Social Influence on Economic Behavior

Social psychologists stress the fact that human beings are social beings who are dependent on fellow humans for their survival and comfort. Undoubtedly, many behavioral acts and behavior in general are heavily influenced by other people. Psychology can even be seen as only a subdivision within social psychology and it can be held that psychology takes the individuals out of their natural social habitats and studies them in artifactual isolation. The social psychologist Tarde (1902) complained that economics was not based on social interaction but on the individual pursuit of self-interest, and that it disregarded the importance of the social environment for the individual. It is still true that consumer choices of products and brands as well as saving decisions are treated in economic theory as if a single individual were making the decisions.

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