Is behavioural economics such a big deal?

The publication of Nudge, Richard Thaler and Cass Sunstein's "libertarian paternalism" manifesto, has made real waves on this side of the Atlantic, with the Tories in particular seizing upon the ideas in the book to show how in touch they are with the latest thinking in social science.

Nudge (which I reviewed a couple of issues ago for Prospect) relies for its insights on the relatively new field of behavioural economics, which aims to move beyond the traditional model of "homo economicus," or economic man—rational, self-interested, independent—to produce an economics that sits more happily with the findings of researchers investigating the economic behaviour of actual human beingss.

Some people, like Pete Lunn, author of the new book Basic Instincts, think that the rise of behavioural economics marks a revolution in the subject; that the very assumptions of the field are tottering. Others, like Tim Harford of Undercover Economist fame, appreciate the contributions of behavioural economics, but are wary of drawing hasty conclusions from a few laboratory experiments. We asked the two of them to duke it out in the pages of Prospect.