Recent research in economics has unravelled a mountain of scientific evidence that has previously remained unexplored. Indeed, the methods in the field of economics are markedly changing, as well as the topics that economists are dealing with. A cursory glance at published articles dealing with experiments, psychology, sociology, and political science in top-ranked economics journals will suffice to grasp recent shifts in economic thinking: something that we often overlook when immersed in a full-time formal degree in economics. The purpose of this article is to understand how expanding our current economic perspective is only beneficial for achieving a better picture of everything that is economics.
First, it must be said that intertwining fields such as psychology and political science with economics is not exceptionally novel, in that it has been an active means of economic analysis under the aegis of behavioural economics and political economy. In fact, areas like mathematics (e.g., game theory) and statistics (e.g., econometrics) have contributed much more to our understanding of economic issues than others; so clearly economics as a social science has borrowed significantly from other sciences. For anyone who is thoroughly dissatisfied with learning the assumptions of any economic model (which, in their own right, are absolutely justified in theory) might immediately take a shine to modelling economic behaviour using psychology or evolutionary biology, since it partly consists of appealing to one’s sense of intuition in analysing economics. Recent studies in behavioural economics include studying the role of moral and religious codes in dishonest behaviour such as cheating on a test (Ariely, 2013), ‘nudging’ people to make choices that are optimal in their own right (Thaler & Sunstein, 2008), and how social norms and social preferences drive our selfish (and often altruistic) decisions (Binmore, 2010).
Second, we see that ‘sister’ fields such as experimental economics have assumed importance owing to their utility in testing behavioural economics theories, as well as falsifying existing, traditional economic theory (Kagel & Roth, 1995). Experiments have become particularly popular in playing out game theoretic-situations for human subjects (e.g., testing if the prisoner’s dilemma is indeed a dilemma for people). Some experiments in economics have gone far beyond the comforts of the laboratory (which gives a researcher the advantage of having complete control over how the decision is presented) to the field; this necessarily requires more resources to organize, but has higher external validity (Harrison & List, 2004). Natural (or field) experiments have become wildly popular in economics as they allow one to assess policy impacts (such as Banerjee & Duflo, 2011). Clearly, experiments (despite their complexities) indeed show the path to a new understanding of how we make decisions in real life.
In the Indian context of economics research (such as Hatekar & Kulkarni, 2013), it would be a grave error to say that there is a dearth of good research. Universities, think-tanks, and other research institutions have contributed vastly to the present research scenario in India. There are also extensive datasets that offer crucial insights into the state of the economy—both at the macro and micro level.
Finally, we can say that the state of flux for economics research (both in India, and world over) is a good indication of a belief in collaboration, scientific rigour, and a system designed to (mostly) ensure that the (usually) best research survives. The inter-and-multi-disciplinary approach to economics will only give us richer insights into the way we function, and ultimately how society (or an economy) runs itself. While many important issues are already the focus of mainstream economics research, there is treasure everywhere, waiting to be found.