While behavioral economics does explore the impact of economic factors on psychological well-being, the relationship between economic inequality and psychological well-being is typically studied in the field of economic psychology.

Prospect theory suggests that individuals experience losses more intensely than gains, leading to a phenomenon known as loss aversion.

Cognitive dissonance, framing effects, and anchoring bias are all psychological factors that have been shown to impact consumer behavior.

Neuroeconomics focuses on understanding the neural mechanisms underlying economic decision-making.

Emotions, cognitive biases, and social norms are all psychological factors that can influence economic decision-making.

Bounded rationality recognizes that individuals have limited cognitive resources and information, which can lead to imperfect decision-making.

While integrating psychological principles into economic models can lead to improved accuracy, understanding, and policy effectiveness, it is not directly related to reducing economic inequality.

Economic psychology encompasses all of these aspects, exploring the bidirectional relationship between economics and psychology.

The endowment effect refers to the tendency for individuals to place a higher value on items they own compared to identical items they do not own.

Framing effects demonstrate how the way information is presented can influence economic decision-making.

Loss aversion suggests that individuals are more sensitive to losses compared to gains, which can influence their willingness to pay.

Behavioral economics arose in response to the limitations of traditional economic models, the need to incorporate psychological factors, and the increasing complexity of economic phenomena.

Anchoring bias refers to the tendency for individuals to rely heavily on the first piece of information they receive when making economic decisions.

Cognitive dissonance theory proposes that individuals experience psychological discomfort when their beliefs and behaviors are inconsistent, motivating them to reduce this discomfort.

Emotions, cognitive biases, and social norms can all influence individuals' perception of risk and uncertainty.