Are Economists Different?

I've been thinking about economists. We are a different breed, I think, at least in one sense. We see markets everywhere. Thinking of getting married? We see a marriage market where partners rationally look at the costs and benefits of a "partnership" and decide accordingly. It is all very sterile and scientific, nothing more than supply and demand, like always.

Thinking of going for a walk in the woods? We can model that choice, it's fairly simple. It has an opportunity cost, and a benefit, and if the benefit exceeds the cost, the walk will be taken.

In fact, all of the "apparently noneconomic dimensions of society" are no match for the economist:

Gary S. Becker ... sheds new light on previously unconnected and poorly understood social phenomena. ... His singular axiom - that all actors in the social game are economic persons who maximize their advantages in different cost situations - allows Becker to study persistent racial and sexual discrimination, investment in human capital, crime and punishment, marriage and divorce, the family, drug addiction, and other apparently noneconomic dimensions of society.

There are very few choices that cannot be reduced to the language of economics. There are, after all, markets in everything!

But maybe economists are people for whom this way of thinking is attractive. People choose their majors, they are not assigned randomly, and for some people this "economic way of thinking" is very natural (and for some it is quite foreign - explain as you will, it just doesn't seem to "click" with them). The first time you see a problem explained with economic tools you say, yes, that's it - that's how people make decisions because when you look inside, it explains how you see the world. And even where you hadn't viewed the world through the eyes of economics before, you suddenly have new insights. Aha! Now I understand how people choose to get married!

Paul Zak gave a seminar yesterday and it made me wonder if economists might, as a group, have some sort of hormonal deficiency, a bad Oxytocin gene or something.

Oxytocin is thought to increase trust between humans:

Oxytocin is a hormone which is released during many experiences, including birth in women. In the brain, oxytocin is involved in social recognition and bonding.

Oxytocin appears to be the 'social glue' that holds entire families, communities and societies together, without needing the government to monitor transactions. Empathy for others begins with the release of oxytocin, which compels feelings of love.

When we feel trusted, our brains release oxytocin. This, in turn, causes us to recriprocate the 'trusted' feeling.

With an added dose of oxytocin, subjects' generosity to strangers increased up to 80%.

Generosity to strangers? With no benefit for me? That can't be right, it doesn't fit our models.

Here's something I found interesting, In Zak's experiments with Oxytocin, there was always one group of people who didn't play the game the same way others played. In the game:

178 students ... were separated into groups of investors and trustees, who were not allowed to communicate with each other. Each investor began the experiment with a fund equal to about five Swiss francs that could be invested with a trustee. Any investment would be automatically tripled. The trustee then could decide how much, if any, of the money would be paid to the investor. Both investor and trustee could take home cash at the conclusion of the experiment, based on how they managed the investments. The more the trustee withheld, the larger his final cash payoff. By design, the investors were caught in a dilemma. If they trusted their partners and invested the maximum allowable, they might reap triple their investment. But they could just as easily lose everything if betrayed by a partner who decided to keep all the proceeds. ...

The researchers found that the volunteers who took oxytocin were twice as likely to risk all their money with a stranger. ... Moreover, the hormone only affected someone's response to another person. Those who engaged in financial trading with a computer partner showed no effect from the hormone...

So, summarizing, we both start with $10. If you send me all of your money, I then have $10 + three times what you sent me = $40 and you will have nothing. If I send you back anything more than $10 but less than $30 we will both be better off. In general, people were willing to trust the other person, and trust increased when Oxytocin was administered. Most of the time, the trust was rewarded.

But there was one group of students with Oxytocin levels that were clear outliers (excessive amounts indicating their receptors were likely inactive) who never gave anything back to the person who had trusted them - they pocketed the $40 (or three times whatever they were sent plus the original $10) and whistled all the way to the bank. They were the exception though, most did choose to give something back so that the gains were shared. But it is not in their self-interest to do so.

Update: Here's the graph I was referring to:

[One other interesting feature. If the first person sent less than 30%, i.e. less than $3.00, people did not tend to send anything back. It was as though the second person said you idiot, we have this great opportunity to make money, yet you won't trust me to hold up my end? - I'll show you by keeping the money.]

