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According to Wiki, behavioral economics

stud[ies] the effects of social, cognitive, and emotional factors on the economic decisions of individuals and institutions and the consequences for market prices, returns, and the resource allocation. The field [is] primarily concerned with the bounds of rationality of economic agents.

In case you never took a class on the topic and would like to learn the basics, my friend and coauthor David Just’s Introduction to Behavioral Economics was just published by Wiley. You can buy it here for the relatively low price (for a textbook, that is) of $112.50.

A reader asks:

Stiglitz said “The heavy subsidization of corn, for instance, means that many unhealthful foods are relatively cheap. So grocery shopping on a tight budget often means choosing foods that are not nutritious.”

Please correct me if I’m wrong. I’ve been telling [people] that farm subsidies make food more expensive, not cheaper (sugar is a really good example).

If you ask an economist, you shouldn’t be surprised when the answer is “it depends.”

An important trade-off to ponder as most Americans are about to celebrate Thanksgiving, a holiday that is largely centered around food:

Despite what you might hear at your local farmers’ market or Whole Foods, not all big farms are bad. Nor are all small organic farms sustainable. They may produce high-quality food, but if they don’t produce a lot of calories per acre, they are doing little to help increase the global food supply. How we increase this supply over the next few decades will determine agriculture’s sustainability. It’s worth exploring why this is so, because sustainable food production is a fundamental human need. Getting it right will require us to carefully assess the consequences of where and how we farm.

Already, the world’s farms take up an area the size of South America. By 2050, a global population of nearly 10 billion people will require roughly 70 percent more food. We have two options: Either we need to get more food out of the land we already farm, or we need to farm more land.

Continue readingFeeding the World: The $10 Billion Trade-Off