Many critics of economists contend that because people aren’t rational, economics has little predictive power. This is wrong for two reasons. First, people act relatively rational in many (if not most) circumstances; second, the deviations from rationality are predictable. As one of my professors at Berkeley used to say, it’s not enough to say that people don’t always act like perfect utility maximizers; the question is whether they do on average, and when they don’t, what directions they take. It turns out that irrationality is not at all random, as claimed by some.

What does this mean for environmentalists?

A lot. Dealing with climate change and other major environmental issues will require major changes in behavior, and this is where behavioral economics comes in. There is an interesting piece in today’s NYT on ways to get people to change their energy use; pay special attention to the “Further Reading” section near the top. And Monday on NPR, there was an hour-length program on behavioral economics entitled “Predictably Irrational,” which offered a nice introduction to the field of behavioral economics.

Educate yourself and enjoy.

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