Should economics be more psychological?

Arkadiusz Sieroń

Chapter 2 in Rationality, Psychology and Capitalism, 2026, pp 35-61 from Edward Elgar Publishing

Abstract: This chapter deals with the question as to whether economics abstracts too much from psychology and, thus, should psychology play a more important role in economics? The claims that economics should be more grounded in (proper) psychology are not new, but they returned in full force with the development of behavioral economics. The chapter argues that, although both seem to study human behavior and in a few areas there is potential for fruitful cross-fertilization, economics and psychology are distinct domains of the social sciences with different research questions, and that they should remain separate fields and respect each other's particular methodology. It is not true that psychologists and economists study separate species. They try to understand the same species, using distinct perspectives. While psychology investigates the content of people's action, economics studies only the formal implications of the fact that people act. Thanks to this approach, economics can formulate general theories, abstracting from situational factors that are interesting for psychology, and explain human action regardless of human motivation. Economics is also more interested in studying the (undesigned) aggregate effects of human actions rather than individual behaviors. Hence, economics should not become more psychological, as such a move would deprive it of its unique character, and reduce the generality and explanatory power of its theories.

Keywords: Causal Utility Fallacy; Economics; Psychology; Methodology of Economics; Neuroeconomics (search for similar items in EconPapers)
Date: 2026
ISBN: 9781035394005
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