Because this is now recognised to be a more challenging problem to solve than was previously acknowledged, the field has had to use a range of models, recognising that human behaviour is highly context-specific. For instance, the behavioural biases affecting financial decisions can differ significantly from those influencing health choices. A surge in empirical studies using randomised controlled trials and field experiments has sought to understand decision-making in diverse settings and consider possible interventions.
There has been increasing absorption of behavioural economics into fields like finance and development economics. This has been further enabled by the use of big data and AI not only to predict human behaviour but to provide insights into socio-economic questions related to fairness and redistribution.
Beyond individual-level interventions (the "I-frame"), there is a growing recognition that systemic changes (the "S-frame") are also needed.2 While "nudges" can encourage better individual choices, critics warn these tools can deflect responsibility from powerful players and institutions. Instead, large-scale societal problems — such as climate change — require regulatory and legislative solutions on systemic scales. There is also an increasing acknowledgment of the ethical underpinnings of policy recommendations, with a focus on understanding what people genuinely perceive as fair.
In essence, behavioural economics is transitioning from merely critiquing notions of “rationality” and identifying human quirks to actively informing policy and system design, with an ever-growing emphasis on empirical evidence, real-world application and a stronger focus on ethics, along with more nuanced understanding of human values.
