In the hands of scholars who study behavioural ethics - such as Max Bazerman and Ann Tenbrunsel, authors of Blind Spots - system 1 is seen as our ''want-self'' and system 2 our ''should-self''. Almost all of us regard ourselves as ethical. Before decisions arise our should-selves think: ''I should behave ethically, therefore I will.'' When we look back on decisions our should-selves think: ''I should have behaved ethically, therefore I did.'' Trouble is, when the decision is actually being made our want-selves take over and we often do things that ignore the ethical implications of our actions. I suspect our two thinking systems explain the paradox of advertising. I'm not influenced by all the advertising I see, but a lot of people are. Do you think that, too? Trouble is, most people think it. If it's true, just who are the dummies that fall for advertising? And how come so many businesses spend millions on advertising, convinced it's money well spent?

I think all of us are more susceptible to advertising than we realise. Most advertising is designed to appeal to our emotions and instincts, not our intellect. In other words, it's aimed at our unconscious, system 1 decision-maker and we're not conscious of the way it affects the choices we make. Meanwhile, our conscious, reasoning system 2 brain is unimpressed by the illogical connections we see in ads. I'm sure they're not Robinson Crusoe, but economists often show signs of having two-track minds. They believe certain things intellectually, but these beliefs don't seem to have the effect on their behaviour you'd expect. For instance, when you criticise their model for its absurd assumption that people are always ''rational'' - carefully calculating and self-interested - they'll tell you they don't actually believe people are rational, that's just a convenient assumption needed to get the model going.

But then they'll argue vigorously for propositions that come from the model, oblivious to the way those propositions rest on the assumption that people are indeed rational in all they decide. Take the exaltation of gross domestic product. When you argue that GDP is a poor measure of national well-being and point out its various limitations, the economists will agree. But that won't stop them continuing to treat GDP as though it's the one thing that matters. One of the most ubiquitous problems in daily life - and thus in the economy - is one the economists' model assumes away: achieving self-control. We need to control our natural urges to eat too much, to smoke, to drink too much, to gamble too much, spend too much, watch too much television, get too little exercise and even to work too much. Here, again, two selves seem to be at work: an unconscious self that's emotional and short-sighted and a conscious self that's reasoning and far-sighted.

We have trouble controlling ourselves in circumstances where the benefits are immediate and certain, whereas the costs are longer term and uncertain. As everyone knows who's tried to diet, give up smoking, control their drinking, save or get on top of their credit card debt, it's very hard to achieve the self-control our conscious, future-selves want us to achieve. People have developed many strategies to help their future-selves gain control over their immediate-selves, including pre-commitment devices - similar to those proposed by the Productivity Commission to assist problem gamblers. Economics will be more useful when its practitioners catch up with developments in neuroscience and offer us solutions to behaviour problems it at present assumes away.