So here's what I wonder. Are economists, as a group (and perhaps libertarians foremost among them), more like the students who acted purely according to self-interest? Did they choose to become economists because when they looked inside at their own decisions, this model of the world - the one where people always follow their self-interest - fit? Do we have a chemical make-up that causes us to see self-interest as a primary, dominating emotional force in all decisions? Is that why we have a hard time understanding things like pure altruism?

Comments

[RW]

Goal directedness is a paradigm of mechanicism and it is a very useful concept as long as theoreticians are wise enough to realize that is probably not the way things really are.

Do living beings have goals? It turns out that they will be seen to have whatever goals are assigned to them by theory. Economics is not my field but the parallel in Darwinian theory assigns to organisms the goal of maximizing fertility. That is, organisms appear to behave as if they have that goal and models assuming that can be quite robust; even very simple deterministic models can lead to very complex outcomes.

But a richer view of self-organization does not need to assume determinism and probably should not where it doesn't have to -- I am sitting here wondering if I should imagine a future tense in the language of mushrooms or can render a seagull in flight in the cybernetic terms of a missile trajectory -- and concepts such as Sartre’s 'project' are probably closer to the way the real world works in any case; such a project emerges gradually from the activities of the system.

Robert Ulanowicz [in his Growth and Development I think] compared it to a group of people playing twenty questions with one other person. The group decides to pick no name at all and the person's first guess (animal, vegetable, mineral) is said to be correct or not arbitrarily by the first respondent (perhaps the group flips a coin in another room). The next respondent will also answer true or false arbitrarily in the same manner but must be bound by the first respondent’s response and so on. Gradually the item the group supposedly had in mind all along (but really didn't) emerges, constructed from the dialogue alone.

That's life lived but it's the very devil to model although Ulanowicz, Salthe, and other systems ecologists have certainly come up with some very interesting approaches to doing so (well they impressed me but then I'm a nobody).

[hari]

You'd expect me to advise economists to avoid Oxytocin harmone because it might activate their endocrinology...and like a Mormon(!)...they might just as well decide to create a joint herem.

Seriously speaking, *neuro-economista* is misnomer to begin with. If you recall, I accused academics (econs included!) of getting off their real objective mission to explain in plain language the real world of economics science - not to get carried away with the *gotcha* syndrome.

[Dick Harmer]

It's my sense that many economists suffer from arrested intellectual development. They have a nice batch of often powerful simple models. But then, rather than being satisfied with the models' power, they have to go on an insist on the models' perfection.

The economists I respect don't do that. They'll put their simple models up against others' as better first approximators, then look for evidence to support that. But they carefully avoid the trap of fogging the idea that their models explain everything in a domain.

I can't count the times I've seen economists assume (and assert!) that anything short of perfect rationality is "not rational" or "irrational". For me, that's a sure sign of arrested development ... a kind of nerdic, sophmoric bravado.

[david]

J K Galbraith was an economist, etc., etc. It's not the oxytocin, it's the training, though cultural tools of self-selection in the major are there too. And incentives! Let's never forget incentives. Talk nonsense like Becker and you can get a Nobel Prize, or like libertarians and you can get a whole department in DC.

[brian holt]

I came to a similar conclusion when I commented in a discussion about politics that I don't know many women who consider themselves to be libertarians.

I came to this conclusion based on the attitude that many men, including myself, seem to have about solitude. Often when frustrated, men tend to want some 'cave time', to be on their own. "just leave me the alone to do what I want."

Women are much better about reaching out to others during times of frustration. The presence of Oxytocin would be a factor in this, at least some of the time.

We probably shouldn't get into a conversation about why there are gender differences in oxytocin.

[S P]

Just wanted to say as one of the econblogs that I read (and it's one of the better ones), I hadn't noticed that this blog is written by a professor at U of O. It wasn't until I saw a video of the econblogger session at the Milken conference that I found out. I'm from Eugene and am planning on returning to school to study economics. Knowing an author of a blog like this is in the dept. really upped my enthusiasm.

