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This chapter deals with some current trends and methodological points regarding the relation of economics and psychology. More precisely, in the late 1970s, the theoretical and empirical validity of neoclassical economic rationality as expressed by expected utility theory, started to be questioned further by psychologists Daniel Kahneman, Amos Tversky, and Paul Slovic. These works are considered to have given the stimulus for the rise of modern or new behavioural economics. Closely related to new behavioural economics, neuroeconomics draws on explicitly from findings from neuroscience and cognitive psychology. Moreover, originating mainly from the work of Richard Easterlin in the early 1970s, happiness economics specialists continuously incorporate findings from other social studies fields and especially from psychology. Finally, two other contemporary heterodox schools of thought, New Institutionalists and Post-Keynesians, have been explicitly more open to psychology compared to the mainstream. All these approaches clearly point to the revival of the interaction between psychology and economics. In particular, the increasing appeal of behavioural economics and happiness economics, both explicitly relying on psychological concepts, appears to be the primary cause of the recent resurgence of the discussion regarding the relationship between economics and psychology. This current discussion about the role of psychological assumptions and findings also has significant methodological and theoretical implications.
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