Economic Psychology and Behaviour investigates how human thought processes, emotions, and social forces impact economic choices. Classical economics frequently holds the assumption that people meet their needs in rational ways. On the other hand, in true life, decisions on spending, saving, working, or investing tend to get largely affected from habit, social norms, emotions, and cognitive biases. The discipline puts together economic science with that of psychology and sociology to realize that, at times, individuals, emphasizing the psychological dimension, work against their own long-term interests-these can be overspending, inordinate delay in savings, and even fashion trends.

It addresses questions such as: Why do people very often discount future reward and take immediate reward instead? In what ways do fear, anxiety, or peer pressure drive consumer behaviour? What guides one community toward adopting healthy habits or sustainable ways while another resists? Economic psychology approaches these psychological and social elements to find explanations for the intricate tapestry of issues involved in even the simplest financial decisions made every day. 

These insights are helpful for governments, businesses, and policy-makers. This has led to a series of interventions where individuals are 'nudged'—gently steered through small changes in how choices are presented—to save more, eat well, and curb energy usage.