[brian holt]

RW...

Thanks for that post. I'm always appreciative of anyone who can use cybernetics in a paragraph. It's good to see evidence that it's making a comeback in some circles.

If you know of any books on how to teach it to college students, I'd be interested!

[anne]

"Women are much better about reaching out to others during times of frustration. The presence of Oxytocin would be a factor in this, at least some of the time."

Nothing like a little schlock science to explain, like, nothing but to pretend to be explaining, like, something we simply want to say. Duh.

[anne]

Trust me, were I frustrated with more than the pretense I would not be reaching out to scientific pretenders. Now, if the point is simply playing at a convoluted sexism at least play honestly. Find me a cave, Gertrude?

[brian holt]

Anne,

It's correlation, not causation. I'm sorry if that wasn't explicit.

"Nothing like a little schlock science to explain, like, nothing but to pretend to be explaining, like, something we simply want to say. Duh."

Are you saying there are no gender differences?

If so, don't be so mean. I'm sorry if I'm not smart enough to explain why it is that there aren't many women libertarians, or why it seems that on the whole, if not in every situation, men seem to prefer to be alone. Heck, it does them disservice when they do. If men were better at reaching out, we probably wouldn't have a war right now.

But by all means, ridicule away.

[brian holt]

anne: "Trust me, were I frustrated with more than the pretense I would not be reaching out to scientific pretenders. Now, if the point is simply playing at a convoluted sexism at least play honestly. Find me a cave, Gertrude?"

Do you really think you are reaching out by insulting me in this way?

I hear that you think I'm trying to defend sexism. Am I wrong?

If I am not wrong, do you think I equate gender differences with sexism? Do you equate gender differences with sexism?

Is asking the question sexist?

[Bruce Wilder]

Maybe I don't get the drift here, but it would seem to me that the libertarians, who trust that market exchange can be conducted on trust, without government, are the ones drunk on oxycontin oxytocin.

It is not the faith in self-interested behavior, which distinguishes economists from the sane and realistic, it is the trustful faith that self-interested behavior will safely channel itself into self-defeating promotion of the public interest that makes of economists a curious sect.

[anne]

Oh, I know you are being kind and I am surely not, since I am not in a kind sort of mood, but seriously this sort of pretend science has been going on since Freud (who I actually much admire) but I am not impressed in cave or auditorium.

I do know you are being nice, though.

[anne]

"Is asking the question sexist?"

No; nor is the surmise which is only and at best a surmise. Do not fret.

[brian holt]

Bruce:

I enjoy your posts; and I think you are being sarcastic in this last one. I'm not sure because Anne has me doubting my intelligence and sense of fairness.

But I think you are being sarcastic because it seems to me that libertarians don't trust in the market, they *think* the market works best. Not because they trust anyone, but because they think that since they work harder, or are smarter than everyone else, that under their idea of a free market, they would win.

I think it's more arrogance than trust.

[brian holt]

looking at the updated graph, I think it would be better to not call the Y axis trustworthiness without giving more context (of course that's usually given in the text.)

The reason is what I know about studies on emotion: if you give a person a dose of adrenalin and NOT tell them what symptoms to expect, when you put them into a room with a person who acts angry, the subject will claim to be angry--they experience the adrenalin symptoms as anger.

But if you give the same dose to a subject but DO tell them what symptoms to expect, then putting them into a room with a person acting angry won't matter. The subject doesn't report being angry.

In other words, context matters. And under this particular situation, I would expect that oxytocin injections would have similar effects. For example, I wouldn't expect a person on increased oxytocin to want to hug their mugger.

Maybe those outliers were just very perspicacious about the terms of the experiment--in effect it was just a game. Or maybe they have a history of not experiencing oxytocin in the right context (kinship, lovers, etc) and their brain doesn't have the historical connections to use the oxytocin. I dunno.

It'd be an interesting study just to see if you could replicate those outliers.

[anne]

"I enjoy your posts; and I think you are being sarcastic in this last one. I'm not sure because Anne has me doubting my intelligence and sense of fairness."

