Through integrating a more holistic understanding of economic history with the realities of 21st-century human experience into economic models and practice, developments in this field are posing provocative questions and challenging the very basic definitions on which mainstream economic theory has been based.
Old ideas that assumed perfectly rational actors always acting in their individual self-interest to maximise specific conceptions of utility, for instance, are being replaced. Behavioural economics integrates psychological insights to explain how cognitive biases, social preferences, and limited will power systematically affect economic decisions. This field challenges fundamental assumptions about the behaviour of economic agents and market efficiency, and has also changed policy approaches towards “nudges” and changes in choice architecture.
A significant transformation in the recent past is the emergence of the knowledge economy, with the rise of the digital economy and big data analytics, as well as emerging AI providing both new insights and new challenges for economic analysis. Many observers expect AI agents to rapidly boost productivity in the short term, while the medium- and long-term prospects of artificial general intelligence (AGI) and an AI “singularity” raise concerns about job displacement and the concentration of wealth. This is driving a greater focus on questions of well-being, technological control and wealth distribution, to ensure that the benefits of such new technologies are widespread and not confined to the powerful few.
There is also greater recognition of the global nature of long-run economic processes and the ways in which they have generated, reinforced and in, some cases, reversed inequalities. There are also moves to integrate knowledge, experience and expertise from countries and regions that have been under-represented in the development of economic thinking. Additionally, the realities of climate change and biodiversity loss are altering how experts think about the world’s economic resources and operations. The interconnectedness of the human economy with natural systems requires that economists advocate for sustainable-scale, equitable resource distribution and efficient allocation within planetary boundaries.
Research into these issues is already uncovering many policy solutions that could lead to resilient, inclusive, sustainable societies. Sustainable economic policies must also deal with the realities and implications of climate change. This has led to forced migration, with all kinds of consequences on the societies at the origin and the destination. It has also impacted agriculture through altered environmental conditions. Our societies also have to solve issues arising from globalisation and from automation and its effect on employment before they cause significant economic changes that lead to social unrest.
KEY TAKEAWAYS
Contemporary economic thought is undergoing a significant transformation, moving beyond the traditional, limited models of economic action to incorporate emerging ideas and understanding about the way all humans operate in the 21st century, contextualised with understanding of the planetary implications of these operations. Behavioural economics challenges the notion of perfectly rational individual utility-maximising actors, integrating insights from psychology to understand real-world decision-making. The rise of an Economics of knowledge, supercharged by AI, is profoundly redefining work, production and life. Transnational economics, which aims to recognise the global nature of economic processes through history and to incorporate the growing role and influence of lower- and middle-income countries, is changing perceptions of how countries develop and what can be learned about adaptive job markets and resilience. Parallel to this, Ecological economics emphasises the interconnectedness of the human economy with natural systems, advocating for sustainable-scale, equitable distribution of assets and incomes as well as access and control over the products of nature to enable expansion of economic welfare within planetary boundaries. All of these areas are interconnected, requiring the development of a radically holistic set of economic ideas.
Three fundamental questions guide GESDA’s mission and drive its work: Who are we, as humans? How can we all live together? How can we ensure the well-being of humankind and the sustainable future of our planet? We asked researchers from the field to anticipate what impact future breakthroughs could have on each of these dimensions. This wheel summarises their opinions when considering each of these questions, with a higher score indicating high anticipated impact, and vice versa.
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.2While "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.
The Anticipation Potential of a research field is determined by the capacity for impactful action in the present, considering possible future transformative breakthroughs in a field over a 25-year outlook. A field with a high Anticipation Potential, therefore, combines the potential range of future transformative possibilities engendered by a research area with a wide field of opportunities for action in the present. We asked researchers in the field to anticipate:
This chart represents a summary of their responses to each of these elements, which when combined, provide the Anticipation Potential for the topic. See methodology for more information.
The deployment of AI is among the important shifts. AI is already affecting the economics of the workplace, with the potential to dramatically increase productivity in some sectors,3 while displacing various roles.4 Lower- and middle-income countries, already bypassed by industrialisation, face an even steeper path if AI takes over both manufacturing and service jobs, especially if the economic value it creates becomes concentrated in the hands of a few technology companies and their investors.
