Behavioral Economics: Rethinking How We Make Financial Decisions

Behavioral economics challenges the assumption that humans act rationally in financial decisions. Instead, it reveals how biases like loss aversion, present bias, and social influence lead people to overspend, undersave, and avoid difficult financial choices.

Nobel Prize-winning research in the field has transformed how governments design policies. Through techniques like nudging, policymakers can subtly steer individuals toward better financial behaviors—such as automatically enrolling workers into retirement savings plans or simplifying default options for budgeting tools.

In Iran and beyond, integrating behavioral insights into fintech products, banking strategies, and public campaigns could dramatically increase financial inclusion and long-term stability.