Nevermore, neither.

[Blissex]

«I've been thinking about economists. We are a different breed, I think, at least in one sense. We see markets everywhere. Thinking of getting married? We see a marriage market where partners rationally look at the costs and benefits of a "partnership" and decide accordingly. It is all very sterile and scientific, nothing more than supply and demand, like always.»

That's perhaps economists who are career oriented, in the USA. Many other economists see power and political relationships mediated by money and goods.

After all the subject is still called Political Economy in those countries where it is still a respectable topic of enquiry instead of elitist propaganda.

[anne]

http://www.cs.rice.edu/~ssiyer/minstrels/poems/85.html

1845

The Raven

Once upon a midnight dreary, while I pondered weak and weary,
Over many a quaint and curious volume of forgotten lore,
While I nodded, nearly napping, suddenly there came a tapping,
As of some one gently rapping, rapping at my chamber door.
"'Tis some visitor," I muttered, "tapping at my chamber door --
Only this, and nothing more."

Ah, distinctly I remember it was in the bleak December,
And each separate dying ember wrought its ghost upon the floor.
Eagerly I wished the morrow; -- vainly I had sought to borrow
From my books surcease of sorrow -- sorrow for the lost Lenore --
For the rare and radiant maiden whom the angels named Lenore --
Nameless here for evermore.

And the silken sad uncertain rustling of each purple curtain
Thrilled me -- filled me with fantastic terrors never felt before;
So that now, to still the beating of my heart, I stood repeating
"'Tis some visitor entreating entrance at my chamber door --
Some late visitor entreating entrance at my chamber door; --
This it is, and nothing more,"

Presently my soul grew stronger; hesitating then no longer,
"Sir," said I, "or Madam, truly your forgiveness I implore;
But the fact is I was napping, and so gently you came rapping,
And so faintly you came tapping, tapping at my chamber door,
That I scarce was sure I heard you" -- here I opened wide the door; --
Darkness there, and nothing more.

Deep into that darkness peering, long I stood there wondering, fearing,
Doubting, dreaming dreams no mortal ever dared to dream to dream before;
But the silence was unbroken, and the stillness gave no token,
And the only word there spoken was the whispered word, "Lenore!"
This I whispered, and an echo murmured back the word "Lenore!"
Merely this and nothing more.

Back into the chamber turning, all my soul within me burning,
Soon again I heard a tapping somewhat louder than before.
"Surely," said I, "surely that is something at my window lattice;
Let me see then, what thereat is, and this mystery explore --
Let my heart be still a moment and this mystery explore; --
'Tis the wind and nothing more!"

[Bruce Wilder]

brian holt:"libertarians . . . *think* the market works best"

"I think it's more arrogance than trust."

I think it is more arrogance than thinking. But, point taken.

[David Robb]

And the people who think they can run markets aren't arrogant?

[David Robb]

It's the same nonsense argument that religious nuts use against atheists. "They're arrogant not to believe in god." But it's just as arrogant to posit that you know anything about the nature of any god.

[brian holt]

David Robb, you make an interesting point in a way that makes me want to consider it. no time now, unfortunately.

[evagrius]

brian holt, anne;

I've just seen a movie apropos to your discussion- "The Solid Gold Cadillac" starring Judy Holliday.

A paragraph from a review;

As a look at the financial culture of the Eisenhower years (and even now, in the wake of Enron and other scandals) THE SOLID GOLD CADILLAC can't be beaten. As a showcase of Judy Holliday's friendly, common sensible urbanite taking on the corrupt it is wonderful. Witness her momentarily getting the upper hand over the villains when she uncovers an particularly stupid action by Sherman regarding a company subsidiary. The four directors silently listen to her lecture and agree to her demands, and at the end are glaring at the embarrassed Sherman. If you want to see Holliday at her best comic performance (my opinion), I recommend this film for that purpose.

I think it's quite a good film representing some "American" values that seem to have vanished.

