The Role of Psychology in the Post War II Non-Mainstream tradition: George Katona, Harvey Leibenstein, and Tibor Scitovsky

This work discusses the role of psychology in the Post War II non-mainstream economics tradition, focusing on George Katona, Harvey Leibenstein and Tibor Scitovsky. Although those three authors were largely ignored by orthodox economists, they exercised a considerable influence on heterodox schools and helped to establish the foundations of behavioural economics and of the economics of happiness. Katona started a research programme at the Survey Research Center of the University of Michigan, which was openly based on the economic psychology of the attitudes and motives underlying market behaviour. Initially, he focused on the psychological aspects of business behaviour in order to explore the motives and attitudes of businessmen. Subsequently, Katona’s studies were centred on the psychological aspects of consumption, suggesting the use of interview surveys to obtain both financial and attitudinal data of consumers. Leibenstein is considered to be one of the first economists to explore issues pertaining to what is called today behavioural economics. Anticipating modern or new behavioural economics, Leibenstein incorporated the psychological dimensions of economic behaviour into his microeconomic approach long before the emergence of behavioral economics as a distinct discipline. Scitovsky was among the first economists to detect a new-found interest in the determinants of well-being and in its underlying processes in psychological research, and to show how economics could be enriched by applying the new psychological insights. All three were clearly against the purging of psychology from twentieth century economic theory, arguing that incorporating concepts and findings from psychology into economics was methodologically legitimate and theoretically fruitful. The paper will also discuss their critical attitude towards the standard model of economic rationality and the mainstream methodological framework. Further, it will investigate key common points of these authors, including their emphasis on the role of interdependent preferences.