Beyond Behavioral Economics: Belonging, Institutions, and the Limits of Cognitive Reductionism

This paper develops a structural critique of Behavioral Economics by introducing the Philosophy, Psychology, and Economy of Belonging as an alternative explanatory framework. While Behavioral Economics has improved the descriptive realism of economic analysis through cognitive and social psychology, it remains insufficient to explain systemic phenomena such as macroeconomic instability and financial crises. The paper argues that Behavioral Economics is not a paradigm shift but a corrective school that retains key methodological limitations of neoclassical economics, particularly its focus on individual cognition. In contrast, this work proposes that rationality is not an intrinsic cognitive property but an institutionally enabled capacity grounded in conditions of belonging. Financial crises are reinterpreted as rational phenomena arising when agents revise expectations about the ability of institutions to sustain economic coordination under stress. Confidence collapse is therefore not a primary cause but a consequence of the erosion of institutional belonging. The analysis integrates theoretical arguments with comparative evidence from major crises, including 1929, 1997, 2008, and 2020. The results show that crisis severity depends on the credibility of institutional belonging rather than behavioral deviations. The paper concludes that macroeconomic stability requires institutional architectures that ensure non-arbitrariness, continuity, and inclusion, rather than behavioral corrections alone.