ABSTRACT
The discipline of political economy (or ‘economics’, as it has been known since the turn of the twentieth century) has always overlapped with that of psychology. Indeed, being the ‘science which studies human behavior as a relationship between given ends and scarce means which have alternative uses’ (Robbins, 1932: 16), this overlap is unavoidable. Avineri (2012), for example, argues that in his Theory of Moral Sentiments (1759), Adam Smith asserted the importance of psychological insights for understanding individual economic behaviour, including notions such as habits and customs, and also concerns about social wealth, fairness and justice. Then in March 1979, with the publication of the article ‘Prospect theory: an analysis of decision under risk’ by Daniel Kahneman and Amos Tversky, this overlap between these two disciplines experienced a dramatic turn: it became a field of study in its own right and the discipline of behavioural economics was born, which focuses explicitly on the study of economic decision-making and on issues such as those raised 150 years ago by the founder of modern economics. Only four years later, the first conference dedicated specifically to the new field was held at Princeton University (Frantz, 2004), securing its place in the economics discipline.