[Gil]

This reminds of the joke of how an economist is someone who knows 100 ways to make love but doesn't know any women. >:P

I can't count the times I've seen economists assume (and assert!) that anything short of perfect rationality is "not rational" or "irrational". - D.H.

This in turn makes me think of Libertarians who label everyone else as 'Socialists' or Religious Fundamentalists who label everyone who is religious yet not fundamentally so as 'damned as any Atheists'.

[Noni Mausa]

One of the questions on an advertising final exam was T/F "Everyone sells."

Indignantly I threw away a point by blacking in False. If I had had a 3B or 4B pencil instead of a 2B, I would have dug that out for added emphasis.

Guess I'm not an economista. >sigh<

BUT, I would not call the economists on my favorite blogs cold-hearted. A smart and kindly bunch, for the most part. And then there's PK, who's playful and funny, too.

Noni

says...

I was given high doses of a drug to inhibit oxytocin activity during my last pregnancy (to stop preterm labor). When I returned to college a few months later, I switched my major from history to economics. I then continued on in the graduate program.

Hmm...all this time, I thought it was the "invisible hand" that guided my career choice. Now, I know better. It was that damn oxytocin blocker!

[Winslow R.]

I've recently coming to the conclusion that economists have no boundaries to their profession and are only too willing to allow money to drive decision making.

Stay out of politics. Period.

The inability of economists to follow this dictum is leading to the breakdown of world peace and prosperity. How? 'Free market ideas' have encroached upon the political process through funding by those with sufficient money, leading to the breakdown of the social order.

For the last 5 years I've been watching a train wreck in slow motion.

'Market' ideas are used to poison the political process. Economists must accept the wisdom of the masses as being capable of making rational choices, at times even more rational than individual choices.

ZERO SUM CHOICES

Once we arrive at zero sum choices, even politics may not be enough to save the world from collape. 'Free market' ideas only work while there are no Malthusian constraints. Once shortages appear, a zero sum choice requires economic decisions to shift into the political sphere.

For example: a fishery.

As long as everyone can fish to their heart content (free market) no rules and regulations need apply. Once the fishery reaches the potential for collapse, politics must take precedence over economics. We are reaching this point with the world economy.

'Free market' monetary control systems are failing. It is time to be taken to task for promoting a system that would only work in the Garden of Eden. Constraints must be recognized and supplies must be politically distributed based on need for governance not on ability to pay.

If high fuel prices don't raise levels of Oxytocin, were in trouble as economists can't seem to come up with a good economic justification for governance.

[Debbie]

Hi Noni! I recognize you from AB. I just posted the comment after yours, but my name didn't show up. Hopefully, it will this time. Debbie

[Debbie]

Winslow--

I share your concerns, but I'm not so sure the problem is with economists, per se. In a twisted sort of way, the ideology of free market economics is not too terribly different from evangelical christianity--at least when it comes to politics. Both have been used and abused to further an agenda based on power and greed.

Debbie

[Winslow R.]

At first I too thought the problem was 'free market' ideas but am coming to the conclusion that money driven decisions just don't work in certain situations.

Specifically when there are life threatening shortages.

[JRossi]

Prof. Thoma, This market obsession is concerning. I mean no disrespect to economists, many of whom are very smart people. But some of us with backgrounds in experimental science who have taken the trouble to read some economics think of it as a mildly autistic subdiscipline of psychology--a much more respectable science, by the way, where they actually do experiments. Getting more psychological would benefit you scientifically but would require you to give up your physics-envy. But kudos on the macro data collection-that's good stuff.

[Goldilocksisableachblonde]

BINGO , Winslow !!

Maybe we need to screen all candidates for political office for oxytocin receptor function. Couldn't hurt.

'Free markets' don't work.

'Command and control' doesn't work.

Something in between , maybe? Wait , isn't that what we had in the postwar decades ? Geez , let's not try that again. After all , back then we had declining debt/GDP levels , we were net creditors to the rest of the world , and every income quintile realized income growth that was coupled to strong productivity growth , incentivizing all workers , instead of just the top 2%. Horrendous. Bad idea.

[a]

I'm less worried about Oxytocin and self-interest and more that there is a structural bias for the moneyed classes.

