Skip to Main Content
April 27, 2013
Paper Authored by Brattle Principal Daniel McFadden on Consumer Behavior Featured in The Economist

A working paper authored by Brattle principal Dan McFadden examining new evidence on consumer behavior and its implications for the measurement of consumer beliefs, intentions, preferences, choices, and well-being has been featured in the April 27, 2013 issue of The Economist.

In his paper, “The New Science of Pleasure,” authored for the National Bureau of Economic Research (NBER), Dr. McFadden argues that economics should draw much more heavily on fields such as psychology, neuroscience, and anthropology to explain behavior that they currently consider anomalous. Dr. McFadden explains how the neoclassical model of the individualistic utility-maximizing consumer that forms the basis of most economic analysis is being challenged by a “behavioral revaluation,” suggesting new directions for the continuing development of choice theory.

The Economist article, “The debt to pleasure,” gives an overview of the paper and cites examples provided by Dr. McFadden. These examples include the fact that preferences are rather fluid and people value mundane things much more highly when they think of them as somehow “their own.” In addition, cognitive science has proven that memory and experience, as well as trust, have a real effect in determining choices. These factors have important implications for policy and, as such, Dr. McFadden’s argument that classic economic theory on consumer choice needs to be overhauled is very timely.

To read the article in its entirety, please visit The Economist website.

To download Dr. McFadden’s paper, please visit the NBER’s website.