Another threat is the possibility of a dangerous AI race without adequate societal controls, driven by capitalist and geopolitical competition. AI development is resource-hungry, exacerbating global inequality and geopolitical tension, and such a race may prioritise rapid development over safety and environmental concerns like energy and water consumption for data centres. How governments and transnational organisations protect public interests in this scenario is an important open question, which will also require the integration of ecological economics and transnational economics in determining how the knowledge economy evolves.
All this is forcing economists and policy-makers to rethink traditional assumptions and ask difficult questions about values, well-being, control of technology and wealth distribution. As AI transforms the digital and real economy, the greatest challenge will be to ensure that society acts to ensure this process benefits all and not just the powerful few.5
The Anticipation Potential of a research field is determined by the capacity for impactful action in the present, considering possible future transformative breakthroughs in a field over a 25-year outlook. A field with a high Anticipation Potential, therefore, combines the potential range of future transformative possibilities engendered by a research area with a wide field of opportunities for action in the present. We asked researchers in the field to anticipate:
This chart represents a summary of their responses to each of these elements, which when combined, provide the Anticipation Potential for the topic. See methodology for more information.
Current economic assumptions, which link growth directly to job creation, are increasingly challenged by technological advancements like automation and AI, as well as changes in ecological and planetary conditions that are associated with growing inequality and more informal economies. Many low- and middle-income countries have experienced such conditions for decades, which provides experience that can inform how the global workforce will evolve and how societies can build resilience against future shocks. The need to ensure decent and dignified lives and working conditions in such countries also points to the need for experimentation with economic policies that go well beyond mainstream perceptions of growth and development.
In addition, the narrow, monetised interpretation of value in Western models, exemplified in the concept of GDP as the basic indicator of economic progress, often overlooks crucial factors such as Indigenous knowledge systems, community-level practices, ecological health and long-term resilience. Embracing these alternative perspectives, and coupling them with interdisciplinary approaches and proactive strategies for sustainable development, will be crucial for navigating the complex economic landscape of the future.7
The Anticipation Potential of a research field is determined by the capacity for impactful action in the present, considering possible future transformative breakthroughs in a field over a 25-year outlook. A field with a high Anticipation Potential, therefore, combines the potential range of future transformative possibilities engendered by a research area with a wide field of opportunities for action in the present. We asked researchers in the field to anticipate:
This chart represents a summary of their responses to each of these elements, which when combined, provide the Anticipation Potential for the topic. See methodology for more information.
Researchers and public bodies increasingly agree that economics must change to serve the long-term well-being of both people and the planet. This will include breaking disciplinary silos within, and democratising access to, the subject. In this way, economics can address real-world concerns with real-world consequences, improving equity, justice and participatory governance.
Ecological economics seeks to play its part here by integrating economics, ecology, psychology and Earth-systems science to understand the planet from a holistic systems perspective. With this kind of radical approach, ecological economics has the potential to create a better future for humanity.
At its core, ecological economics pursues three fundamental goals: achieving an ecologically sustainable scale for the human economy within planetary boundaries; ensuring fair distribution of resources across generations, communities and species; and enabling efficient, equitable and well-being-oriented resource allocation. Its central idea is that humans are not separate from nature but embedded within it, with nature, societies, knowledge and built infrastructure all contributing to well-being. The interactions among these and the limits to substituting one for another are central to creating regenerative and equitable economic systems.8
It is also important to raise the profile of knowledge from lower- and middle-income countries, especially given the continued domination of institutions and scholarly work from the Global North in “recognised” academic work, with associated biases and blind spots. The underrepresentation of Southern scholarship, especially in African contexts, is a systemic challenge linked to power asymmetries in global research.
The Anticipation Potential of a research field is determined by the capacity for impactful action in the present, considering possible future transformative breakthroughs in a field over a 25-year outlook. A field with a high Anticipation Potential, therefore, combines the potential range of future transformative possibilities engendered by a research area with a wide field of opportunities for action in the present. We asked researchers in the field to anticipate:
This chart represents a summary of their responses to each of these elements, which when combined, provide the Anticipation Potential for the topic. See methodology for more information.
