Traditional economics assumes that people make rational, self-interested decisions. It doesn’t shed much light on commonly observed self-destructive patterns of behavior, such as smoking and other forms of drug abuse, overeating, and overspending except to say that if people are doing them, they must be rational.
Behavioral economics attempts to provide a more realistic account of consumer behavior by recognizing that people make certain types of systematic mistakes. For example, people overweight immediate, relative to delayed, costs and benefits (a phenomenon known as “present-biased preferences”) : they overweight small probabilities (which helps to explain the appeal of lottery tickets); and they tend to take the path of least resistance, going with the status quo or default options even when superior alternatives are available. By providing a more realistic account of human decision making, behavioral economics can account for a much wider range of consumer behavior, including self-destructive patterns of behavior that traditional economics assumes don’t exist.