[Andrew]

JRossi,

Your insightful comment reminded me of this passage:

"[The weaknesses of economics] can be summarized in two labels: Newtonian and hermetic. Newtonian because economic theorists aspire to find simple, general laws that cover all possible economic arrangements. Universality is a logical and worthy goal, except that the innate traits of human behavior ensure that only a minute set of such arrangements is probable or even possible. Just as the fundamental laws of physics cannot be used alone to construct an airplane, the general constructions of equilibrium theory cannot be used alone to visualize an optimal or even stable economic order. The models also fall short because they are hermetic-that is, sealed off from the complexities of human behavior and the constraints imposed by the environment.
[...]
The world economy is a ship speeding through uncharted waters strew with dangerous shoals. There is no general agreement on how it works. The esteem that economists enjoy arises not so much from their record of successes as from the fact that businesses and government have nowhere else to turn.
[...]
Just as, in his Nobel Lecture, Becker stated that his contribution was 'to pry economists away from narrow assumptions about self-interest,' the next step is for economists to free themselves completely, at long last, from the standard social science model of behavior and take seriously the biological and psychological foundations of human nature."

E.O. Wilson, Consilience

In all fairness, this was written in 1998, and economists have been moving in the suggested direction for some time. The dominance of Chicago school economics in discourse on every level, from media soundbites to blogs such as this, clearly says we have not gone nearly far enough.

[wjd123]

Anne,

If our defenses are down late at night wouldn't that be the time one feels loss the most? So would a shot of oxytocin make one more vulnerable to depression or less? Would it make one more abandoned and their loss even more? Or would is help one make it through the night by not feeling so abandoned, since oxytocin might make one feel that the milk of human kindness could help console them once morrow breaks?

Perhaps oxytocin is a hormone that should never be taken late at night if one is depressed because it leads to a confused mind--longing for the morn while growing increasingly depressed.

So, Anne, what does this suggest to us about economist since they are the least effected by oxytocin and by temperament follow the road to clear-cut explanations:

They are more or less likely to submit to the Raven late at night since a lack of oxytocin will make them variate from the norm. This could be shown statistically. Their favorite TV show is "Monk." Their favorite detective is Sherlock Holmes. And few care for the poetry of Poe. The first two don't deal in emotions, the last does.

Therefore, these would all be the taste and proclivities of people living in a oxytocin free zone.

I'm sure I just offended every economist in the nation. If any economist reads this, know that Anne made me do it.

[Barkley Rosser]

david,

That "J K Galbraith" (presumably the late John Kenneth rather than his still living son, James Kenneth) was an economist proves little, as he was often dissed by many more conventional economists.

For the record, George Mason University is in Fairfax, Virginia, not in D.C., although it is nearby certainly.

anne,

Would that be "a cave of one's own," and does hanging out in it increase or reduce oxytocin?

As a final note, it may not be that selfish sorts of economists are lacking in oxytocin. Rather, Zak's figure suggests instead that they get their oxytocin rushes in conjunction with their selfish conduct.

[Lafayette]

I am enticed by the underlining theory in the article, but I suspect that women are NOT under-represented in the economics profession any more than other professions.

Besides, the experiment was really quite limited, within a fairly homogeneous group and therefore does not show variances due possibly to cultural factors.

I was also impressed by the "Men are from Mars, ..." book because of the unique idea expressed by its psychologist author (as I recall). The notion seemed to coincide with my empiric observations.

Meaning this: The functional behaviour of women in terms of their ability to listen and "reach out" (to trust multiple sources of information) is quite possibly genetic and not chemical. I suspect as well that nurturing has been an integral part of their genetic evolution, since they traditionally spent so much time with the children to whom they gave birth.

And, what characteristics do we male managers seem to appreciate in female managers nowadays? The ability to listen/provoke multiple opinions and to seek consensus before deciding/acting. That is, they “reach out”.

Men tend to behave according to hierarchical patterns of obedience to the given leader. Discussion tends to be limited, because the onus is on making a decision. Once made, men tend to fall in line.

