The 1-800 Critique, Counterexamples, and the Future of Behavioral Economics

This chapter contrasts the different approaches taken by economists and psychologists. While economists create models aimed at parsimony and generalizability, psychologists tend to look more narrowly at data and generate their models to describe them. The problem with the latter approach is that it is not clear to what environments the data generated is exportable to. The implication here is that many psychology articles should have a 1-800 call center number attached to them to allow the reader to call and ask how the results would generalize to different contexts. The approach taken by behavioral economists is to look for counterexamples to rational parsimonious models and therefore use the rational models as a benchmark. This approach cannot be successful because the leading behavioral models are not clear about when they apply. Hence, unless behavioral models are general and not merely constructed to account for a specific counterexample, counterexamples are easily found to the counterexample, which brings us back to the starting point.