Research Spotlight: Syon Bhanot and Behavioral Economics (Part III)

This is the second interview in the series Research Spotlight, in which I share conversations that I have with faculty regarding their research, their journey within their field, and their field in a broader context.

Professor Syon Bhanot is a behavioral and public economist. He primarily uses field experiments to study decision making around cooperation, environmental conservation, personal finance, and various development topics.

This article is the last part of a three part interview with Professor Bhanot. You can find Part I here, and Part II here.

10/13/17

AIDAN REDDY: How did you end up doing the work you do in the field of economics, and, more specifically, behavioral economics?

SYON BHANOT: This is one of my favorite topics. I think students are all over the map, and generally systematically wrong about how these things work. I’m a reasonably young guy. I’m not like you guys, but I’m early 30’s. A lot of people ask, “How did you become professor at that age?” It’s not an abnormal age to be a professor, but they think “You must’ve had a plan. It must’ve been fifteen years ago that you thought you were going to be a behavioral economist, and you said to yourself – ‘I’m gonna do the 11 things that one needs to do to become a behavioral economist.’” That’s totally not how it works at all. I did my undergrad in public policy and I was interested in foreign policy. I applied to the Kennedy School for their master’s program, and then I was lucky enough to get in, but I deferred it for a year and did foreign aid work in Kenya because I thought maybe I wanted to do that. Then I came back to the Kennedy School for my MPP degree thinking, “I’m gonna do my MPP and then I’m going to work in foreign policy at the State Department or something like that.” Then, I started teaching a little bit of economics on the side because I was a hungry graduate student. I thought, “Wow, I kind of feel like can I do this. People seem to think I am a good teacher.” Who knows if that’s true, by the way, but I felt like it was a really rewarding experience for me and students seemed to like it. So I thought, “I kind of like this, it’s kind of fun.” And, at the same time, I was thinking about behavioral economics through some of my coursework. I was thinking, “This stuff’s kind of cool, but I’m interested in foreign policy. That’s my area.” But then, I realized that if you want to do foreign policy, you often have to do national security, which I naively thought of as two different things. I thought, “I don’t really care about national security; I care about foreign policy and diplomacy.” At that time in that place, it wasn’t as salient of a topic to study, so I lost my interest a little bit, and started getting more interested in economics. I took two or three economics courses as an undergrad. It wasn’t like I was doing economics my whole life; I was much more multidisciplinary, public policy, political science, econ, stat… kind of in the middle of all of these, like many students, I think. It was a realization in my mid-twenties that I was interested in this. Seven years ago, I didn’t know that I was going to be a behavioral economist. It was probably only five years ago that I thought, “Okay, I’m gonna go for the behavioral econ route, and that’s the direction I want to go.” That was mid- to late twenties. I was obviously fortunate enough to be in some really great institutions and have some really great mentors, but the path is a lot more all-over-the-map than students expect. They think, “Now I have to do this thing for X years, and then I can apply to this other thing, and then I’ll be where I need to be.” If you ask most students where they’re going to be in five years, they’re not going to get it right. A lot of them will be way off, including people who are really organized and together. So, for me, it was a little bit of a meandering process, but there were always some core principles that I thought, for myself, I was never going to compromise on, but they were never super specific. I thought, “There are certain things I won’t do, and I’m not interested in. There are certain principles for any job or path I would take that have to be there.” Just guided by that, I think you find what you need to find. Your twenties are the time to figure out who you want to be. You don’t have to know when you’re twenty one or eighteen applying for internships. You’re so far away from the time when you start needing to make really big choices. Fortunately, I had a support network that was cool with that, and I’m glad that I was able to sort of navigate through that. If you look at my CV, you’d think it was all planned. No; opportunities come up. I remember I had an internship in DC at a think tank and the director of the Middle East program, who was a great guy and I really respected him and he had a PhD from Harvard and all of this stuff, I thought I should ask him what he did to get to this point. He told me the story: “I worked there, and then I knew this guy who was over here, and he had this friend and she worked at this other place. I didn’t know what I wanted to do, so I went and worked over there.” I thought, “This does not sound really thought out. Wait… I don’t understand. When did you have this vision to become the head of a think tank in Middle East policy?” He said that moment never occurred. You just take opportunities as they come. Stay open and curious and true to some principles you have for yourself. Everybody here is so smart, at a place like Swarthmore. You’re all capable of doing whatever, it’s just a matter of not falling into some random direction and then thinking, “Wait, what am I doing here? I don’t want to do this. How did I end up here?” It’s more about being aware of the things that matter to you – don’t go down that rabbit hole of doing things because you think others will be impressed. Do whatever you think is cool. Eventually, it’s gonna work out for you because you’re all very talented people. My path’s been a little bit all over, but behavioral econ just spoke to me when I was in graduate school. Teaching, obviously, is the thing where I was like, “I can’t believe people get paid to do this. I would do this all day long for free.” (Don’t tell the College that.) People like telling themselves the story that they had it all planned out. They’re usually misremembering. Everybody needs a narrative to tell themselves, but the real narrative for most people is, “I had some interests, and then things came up, and I took opportunities, and made the best of them, and now I’m here.” That’s not what you usually hear; you hear very manicured stores. Then it scares you into thinking that’s how you’re supposed to be thinking, but that’s totally not true.

