The selfish and utilitarian side of human beings, that of Adam Smith's famous "invisible hand," is the basis of modern economic theory, which is studied in universities, and which was developed and deepened over the past two centuries. And the approach is not bad, without a little human selfishness, private property and much of its associated productivity would be impossible, which in the end has made the modern world grow in an unusual way during the twentieth century, although with certain inequality in the distribution of income and with some carelessness with the environment.
But the selfish side is a partial approach to the complex human dimension. It is necessary to incorporate the emotional side to economic models, where the passions that often cloud reason, empathy, trust generation, collaborative and cooperative spirit, the psychological biases that make us fall into bubbles, overreactions, panics are addressed and other mistakes, and that powerful “unconscious rationality”, that of the system 1 (fast) of the nobel Kahneman, which dominates much of our daily decisions.
It happens that the emotional side of the economy has been approached in a very simple way by neoclassical tradition, through the indifference / utility curves (tastes and preferences), weighed against the cold rationality of income restriction (the consumer's pocket ). Basically, neoclassical microeconomics has always assumed that reason (income restriction) dominates emotion (utility curves), reaching optimal equilibrium points for the rational consumer. In short, for the traditional economy, we always choose the best for us, at the right times and at the right prices. But that ... clearly ... is far from reality.
In this way, given this notorious absence of emotional content - complex psychological in their theories and training modules (beyond the simplistic theory of marginal utility), universities have become factories of mathematical economists, rationalists, optimizers, every time farther from the people of flesh and blood, the people of the street, which in the end are the ones that really move the economy, but of course ... an economy that is far from those optimizing mathematical models that study it. So, something does not close between theory and practice.
This book addresses several of those issues that are often lacking in the basic economic training of students, but also those that we have asked thousands of times the common citizens in our daily decision-making life, which could be summarized as all that psychology that is involved in our daily economy, from the supermarket cart, the administration of our household expenses, the management of our savings, and other domestic issues that, in the end, is where the happiness (or not) of people's lives actually resides.
In this way, EMOTIONAL ECONOMICS aims to help understand why we are as we really are with money and other scarce resources, and not as we have been told that we are, as well as helping to be a little friendly with the eternal internal tension that we carry between reason and emotions, which makes the very essence of each economic decision.
The book mixes concepts of traditional economics with psychology, behavioral economics and neuroeconomics, also going through the modern concept of collaborative capitalism, and while reviewing those brilliant minds of history that understood these issues before anyone else, like JMKeynes, Adam Smith himself, with his Theory of Moral Sentiments, and David Hume, among others.
In short, a book to read without too much prejudice, perhaps even with the curiosity of a child when he is faced with something completely new in his life. We hope you like it!
(*) Sebastián Laza is an argentine economist, specialized in the interrelation between Cognitive Neuroscience and Behavioral Economics, with postgraduate courses on the subject at National Research University (Russia), Duke University (USA) and Copenhagen Business School (Denmark).
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