David misrepresents the Austrians which leads to dubious conclusions about the
progressive critic of neo-classical theory. The Austrians do not reject all
neo-classical assumptions; they reject neo-classical welfare economics and general
equilibrium. They do not reject that value is subjective nor do they reject
methodological individualism.
As for a fascination with behavioral economics I have not seen it among the
Austrians with the single exception of Roger Koppl. Austrians are very critical of
empirical data and particularly psychology. Mises, of course, was a pure
rationalist; and Hayek maintained that psychology had no business in economics.
How could it be otherwise? methodological individualism and the results of
behavioral economics not compatible. A central feature of behavioral economics,
for example, is framing. How can value be subjective in an environment where value
depends on the framing of choices?
*** From Murray Rothbard
Praxeology, the basis of economic theory, differs from psychology, however.
Psychology analyzes the how and the why of people forming values. It treats the
concrete content of ends and values. Economics, on the other hand, rests simply on
the assumption of the existence of ends, and then deduces its valid theory from
such a general assumption. It therefore has nothing to do with the content of ends
or with the internal operations of the mind of the acting man.
If psychologizing is to be avoided, so is the opposite error of behaviorism. The
behaviorist wishes to expunge “subjectivism,” that is, motivated action,
completely from economics, since he believes that any trace of subjectivism is
unscientific. His ideal is the method of physics in treating observed movements of
unmotivated, inorganic matter. In adopting this method, he throws away the
subjective knowledge of action upon which economic science is founded; indeed, he
is making any scientific investigation of human beings impossible. ...
The errors of psychologizing and of behaviorism have in common a desire by their
practitioners to endow their concepts and procedures with “operational meaning,”
either in the areas of observed behavior or in mental operations.
David B. Shemano wrote:
This whole discussion started with a post about behavioral economics and the
implications for N/C economics and its assumptions of perfect competition, etc.
I then pointed out the GMU view (which is essentially Austrian) which also
rejects the N/C assumptions, is fascinated with behavioral economics, etc., but
also advocates free-market, anti-socialist policies.
To get to the point, and I think your response proves my point, you (and I assume most people on this list), don't really give a crap about methodology or theory. You don't reallly care about whether N/C assumptions are right or wrong, good or bad, useful or nonuseful. You only care about such assumptions to the extent they favor or disfavor policies you support.
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