24 Pages Posted: 22 Feb 2005
Date Written: January 2005
Behavioral economics has played a fundamental role historically in innovation in economic institutions, even long before behavioral economics was recognized as a discipline. Examples from history, notably that of the invention of workers' compensation, illustrate this point. Though scholarly discussion develops over decades, actual innovation tends to occur episodically, particularly at times of economic crisis. Fortunately, some of the major professional societies, the Verein fur Sozialpolitik, the American Economic Association and their successors, have managed to keep a broad discourse going, involving a variety of research methods including some that may be described today as behavioral economics, thereby maintaining an environment friendly to institutional innovation. Further, the broad expansion of behavioral economics that is going on today can be expected to yield even more such important institutional innovations.
Keywords: Economics innovation, invention, psychological economics, institutional economics, social insurance, workers'compensation, American Economic Association, Germany, Verein fur Sozialpolitik
JEL Classification: B41
Suggested Citation: Suggested Citation
Shiller, Robert J., Behavioral Economics and Institutional Innovation (January 2005). Yale ICF Working Paper No. 04-50; Cowles Foundation Discussion Paper No. 1499. Available at SSRN: https://ssrn.com/abstract=671024