Mind over money (Image: Rex Features)
ECONOMICS used to concern itself with a species called Homo economicus – a purely rational being driven largely by self-interest. In this Panglossian world, everything worked out for the best if you just left it alone. Sadly, real economic life doesn’t work like that.
Research into the psychology of economic behaviour has shown that, contrary to the assumptions of 20th-century theoretical economics, it is not completely described by rational choice models. The deviations from rationality are substantial and systematic. It follows that an economics, or an economic policy, that does not take psychology into account…
