Economics=Psychology+Counterfactual Models

Economics - to the great dismay of economists - is merely a branch of psychology. It deals with individual behaviour and with mass behaviour.
Many of its practitioners seek to disguise its nature as a social science by applying complex mathematics where common sense and direct experimentation would have yielded far better results.
The outcome is an embarrassing divorce between economic theory and its subjects.
The economic actor is assumed to be constantly engaged in the rational pursuit of self interest. This is not a realistic model - merely a useful (and flattering) approximation.
According to this latter day - rational - version of the dismal science, people refrain from repeating their mistakes systematically. They seek to optimize their preferences. Altruism can be such a preference, as well.
We like to believe that we are rational. Such self-perception is ego-syntonic. Yet the truth is that many people are non-rational or only nearly rational in certain situations. And the definition of "self-interest" as the pursuit of the fulfillment of preferences is a tautology.
The theory fails to predict important phenomena such as "strong reciprocity": the propensity to "irrationally" sacrifice resources to reward forthcoming collaborators and punish free-riders. It even fails to account for simpler forms of apparent selflessness, such as reciprocal altruism (motivated by hopes of reciprocal benevolent treatment in the future).
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[@idaich]

as a young adult, i am constantly mindblown by these lectures

[@brainchildabacustt]

"Economics is a not a science, it is branch of psychology" As a mathematics teacher having also studied economics, I have to agree with this conclusion Prof Vaknin. Perhaps management accounting is also business psychology, ie analysis of a business' behavior.

[@BEnyart454]

The one universal truth of human nature and ignorance: People will agree with the beliefs that benefit them, then seek facts to support the conclusion they have already decided on. The only true goal in life is objective self-awareness, and to see things as they are.

[@felipefelix8027]

YES!!!!!
So glad you posted on this topic my friend

[@mrnevaleft9060]

Economics is psychology, statistics and finance

[@samanthaf7251]

Thank you for talking about this.

[@wombot2188]

I don't have much knowledge at economics, but things like game theory (and the ways people preach them as "the objective") always strike me as dogmatic and digused subjectivity, even ideology.
In prisioner game, game theory's conclusion is that if sum of outcomes from snitching is greater than not snitching, then you SHOULD snitch. But there's a counter argument, if you choose not snitching then the other player will be more likely to do that too because you can assume the other player is similar to you, and by snitching you are more likely to get the bad outcome.
The followers will scream to your ear "No! How dare you be irrational!". But I think they are more ideology than objective fact. If your theory is true ONLY in a world where everyone use it then it is not objective truth. You are not spreading truth, you are preaching ideology