Economic Psychology Quotes

Economics is (now) about emotion and psychology.

I think time and time again, in reality, psychological notions and economic notions interplay, and the man who doesn't understand both is a damned fool.

How should the best parts of psychology and economics interrelate in an enlightened economist's mind?... I think that these behavioral economics...or economists are probably the ones that are bending them in the correct direction. I don't think it's going to be that hard to bend economics a little to accommodate what's right in psychology.

Money is very difficult to think about. So, we think about money as the opportunity cost of money. So, we at some point went to a Toyota dealership and we asked people, what will you not be able to do in the future if you bought this Toyota? Now, you would expect people to have an answer. But people were kind of shocked by the question. They never thought about it before. So, the most we got was people said, "Well, if I can't buy this Toyota, if I buy this Toyota, I can't buy a Honda." What is this thing? What is this value of price? Very hard to think about it.

Economists who adhere to rational-expectations models of the world will never admit it, but a lot of what happens in markets is driven by pure stupidity - or, rather, inattention, misinformation about fundamentals, and an exaggerated focus on currently circulating stories.

I practice what has come to be called behavioral economics.

Economics is half psychology and half Grade Three arithmetic, and the U.S. does not now have either half right.

Psychology, not economics, holds down public support for freer trade.

The great thing about behavioural psychology and economics is that they help us to see that there are actually pretty good reasons why human beings swing from greed to fear, and why we're not really calculating machines or utility-maximisers.

[There will be movement toward] behavioral economics... [which] involves study of those aspects of men's images, or cognitive and affective structures that are more relevant to economic decisions.

Interestingly, human irrationality is a hot topic in economics at the moment. Behavioural economics it's called, on the cusp of economics and psychology.

The substitution of meaning accounts for the grasping of misers as well as the extravagance of spendthrifts. Karl Marx well understood this peculiar transformation of flesh into coin.

People will pay for great services. They said they wouldn't pay 99 cents for a song but they did. We've always believed that. When you go to work, you don't work for free; nobody works for free. Nobody can say, "I want to work for free." Nobody says that.

I think what Bob Shiller and I are doing is we're focusing on macroeconomics and the role of psychology in macroeconomics.

People tend to cherish and take care of the things they pay for and therefore own, countries included. The opposite is also true. When was the last time you changed the oil in a rental car?

We tend to not value anything that we get for free.

People go shopping, we spend on so many things, and we just don't know. We don't know the prices of things. But gasoline, even when you're not buying, it's staring you in the face. Psychologists call this 'salience.'

There is something so fascinating about the 1.3 billion person market in China that businessmen become irrational. They do things in China that they normally would never do…. There’s something about China that makes foreigners act irrationally.

One cannot walk into an April day in a negative way. With spring, each man's plans and hopes result in new efforts, fresh actions. All of which has a mighty important bearing on the economy. There are those of us who think that the psychology of man, each and together, has more impact on markets, business, services and building and all the fabric of an economy than all the more measurable statistical indices.

Spending $1 for a brand new house would feel very, very good. Spending $1,000 for a ham sandwich would feel very, very bad. Spending $19,000 for a small family car would feel, well, more or less right. But as with physical pain, fiscal pain can depend on the individual, and everyone has a different threshold.

My first undertaking in the way of scientific experiment was in the field of economics and psychology.

There are a lot of people with money, but not with the passion to really go spend it.

Once public opinion is convinced that the increase in the quantity of money will continue and never come to an end, and that consequently the prices of all commodities will not cease to rise, everybody becomes eager to buy as much as possible and restrict his cash holdings to minimum size... If the credit expansion is not stopped in time, the boom turns to crack-up boom: the flight into real values begins, and the whole monetary system founders.