What bothers males is the way women go about informing themselves. Males go into the cave, seek information, and drill down to a solution. Females, I think, instinctively reach out (first to other females, then to men they trust) in order to get opinions. In the past, males have dismissed this as “chicken cackling” when observing women in groups discussing matters.

Nothing could be further from the truth. It can be confusing to a male, but the process is one of females informing one another in a more random or circuitous fashion than males are used to. (I have learned to shut up and listen intently whenever in a meeting with a large number of women. It takes real effort.)

Why? Because, once again it is a matter of genetic development. The male animal has a competitive instinct that allows him to achieve excellence ... but at the cost of consensus. Because excellence is typically a matter of either personal motivation/effort or, in groups, traditionally a military hierarchy where the ability to execute prevailed above the need to discuss towards a consensus before deciding/acting. (This was essential to protect the tribe against intruders, who attacked not only to obtain a hunting territory but also the females in order to procreate as well as.)

And so, to my mind, it is not the chemicals, but in the genes. Though I am quite ready to accept recent research findings that testosterone levels seem to be able to predict a trader’s success rate on any given date.

So, go figure ... ;^)

[ScentOfViolets]

Barclay, I would suggest that, in the end, Galbraith was more right the Friedman. Certainly the trend (yes, I admit it is just a trend at this point) is away from Friedman and towards Galbraith. One should remember that one of the laments of Galbraith was the unseemly mathematization of economics, which most of the neoclassicals seemed to take as a personal attack.

Galbraith was right, of course. And as I recall it, no less a personage than von Neumann said that economics was so undeveloped that he questioned whether it had even settled upon the appropriate metrics, let alone whether there was even a hint of any overarching theory.

[Lafayette]

SOV: Galbraith was right, of course.

Galbraith was full of good Scottish common sense. (Even if he was born Canadian.) Economics today is full of good mathematics.

Mathematics is a highly logical art, as is modern economics. Common sense needs a bit of understanding of human behaviour.

Never the twain shall meet; and 'tis a shame.

[david]

I don't know about economists and oxytocin, but Barkley sure does have the pedant gene!

Point is, there's lots of types of economists -- just so happens that in the US economist culture has led to neo-classical and libertarian and Republican wanking becoming the type. The search for a biological explanation is a silly one.

[Barkley Rosser]

For anybody who did not figure this out. I was not criticizing Galbraith (either of them). I was simply noting that statements made about him were not generalizable to most economists. For the record, I am not that much of a mainstream, conventional economist myself.

[Dan Hirschman]

There's a research literature on this question (do people who study economics behave differently than their peers? Do they do so because those who self-select into economics are different or because they were taught to be different?). A most recent example uses a 'natural experiment' at Yale Law School where some students are taught required courses by economics-trained faculty and others are not (and the students do not get to choose). That paper, “Exposure to Ideology and Distributional Preferences”, is available here.

A paragraph from the conclusion: "Second, and equally important, our experiments yield insights into what students learn from teachers who emphasize different ideological content. Crucially, the difference between economic and humanist teaching is not just that economics encourages students to become more selfish, although this is one of our …findings. Rather than identifying a simple difference between immoral economics and moral humanities, our study reveals that an important part of the difference between these disciplines is that they instill competing conceptions of impartiality in those who study them: students exposed to economics are relatively more likely to adopt distributive preferences that emphasize efficiency; whereas students exposed to the humanities are relatively more likely to adopt distributive preferences that emphasize equality."

I wrote something on this in a post here.

[Blissex]

«Point is, there's lots of types of economists -- just so happens that in the US economist culture has led to neo-classical and libertarian and Republican wanking becoming the type.»

Culture? I see a lot of incentives (career, funding) in the USA for economists to uphold the central verity of USA Economics, that the income distribution is determined mathematically by productivity.

There are many fellowships at well funded Republican think tanks, who go to those who understand best how wealth can only trickle down from the best and brightest. Never mind the rich prize of endowed chairs; after all there are over TWENTY Ken Lay Chairs of Politics and Economics and similar numbers of endowed Accenture Chairs of Accounting (no, I am not joking).

