Inspiring Economics

Inspiring Economics

Human Motivation in Political Economy

Bruno S. Frey

Bruno S. Frey illustrates what he perceives to be the inspirational quality of economics and how this differs from the type of economics studied in many academic institutions. He introduces insights into economics from a psychological perspective, dealing with issues such as transformation of anomalies, identification in democracy and crowding effects, and focuses on intrinsic motivation and how it is undermined.

Preface

Bruno S. Frey

Subjects: economics and finance, economic psychology

Extract

Economics is inspiring – or rather, it can be inspiring. It is able to provide original and unexpected insights which differ from conventional views and general opinions. Economics is radical in the sense that many of its conclusions are not welcome in a streamlined world. It is also relevant and down to earth, as it squarely faces the trade-offs and conflicts rather than discussing them away. Its comparative approach makes it useful for politics: it suggests what can best be achieved from the feasible options. This book wants to demonstrate that economics can fruitfully be applied to many different topics and questions. Part I sets the stage. It discusses what I perceive to be the state of economics. While an inspiring economics exists, it is not the type of economics popular in many quarters of academic economics, and it certainly is not applied in graduate studies. Part II introduces new insights from psychology into economics. Instead of economics imperializing other fields, I import findings from elsewhere. It is shown how behavioural anomalies initially detected in psychology can be dealt with in economics, without throwing reasonable (or rational) economic man overboard. The ‘Crowding-Out Effect’ discussed thereafter goes one step further. It identifies and empirically measures a relationship stating exactly the opposite of the relative price effect on which economics has so far been founded. The major consequence is that monetary rewards (often in the form of prices and wages) do not always bring about the desired behaviour. Thus, for example,...