For generations, economists thought their field was a science just as precise as chemistry, but their consistent failure to predict the turn of events only proves that classical economic theories lacked an appreciation for the instability of human chemistry. University of Chicago economics professor Richard H. Thaler has long entertained doubts. In Misbehaving, Thaler provides an entertaining introduction to the emerging theory of behavioral economics, which assumes that most people aren’t rational actors, at least much of the time, and are guided by emotions and misconceptions rather than the idealized models beloved by economists. Witness not only the failure of economists to foresee the Great Recession but their contention that such a downturn was impossible.
