George Katona (6 November 1901, Budapest – 18 June 1981, West Berlin)[1] was a Hungarian-born American psychologist who was one of the first to advocate a rapprochement between economics and psychology.
He graduated with a doctorate in Experimental Psychology from theUniversity of Göttingen in 1921, and worked in Germany until 1933, both as a journalist and as a psychological researcher. Originally trained as aGestalt psychologist working on problems of learning and memory, during theSecond World War he became involved in American government attempts to use psychology to combat war-induced inflation. This led him to consider the application of psychological principles tomacroeconomics, devising measures of consumer expectations that eventually became theUniversity of Michigan Consumer Sentiment Index. Use of this index enabled him to predict the post-war boom in the United States at a time when conventionaleconometric indicators were predicting a recession, a success which helped his fledgling index establish itself. Katona wrote numerous books and journal articles advocating the development ofeconomic psychology. These general ideas were taken up more fully in Europe than in the United States until the development, after his death, of modernbehavioral economics.
Katona developedmacroeconomic generalizations and predictions fromempirical,microeconomic consumer survey data, rather than theorizing from idealized models or assumptions of perfectly rational participants in an economy. "Unlike pure theorists, we shall not assume at the outset thatrational behavior exists or that rational behavior constitutes the topic of economic analysis," he wrote in 1951.[3] Instead, he looked for conditions under which more or less rational behavior was likely to occur. He also sought to tie market forces to an origin in human behavior, sentiment, and decision-making. "Instead of assuming that prices, size of production, amount of purchases, etc., are set for us by impersonal factors, we shall seek to ascertain the forms, conditions, and limits of the human decisions that affect them. The self-regulatory market economy will be considered as a 'limiting case' in which human decisions are least spontaneous."[4]
Katona contrasted "genuine decision" and "habitual behavior".[5]
"Persistence of Belief in Personal-Financial Progress," in Burkhard Strumpel, ed.,Human Needs and Economic Wants (Institute for Social Research, University of Michigan, 1975)
