The field of Behavioral Economics has been pioneered and developed by IBR President Dr. Steven R. Hursh over the past 30+ years and continues to grow. Not to be confused with the more recently popularized sub-field of Economics that applies psychological principles to understand human economic decision-making, Behavioral Economics as developed by Dr. Hursh is a subfield of Psychology itself, defined as the application of microeconomics principles and techniques to describe and understand individual and group behavior. Fundamental concepts such as supply, demand, price, consumption, value, and choice are not limited to monetary exchanges in the human commercial marketplace, and application of these principles to animal and human behavior has created an innovative and influential theoretical framework yielding novel insights on topics as diverse as drug abuse, social behavior, obesity, public transportation, healthcare, and various extensions to national policy.
Recent breakthroughs in Behavioral Economics out of IBR include the Exponential Model of Demand introduced in 2008 by Dr. Hursh in partnership with Dr. Alan Silberberg from the Department of Psychology at American University in Washington DC. The Exponential Model is a descriptive quantitative model that fits “consumption” data as a function of “price” across a wide range of prices and defines reinforcement not as total consumption, average consumption, or consumption at any one price, but rather as sensitivity to price across the entire range of prices expressed in a single number. A fundamental innovation of this model is that it mathematically separates and provides independent metrics for baseline consumption vs. sensitivity to price across the full range. As such, the model allows credible direct quantitative scaling of qualitatively different items. For example, using the Exponential Model, one could quite literally compare the reinforcing value of apples and oranges! IBR Scientists have developed software tools to aid in the application of the Exponential Model, specifically, a basic Excel-based tool as well as a more advanced analysis and graphing template for GraphPad Prism. Both the Excel tool and GraphPad template are freely available from IBR, and IBR Scientists are happy to collaborate or otherwise provide guidance on their use.
Dr. Hursh also is developing a brand new “Complement-Substitute” model built upon the Exponential Model which allows quantification of the relationship between two simultaneously presented reinforcers in choice procedures. More specifically, by quantifying consumption of one item across a range of prices while the other item’s price remains constant, this model yields a single metric describing the direction and magnitude of the relationship between the two items as “complementary” (as price increases in A, consumption of A and B decrease—like peanut butter and jelly), “substitutable” (as price increases in A, consumption of A decreases, but consumption of B increases—like theater movie tickets and DVD movie rentals), or unrelated (as price increases in A, consumption of A decreases, but consumption of B does not change—like peanut butter and DVD rentals). Additional details on this model and its formal release are forthcoming; however, Dr. Hursh and associates are happy to discuss this exciting new work with interested colleagues.