REDDY: What impact do you think the recent awarding of the Nobel Prize in Economics to Richard Thaler for his work in behavioral economics will have on behavioral economics in the field?

BHANOT: He’s not the first “behavioral economist” to win the Nobel. Danny Kahneman and Robert Shiller and others that came before could be classified in the same category. He’s had a really profound impact on the field in general. He was the president of the American Economics Association until last year I believe. It’s finally reached the point where, I think, economists at the very top levels of academia don’t scoff when they hear “behavioral economics.” Some still will, but, by and large, there are people in every subfield of economics who are integrating behavioral insights into what they do. You could go down the hallway and poke your head into basically every office and say, “Hey, can you tell me about how behavioral economics has influenced your field?” And they will have some answer, whether it’s health economics, public economics, industrial organization, etc. They may not be doing that work themselves, but they are aware of other people in their field who are thinking about how irrational behavior might influence, for example, how people think about health care, taxes, public policy, race and discrimination, things like that. Every subfield has a little bit of behavioral economics, and I think this will only make it more salient to people that being flexible in your assumptions about rationality in models can have important payouts in terms of making your work better. Even if you’re fully committed to the rational model, just thinking, “How can I think about this policy question if people are struggling with x systematic bias that we believe we have evidence of?” I think people will start paying attention to some of that evidence more. It often gets framed as behavioral vs rational, and rational economists are refusing to let the behavioral people have any influence, and now with the Thaler Nobel Prize they’ll finally have a chance. I don’t think it’s totally like that. The rational model can be super powerful; I’m not one of these people who think it’s terrible and needs to be thrown out. It’s really simple and explains behavior in a lot of contexts, but I think it’s more important that people keep an open mind when looking at behavior, at least by not necessarily assuming that people are going to be rational all of the time.

In academia, I think it will have that impact. But, outside, I think some of that impact has already been had by people like Danny Kahneman, Dan Ariely, etc. And of course Richard Thaler as well – I mean, he was in a scene with Selena Gomez in the movie “The Big Short!” So he’s obviously left a mark outside the academic walls from that alone. Richard Thaler has been recognized as one of the first modern era economists who was a true “economist” but who interacted with psychologists a lot. He spent a lot of time with psychologists early on in his career. We can learn from that model, that it’s okay to hang out with people in a totally different field and immerse yourself in what they’re thinking. If a lot of economists and psychologists and sociologists weren’t just talking trash about each other all of the time, and instead, paid attention to what they’ve found, we’d come to a lot of solutions. I’m hoping that there will be the impact of showing people that it’s okay to not just be an economist and that it’s okay to engage with other social sciences and even natural sciences. Dick Thaler had done that and been rewarded, and is deserving of it. I’m hoping it will get people across fields to appreciate that a little bit more. It did for me, reading his work. People thought, “This doesn’t sound like economics in the way I’ve always thought about it, but it sounds compelling and important.”

There’s a great series that in recommend to everyone, the Anomalies series by Richard Thaler. He wrote these short, funny, interesting articles in the Journal of Economic Perspectives, and had a big influence on the field with these 12-page pieces with funny examples. It really showed, “Here’s a behavioral concept, and here’s how it conflicts with the standard model. Think about it, you see people do X all of the time… why are we not talking about this?” I think that was one of his most influential pieces of work, in opening people in academia’s eyes to these things.

He’s been a great influence, and I hope we’ll learn the lessons from his career, which has been a very interesting one.

Featured image courtesy of Carnegie Mellon University.


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