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Instituto Tecnológico de Santo Domingo

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Pose behavioral economics improves business and public policy decisions

Spanish economist Diego Valero gives a talk on behavioral economics, in which he indicated that the applications of behavioral economics are defined as the incorporation of principles of psychology into the paradigm of classical economics

SANTO DOMINGO. - The behavioral economics It's not a magic recipe, it's a process that integrates fundamentals of the conventional economics with sociology and psychology, which is part of the behavioral sciences to understand people's decision-making processes, he said Diego Valero, economist and founder of Novaster.

During a conference at Instituto Tecnológico de Santo Domingo (INTEC) organized by area of ​​Economy and Business and the Social Security Observatory (OSES), the Spanish expert explained that the Theory of Perspective is the basis on which behavioral economics is based, which establishes that, within the human behavior, the feeling of loss has a greater impact than the feeling of gain.

"The brain processes investment and savings as a loss, which forces us to fight against a natural reaction of the brain," said the professor at the University of Barcelona, ​​who also said that the person must be transferred mentally at the time of retirement, make him feel what emotions he will have then and visualize himself in that situation.

The opening words were given by Armando Barrios, dean of the area of ​​Economics and Business, who indicated that the INTEC has a great interest in betting on the area of ​​behavioral and experimental economics, as it is a conducive way to improve decision making in the business sector and public policies.

“It is a discipline that has been developing for a long time and has had an exponential tendency. We have been seeing more and more the wonderful applications that it has and how it effectively improves the quality of decision making, ”Barrios said.

As for pensions, the Spanish economist said that in general the population, in the Dominican Republic and in the rest of the world, has difficulties to fully understand pension systems, and these issues are where more applications can be carried out. of behavioral economics.

“Pension decisions have deferred effects, are difficult, infrequent, with little feedback and no direct relationship between choice and experiences,” said Valero, who also said that through this area of ​​science, positive support can be given, in a way more cost-effective to develop pension systems.

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