Economic psychology
Economic outcomes are shaped by incentives and constraints — but public understanding is shaped by psychology. The gap between the two is where democracies struggle to implement “good” economic policy.
Humans are far from purely logical. Influencing our thinking we have:
The issue is we don’t realise how flawed our thinking is — especially when the system is abstract (like an economy).
When it comes to economic psychology, many utilitarian intuitions are broadly misunderstood. One common mistake is zero-sum thinking — the feeling that there’s “finite money”, so if someone wins, you must lose.
This is why (especially in democracies) implementing strong economic policies isn’t always popular or understood. Concepts like billionaires, wealth, incentives, and long-run prosperity become a perfect media battleground — even when they’re deeply tied to everyone’s standard of living.
In the simulator below, you step through the timeline of a poor village with few rights into a modern economy. It’s deliberately simplified: the point is to show how innovation and policy swings can create wealth discrepancy, a oscilating GDP and economy, but still leave almost everyone far better off in the long run.