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Welcome to module 9
There has been a push by central government to make use of new developments within behavioural economics and psychology in policy making. These developments can also be useful for MyBnk’s programmes and helping individuals on their journey to becoming financially capable.
In particular, more recent research has shown the extent that the challenges on the path to financial capability are behavioural rather than informational. A 2016 Money Advice Service report highlights that young people often have a good understanding of the importance of money and saving, and yet do not translate this understanding into behaviour. In addition, a 2008 discussion paper researched by the LSE on the links between financial capability and behavioural economics concludes that the main drivers of behaviour in this area are psychological rather than informational. It also noted the literature on changing such tendencies is currently very small.
As such this module has been designed to give on overview of the basic concepts of behavioural economics, both as they are an essential part of understanding contemporary economics but also as they have potentially applicable insights. Firstly, in order to understand the behavioural approach it is necessary to have brief overview of the traditional economic model that behavioural approaches are a reaction against.
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