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THE INCOME EFFECT OF IRRATIONAL BEHAVIOUR: A PSYCHO-ECONOMIC ANALYSIS
Uma Charan Pati 1 ; Minakshi Biswal 2 ; Sudhanshu Sekhar Rath 32 Ph.D. Scholar , G.M. University, Sambalpur, India.
3 Former Vice Chancellor, Gangadhar Meher University, Sambalpur, India.
Article Id - IJM_11_04_012, Pages : 98-107, Date of Publication : 02, May 2020
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Abstract
The standard economic theorization is based on the neo-classical rationality postulate. But irrational activities and superstitious practices impact a wide range of decisions and choices in our day today life. Dissection of irrational behaviour of an individual is not so simple to comprehend but not impossible too. The emergence of the Behavioural Economics paradigm has recognized the psycho-economic importance and the socio-cultural effects of irrational beliefs and superstitions-driven activities on the lives of the common people. This paper highlights how the rationality assumption has become irrelevant in the light of irrationality-based superstitious practices and preference heterogeneity. Choice failure is caused by such realistic irrationalities further leading to capability deprivations. In the present study 100 participants have been sampled from both rural and urban vicinity of Bargarh district of Odisha to examine the linkages between monthly income and irrational behaviour represented through households spending on various superstitious activities and practices. Through the use of descriptive and inferential statistics it has been proved that irrational behavioural patterns have an income effect and income does have an effect on the way economic agents behave in the real world situations.
Keywords
Rationality Postulate, Irrational Behaviour, Income Effect, Capability Deprivations
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References
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