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Behavioural Economics and Individual Ageing

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Abstract

This chapter acts as a primer on behavioural economics and ageing: it introduces the basic concepts studied in behavioural economics, including the anomalies and departures from the rational choice framework, along with a discussion of the main empirical findings.

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Notes

  1. 1.

    Modern behavioural economics is considered to have started with the papers by Tversky and Kahneman (1974) and Kahneman and Tversky (1979). For a historical view of behavioural economics, see Heukelom (2014). Belsky and Gilovich (2000) is a non-technical introduction.

  2. 2.

    Although see Rachlin (1995) for a criticism to this approach.

  3. 3.

    For book-length treatments of behavioural economics, see Altman (2012), Wilkinson and Klaes (2012), and Cartwright (2014).

  4. 4.

    I am not going to delve into the weak and strong axioms of revealed preferences and other theoretical points, which I leave to any interested readers to consult in any intermediate or advanced textbook in microeconomics, such as Mas-Colell et al. (1995), Jehle and Reny (2011), and Varian (2014). For thorough, though advanced, book-length discussions, see Wakker (2010) and Chambers and Echenique (2016).

  5. 5.

    See Plott and Zeiler (2005) for a criticism.

  6. 6.

    Decision quality is ‘the frequency with which the decision-maker chooses the option with the higher expected value …associated with each possible outcome of an option’ (Pachur et al. 2017, p. 504).

  7. 7.

    Or ‘valenced’, which in psychology refers to the ‘intrinsic attractiveness or aversiveness’ of events, objects, and situations (Frijda 1986, p. 207).

  8. 8.

    In the poem ‘Sacred Emily’ (Stein 2012).

  9. 9.

    The experiment applied a computer-based psychological task known as the Iowa gambling task; rewards and punishment were administered in the shape of game money. See Bechara et al. (1994, 2005) and Damasio (1994) to learn more about this task.

  10. 10.

    On lack of willpower and retirement saving, see Ellen et al. (2012), Millar and Devonish (2009), Raaij (2016), Visco (2009), and the sub-section on the Save More Tomorrow programme below.

  11. 11.

    For lack of willpower as a barrier to physical activity in later life, see Dye and Wilcox (2006), Kim (2015), and Schreier et al. (2016).

  12. 12.

    In the words of the Committee who awarded Herbert Alexander Simon the Sveriges Riksbank Prize in Economic Sciences in Memory of Alfred Nobel in 1978:

    Simon’s scientific output goes far beyond the disciplines in which he has held professorships - political science, administration, psychology and information sciences. He has made contributions in, among other fields, science theory, applied mathematical statistics, operations analysis, economics, and business administration. In all areas in which he has conducted research, Simon has had something of importance to say…

    (The Prize in Economics 1978 2014)

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  1. Age UK, London, UK

    José Luis Iparraguirre

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  1. José Luis Iparraguirre
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Iparraguirre, J.L. (2019). Behavioural Economics and Individual Ageing. In: Economics and Ageing . Palgrave Macmillan, Cham. https://doi.org/10.1007/978-3-030-29013-9_8

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  • DOI: https://doi.org/10.1007/978-3-030-29013-9_8

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