RM - Psychology and the economy Flashcards
What does the ‘economy’ concern?
The production, distribution and consumption of goods and services.
What was Daniel Kahneman rewarded in 2002?
Nobel prize.
Who won a nobel prize in 2002?
Daniel Kahneman.
What was Daniel Kahneman’s study on decision making?
One group heard a list of 19 famous male names and 20 less famous female names whilst another group heard a list of 19 famous female names and 20 less famous male names to counter any gender bias. they then had to say which gender of names was the most frequent and 80% of them were influenced by the more famous names meaning that they made the wrong decision.
What is economic psychology?
A blend of economics and psychology - seeking a better understanding of people’s behaviour in their economic lives.
Primarily concerned with the rationality (or irrationality) of decisions relating to economics.
What is economic psychology also referred to as?
Behavioural economics.
What happens in behavioural economics?
Researchers investigate the effects of social, cognitive and emotional factors on economic decisions.
What does heuristic mean?
Rule
What is the availability heuristic?
The rule that the likelihood of selecting something is related to its availability - overestimating the likelihood of dying in a plane accident because we read about such accidents beforehand and therefore they are more available to us.
What is the framing effect?
People’s decisions differ depending on whether a choice is presented as a gain or loss.
For example, these scenarios have the same outcome:
Treatment A would result in 400 deaths.
Treatment B would result in 33% chance of no deaths and 66% chance that all 600 would die.
And…
Treatment A would result in 200 lives being saved.
Treatment B had a 33% chance of saving everyone and a 66% chance of saving no one.
Link social change to its impact on the economy:
Reducing drink driving was discussed where attitudes and behaviour was changed by making people aware of social norms. (Can also be applied to reducing stereotypes and smoking).
Such practices have the potential to bring about positive changes that will impact the economy however this approach is limited to tasks where behaviour is moderated by social criteria.
Link improving memory to its impact on the economy:
Improving the amount of accurate information collected from eyewitnesses and therefore improving crime detection particularly to reduce the expenses on wrongful arrests and to ensure that criminals are caught.
Link attachment to its impact on the economy:
Bowlby’s theory on attachment showed the world the importance of emotional care in early child development.
Unicef are continuing indicating its influence and the influence it has on developmental policies in ensuring the healthy development of children to becoming productive members of society and thus improving the world economy.
Link mental health to its impact on the economy:
The number of people receiving medication provides a much greater economic gain than psychological therapies which may produce similar benefits compared to medication but are far more expensive.
Evidence-based research on effective drug therapies is important in reducing costs and helping people return to work.
Link biopsychology to its impact on the economy:
Neuroscience offers the possibility of revolutionising our understanding of the human brain. This may have practical economic benefits in the area of ‘smart’ machines for example face recognition at airports.
