the disconnect between economic models and the complexity of real-world human behavior. He argued that economic models often make poor predictions due to their failure to account for human irrationality. This was a revelation to me, as it bridged the gap between the theoretical knowledge I had acquired and the practical realities I observed.
Thaler's introduction of "Supposedly Irrelevant Factors" (SIFs) further illuminated the shortcomings of traditional economics. These factors, like biases and the endowment effect, are crucial in human decision-making but are frequently ignored in economic models. This perspective offered a more realistic and nuanced understanding of economic activities, aligning with the critical approach that Professor Dodo had encouraged in his teachings.
I am deeply grateful to both Professor Dodo and Richard Thaler. Professor Dodo for his foundational teachings and critical perspective on macroeconomics, and Thaler for his groundbreaking work in "Misbehaving," which exposed the flaws in traditional economic theories and introduced more realistic models that incorporate human behavior's complexity and irrationality.
For those who are keen to explore how behavioral economics can reshape our understanding of economic phenomena, I recommend visiting The Internet of Value, an idea dedicated to the pluralistic perspective on economics to create an equitable world which optimises for the wellbeing of an individual at its core.