I attended all or parts of six sessions at the American Society of Health Economists (ASHEcon) conference today. Pulling way back from the details, one strong impression is that behavioral economics has firmly taken hold as an important and accepted paradigm in health economics. For example, Daniel Kahneman’s Thinking, Fast and Slow was referenced in at least three of the talks I heard, including Randy Ellis’s presidential address. The book has been on my reading list, but I have not read it yet.
The recognition that humans are not fully rational, and particularly not when it comes to decisions in the realm of health, is a giant step forward. Of course one still finds a few economists (and non-economists) bending over backwards to defend neoclassical theory from reality. But, by and large, it seems the community of health economists has begun to accept that theory as incomplete, even if still useful in some circumstances or as a starting point. Being an empiricist, I find that a welcome development.
More at TIE on Kahneman here, which links to two other posts about his work.