One day in 1974, in a restaurant in Washington, USA, a group of conservatives got together to chat and laugh.Important figures in the Republican Party such as Cheney Rumsfeld and the Wall Street Journal's Wanisky attended the gathering.The economist Arthur Laffer who was with them grabbed a napkin on the table and drew a simple diagram to show everyone.After seeing the parabolic diagram drawn by Laffer, the people present immediately patted their thighs and said, "Yes, it should be like this." It was only natural that they would be fascinated by the picture just by looking at it.This picture theoretically confirms how much the tax cut policy they have been advocating will bring to the US economy.Conservatives believe that onerous taxes are the main reason for the economic contraction.They always believed that the economic recovery should be stimulated by large tax cuts.The only worry is that reducing taxes may shake the country's fiscal security.

However, after looking at the picture on the napkin, won't there be that kind of unreasonable worry?And it does, because that graph shows that if the tax rate is lowered, the tax benefit actually increases.It is common sense that lowering the tax rate will directly lead to a reduction in tax revenue, but now we can happily overthrow this common sense and advocate tax reduction policies without any scruples.So the moment they saw the picture, they were immediately fascinated; it would be strange if they were not fascinated at the first glance. The name "Laffer Curve" made that graph well known, and it inspired Reaganomics.Subsequent history clearly proves that the Laffer Curve is nothing more than an incident of "intellectual property fraud", that is, the packaging of exceptional or theoretical possibilities as practical results to confuse the public. This fact has been exposed worldwide. come out.In the end, the Reaganomics based on this not only failed to effectively activate the economy, but also left a huge fiscal deficit problem, and soon left the stage of history desolately.

The Laffer curve justifies the so-called supply-side economic theory that was popular in the late 1970s and early 1980s.At that time, economic theories were very scarce, and the supply-side theory was in line with the US economic situation at that time, so it attracted a lot of popularity.However, the exit of Reaganomics led to the gradual disappearance of supply-side theory in people's minds.The supply-side theory, like other specious economic theories, has been thrown into the "trash can" of economics. Theories that are far from reality will lead to wrong policies, and such examples are not limited to supply-side theories.From a certain point of view, the traditional economic theories mentioned in textbooks may also lead policies in the wrong direction.Because traditional economic theory starts from the assumption of complete rationality of human nature, there is a possibility that people's actions cannot be correctly predicted.Policies devised without knowing how people will react have a good chance of failing.

For example, a certain policy gives huge profits to the rich, but conversely, it gives little profits to the poor.According to traditional economic theory, this is undoubtedly the most appropriate policy.Although the profit of the poor is extremely small, it is not a loss, because the loser has nothing.Now that everyone has gained profits, of course social welfare will rise to a higher level.So conventional economic theory predicts that everyone will support the policy.But this prediction is based on false assumptions about human nature. Traditional economic theory assumes the rational nature of human beings to pursue the maximization of self-interest.If you just pursue your own interests rationally, it doesn't matter how much benefits others get.However, the reality is by no means like this.Constantly comparing yourself with others, this kind of life is the true face of human beings.There is no reason for people to be willing to accept other people's huge profits and only get a small part of it.However, people bound within the framework of traditional economic theory cannot see this truth.

My main motivation for writing this book is a sense of mission that people should know the truth.According to the behavioral economics presented in this book, it is a natural reaction for people to feel dissatisfied with the small profits they make compared with others.It's important to note that it's not just people who are extremely jealous, but even ordinary people. It is a common characteristic of human beings to reflect on ourselves in relation to others.It is only natural that the general public will object to unfair policies that favor the wealthy. Only by accurately understanding the nature of human beings and making the policy based on it to the greatest extent can it be a suitable and feasible policy.That is to say, if there is a certain spirit in human nature, we should move according to that spirit and formulate policy frameworks along the guiding direction.If the policy framework is formulated against the direction of the heart, even if a lot of money is spent, it will be difficult to produce the expected results.This is the lesson we should learn from behavioral economics.

Another important motivation for finishing this book is that I was fascinated by the fascination of behavioral economics.I'm new to behavioral economics, and to be honest, I didn't know the field existed until a few years ago.However, reading articles in this field unexpectedly sparked my strong interest.Then I had this idea: such an interesting thing cannot be kept by myself, but should be shared with many people. Behavioral economics strives to reveal the true colors of human beings, verify whether human beings are really selfish and rational animals, and advocates that economic theory should be reconstructed based on the true colors of human beings.It is for this reason that behavioral economics is tinged with humanity.

I am impressed by the charm of behavioral economics not only because of the reason of "interesting".It is also because this theory can greatly improve the realistic persuasiveness of economic analysis, which is also its unique charm.From the perspective of behavioral economics, I feel that a brand new world has appeared before my eyes. Because I deeply understand this situation, I think this kind of analysis method related to economic policy, but different from the past, is necessary. Behavioral economics is currently in its infancy.Compared with the overwhelmingly powerful influence of traditional economics, the influence of this theory is actually very small.However, more and more people have recognized the realistic persuasion of behavioral economics.I have been teaching traditional economic theory courses and have written many books on it.My belief in traditional economic theory is still strong.But I believe there is a lot to absorb in behavioral economics as well.

I see myself as a guide, leading readers into the uncharted territory of behavioral economics.I look forward to working with you all to make this expedition a lot of fun.It is my earnest wish to make everyone as deeply attracted by the charm of behavioral economics as I am.I believe that through my guidance, everyone will also have a good impression of behavioral economics-not because my writing is good, but because the theory itself is very attractive. When I set out to write this book, I set out to overturn the stereotype that economics is a rigid and uninteresting discipline.I hope readers read economics works like reading novels, and look forward to the following content with excitement. Writing such a book is my goal.To be honest, I really want to create such a situation, so that readers can sigh: "Economics books can be so interesting!" Of course, how much I have achieved on this point will be left to the readers to judge.