What is Behavioral Economics?
Behavioral economics is the study of the effects of psychology on economic decision making. In other words, how people’s emotions and thoughts can affect how they make decisions about money. One of the first supporters of this idea was Adam Smith. Behavioral economics was later disregarded when a more rational approach was taken in the 1800s. By the mid 1900’s, however, there was a clearer understanding of how much psychology plays into economics.
