The Great Economists

Chapter 10

Daniel Kahneman – economic psychologist

‘Economists think about what people ought to do. Psychologists watch what they actually do.’

Daniel Kahneman, Interview with CNN Money, 23 August 2007

I must state one important thing before going any further: Daniel Kahneman is a psychologist. So why is he included in a book on ten great economists when there are so many professionally trained economists to choose from? On one level the answer is easy. Kahneman won the Nobel Prize for economic sciences in 2002 jointly with Vernon Smith, an experimental economist (Kahneman’s collaborator, Amos Tversky, died in 1996, so making him ineligible for the Nobel). Kahneman’s citation was for ‘integrating insights from psychological research into economic ...