{"id":15656,"date":"2020-09-30T13:01:00","date_gmt":"2020-09-30T17:01:00","guid":{"rendered":"https:\/\/www.shortform.com\/blog\/?p=15656"},"modified":"2020-10-12T13:29:30","modified_gmt":"2020-10-12T17:29:30","slug":"humans-and-econs","status":"publish","type":"post","link":"https:\/\/www.shortform.com\/blog\/humans-and-econs\/","title":{"rendered":"Humans and Econs: Feelings Versus Rationality"},"content":{"rendered":"\n

What is the difference between humans and econs? What mistakes do humans make that econs avoid?<\/p>\n\n\n\n

Humans and econs are terms used to describe two types of decision making<\/a>. Econs are perfectly rational in their choices, but humans are irrational<\/a>.<\/p>\n\n\n\n

Read on to understand humans and econs.<\/p>\n\n\n\n\n\n\n\n

Humans and Econs: Overview<\/h2>\n\n\n\n

Humans and econs are very different beings. One of the most important insights of behavioral economics is that self-interested human beings are actually terrible at doing what\u2019s best for themselves<\/strong>. That is, despite having the intellectual capacity to write symphonies or design aircraft or edit genes, we humans consistently and predictably make bad choices<\/a> in our everyday lives<\/strong>.<\/p>\n\n\n\n

A classic example of our poor decision-making<\/a> is diet. More than 60% of Americans are either obese or overweight, despite the well-known health risks of excess weight. If human beings unfailingly acted in their self-interest, they would always\u2014or, at least, most of the time\u2014choose healthy foods over unhealthy ones.<\/p>\n\n\n\n

The fact that human beings don\u2019t always make the right choice for themselves contradicts a central assumption underlying traditional economics<\/strong>: that human beings are always rational and always choose what\u2019s in their self-interest<\/strong>.<\/p>\n\n\n\n

Traditional economics gets us wrong because it conceptualizes us as \u201cEcons\u201d\u2014fantastical beings with incredible powers of perception and self-awareness. On the contrary, in behavioral economics, people are conceptualized as \u201cHumans\u201d\u2014often irrational beings prone to make mistakes<\/strong>.<\/p>\n\n\n\n

Humans Are Irrational<\/h3>\n\n\n\n

The reasons for humans\u2019 fallibility are legion, but the dominant factor is simply the way we think<\/em>. We favor gut feeling over reflection. We rely on rules of thumb rather than research. We allow the way a question is phrased to sway us. Unfortunately, these deeply ingrained ways of dealing with the world tend to lead us astray.<\/p>\n\n\n\n

When a Human makes a bad decision, it\u2019s often the result of one or some combination of the following:<\/p>\n\n\n\n