Cultural Economics

For decades, Western Economics has emphasized the financial aspects of the field almost to the exclusion of all else. More recently, practitioners have expanded their studies to include Behavioral Economics, which takes into account the fact that people do not always behave rationally. Economists have begun to study the non-rational part of human behavior, but so far it is limited to Western economies.

To the extent that it helps to explain what Alan Greenspan called "irrational exuberance," this is good. But Greenspan's remark dealt only with financial markets.

It may be time to incorporate Anthropology and Sociology into the the study of Economics, especially when dealing with aid programs to developing countries. Why? It's not only unfair, but it's also unrealistic to attempt to superimpose Western economic principles onto the cultural practices of other nations.

In part, it's an example of the Fallacy of Composition: It works for me, therefor it will work for everyone else -- a common error found in "true believers" of any stripe.

In the early years of Economic study, the field was known as Political Economy, and took into account human behavior. It's time to return to those thrilling days of yesteryear, and expand the field to consider the cultural practices of societies as well as the financial. Especially since many developing countries do not have a financial structure as complex as many Western nations.