The Relationship between Psychology and Economics.
AbstractDuring the last twenty years there has been substantial progress in the development of economic psychology. By now, economists in academic institutions as well as in business and government have become accustomed to regard studies of psychological variables as contributions to the understanding of economic processes. Psychologists, however, seem to be less aware of research in economic psychology than economists, although such research may contribute substantially to psychological knowledge. In the past, many writings in economic psychology have been addressed to economists and have appeared in economic publications because the need for such material has been more pronounced in economic than in psychological research. Moreover, to the practitioners of economic psychology, it appeared more straightforward to address themselves to such economic problems as reactions to income and price changes or factors determining the demand for homes and automobiles than to analyze motivation, habit formation, and group belonging in the area of spending and saving. In either case the central problems were the same, only the labeling differed. The belief that economic psychology is applied psychology often makes for difficulties in understanding. It is sometimes thought that established theorems of psychology can clarify the problems inherent in, say, inflation or business cycles. If this were true, economic psychology might serve to enhance the collective ego of psychologists and raise the income of some psychologists who might be called in as consultants on economic problems, but it would hardly contribute to psychological theory. But economic psychology is not applied psychology. Even a related, somewhat broader view appears to be insufficient, namely, that economic behavior can serve as a testing ground for psychological generalizations and hypotheses originally developed about noneconomic behavior. We shall attempt to show that studies of spending, saving, investing, and the like can contribute to the development of knowledge of motives, habits, groups, and other areas of psychology. Furthermore, we shall attempt to show that some important psychological problems are more susceptible to study through analysis of economic behavior than through work in areas more traditional to psychology. (PsycINFO Database Record (c) 2009 APA, all rights reserved)