Jim,
I'm not railing here against the economics profession (though I'm happy
to do so) but rather asking "Is there anything in behavioral economics that
economists didn't already know?"
Gene
On Apr 3, 2011, at 9:11 AM, Jim Devine wrote:
> Eugene Coyle wrote:
>> I don't think it is "some economists are catching up to psychologists" as
>> Jim D. asserts -- some economists have for 100 years recognized that an
>> individual's consumption depends on the consumption of other people.
>> Neo-classical economists will continue to assume (in spite of themselves
>> knowing and sometimes acknowledging that the assumption is false) that there
>> is no interpersonal effects. Otherwise how are they going to tell
>> politicians that policies that benefit the rich are the best for the poor?
>
> Despite their obvious idiosyncrasies, NC economists are like most
> other people in some ways. If the political winds are blowing to the
> right, they go right-wing. The economics profession went somewhat left
> during the New Deal (the Keynesian "revolution") and again at the end
> of the Vietnam war (because of mass demonstrations against, among
> other things, the dominant views in economics). But then when the
> stagflation of the 1970s encouraged "we have to give business what it
> wants _now_" ideology, economists shifted rightward and ever
> rightward, coming up with crap such as Rational Expectations and the
> Efficient Markets Hypothesis.
>
>> Who are these economists over the past 100 years or so who acknowledged
>> interpersonal effects? Pigou, Marshall, Baumol, Veblen, Duesenberry, Lionel
>> Robbins are listed by De V. Graaff, as I discovered re-reading him looking
>> for a Veblen cite I intend to use. We can add Gintis, Marglin, Marris, and
>> Houthaker & Taylor (though Taylor later indirectly recanted) and more, and I
>> myself wrote about it in the '70s and '80s, though just out of observing
>> behavior rather than any deep thinking. So a lot of big names, respected
>> names, have rejected the validity of the assumption(s) -- yet nothing
>> changed in the neo-classical model. And nothing will....
>
> I had said:
>>> the basic idea is that some economists have finally caught up with the
>>> psychologists and have gotten away from _a priori_ assertions about
>>> human decision-making and have produced a more complicated and more
>>> realistic one. Unfortunately, they still have a basically
>>> individualistic perspective. They thus ignore the way in which our
>>> biographies in society (including our practice) limit and shape our
>>> "preferences," attitudes, and ideologies.
>
> Gene, you're railing against the economics profession for having "a
> basically individualistic perspective" and thus ignoring "the way in
> which our biographies in society (including our practice) limit and
> shape our 'preferences,' attitudes, and ideologies." In other words,
> we agree.
>
> Where some economists have "caught up with the psychologists" is only
> in the territory defined by Herbert Simon's "bounded rationality." I
> doubt economists (except for a small minority) will ever transcend
> narrow-minded individualism.
> --
> Jim Devine / "Segui il tuo corso, e lascia dir le genti." (Go your own
> way and let people talk.) -- Karl, paraphrasing Dante.
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