I was too elliptical in saying that economics is a branch of psychology. Perhaps I should've said, economic should be considered a minor branch of psychology, because so much of our behavior -- both investment behavior and consumption behavior -- is clearly at variance with the rational behavior assumed by economists. Keynes' expression, animal spirits, should have made economists aware of such things, but Keynes' influence is long gone.
On Wed, Aug 29, 2007 at 06:36:20AM -0700, Jim Devine wrote: > Michael Perelman: > > > I think of economics as a minor branch of psychology. > > Sabri: > > I think this statement is a bit of an exaggeration, although it is > in the right > > direction. I would rephrase it as follows: "the intersection of economics > > and > > psychology is a large set." > > I disagree -- if we're talking about economists, as opposed to > economics as a field of study. Psychology is extremely important to > economics (especially financial economics) -- but it's not something > that economists study. > > It's only recently that economists have studied psychology (cf. > behavioral economics and finance) and almost no psychological stuff > has made it into the mainstream or appeared in official textbooks. > (Such work as that by Tibor Scitovsky were flashes in the pan.) > > For the vast majority of economists -- the neoclassicals -- psychology > is very important, but it's not analyzed. "Tastes" and the like are > taken as exogenously given. This is more a matter of Skinner-type > behaviorism than true psychology -- though most economists do not > follow Skinner's rule against making "mentalistic" assertions and > discuss subjective preferences (without trying to understand them). > > > -- > Jim Devine / "In every [stock-dealing] swindle every one knows that > some time or other the crash must come, but every one hopes that it > may fall on the head of his neighbor, after he himself has caught the > shower of gold and placed it in safety. Après moi le déluge! is the > watchword of every capitalist ... " -- K. Marx -- Michael Perelman Economics Department California State University Chico, CA 95929 Tel. 530-898-5321 E-Mail michael at ecst.csuchico.edu michaelperelman.wordpress.com