Never mind the possibility to earn seriously large wealth as expert witness and consultant to large corporations on issues ranging from the catastrophic effects of increases in the minimum wage to the impossibility of monopoly rents in contestable markets.

[undergroundman]

Those people, which Zak's call his 'bastards', are probably more similar to sociopaths. There have also been studies of economic students playing this game, and they do act more as economics tells them to act, but I don't think they're the same as Zak's bastards. Those people are not just impressionable -- they truly don't care. At least that's what I gather.

[david]

"Culture? I see a lot of incentives (career, funding) in the USA for economists to uphold the central verity of USA Economics, that the income distribution is determined mathematically by productivity...."

That's what culture is.

Barkley, I didn't think you were slamming either or any of the Galbraiths -- when people say JK, everybody knows who we mean, cause you say James for the other.

[Lafayette]

Where is Social Ethics in Economics

DH: students exposed to economics are relatively more likely to adopt distributive preferences that emphasize efficiency; whereas students exposed to the humanities are relatively more likely to adopt distributive preferences that emphasize equality

Thanks for another Good Reason for assuring that students are exposed to a genuinely mixed bag of different schools of thought.

It is obvious that the classical Political Economic thought of yore is not given their just due. Also, the humanist sciences (sociology, psychology, and particularly ethical behaviour) have not had sufficient exposure in modern Economics studies.

Given the cost of tertiary education, it is no wonder that "efficiency" prevents their wider usage, perhaps? Apart from a cursory semester, or so, of the History of Economic Thought? The emphasis on mathematical approaches is perhaps far too systemic? Particularly at the Graduate School level?

Throwing up a supply and demand curve to explain market behaviour is simplistic, but works. It shows well the basic functionality of the two variables in determining pricing -- but it does not necessarily explain how markets generally work. Price is only one element -- conspicuous consumption is another, sociological peer pressure another, and predatory practices a recent newcomer as well.

Ditto natural preferences and the penchant to maximize personal return in choice selections -- which has certainly gone overboard in America to pervade even cultural values. Where is the ethical justification of tax policy to show how Social Expenditures have a benefit to society as a whole -- rather than genuflecting at the altar of Market Forces? Why is it that so many Americans are ignorant of Income Inequity and its acuteness is having NO BEARING whatsoever on this election, shunned like an uninvited guest?

We trip up in going from theory to reality. Other forces are at work and economics does not consider sufficiently those components.

[Lafayette]

david: Culture? ... that the income distribution is determined mathematically by productivity....That's what culture is.

With that sort of reasoning, you'd probably find culture in a Petri dish. Or, a jungle where survival is of the fittest?

What point are you trying to make? Because it is not evident. Try articulating. It often works.

[Lafayette]

Laissez-faire political philosophy

Blissex: after all there are over TWENTY Ken Lay Chairs of Politics and Economics

No doubt that the Laissez-faire Political Philosophy school of thought has its niche firmly planted in the US.

Social Democracy as a political current never took root in the US. The Dems held the "thought ground" on the Left, which was fine in the 19th and 20th centuries for as long as Europeans were the main immigrant population.

That population was largely assimilated and, after three generations, has long since left any notion of Social Expenditures benefiting the poorer classes way, way behind them in their Yuppy-gravitation upwards in terms of income -- resulting in a gradual shift to the Right of center.

The "What's-in-it-for-me-generation" is upon us, literally and figuratively.

In terms of historical perspective -- given two Great Wars in the 20th century that turned the world topsy-turvy during a period of revolution unseen since the 18th century -- America remained isolated, cocoon-like, from these influences. Europe, on the other hand did not. Neither the Far East. Both were forced to review their political underpinnings.

The Wheel (of destiny) having turned, the US finds itself a debtor nation to those, barely a half century ago, it considered amongst their worst enemies. It is in serous difficulty because an era of prosperity (brought about by a large, unified and vibrant internal market, founded upon economies of scale and technological advantage that both arose in the previous century) has come to a close. America now finds itself competing with the world on a more level playing field.

Neither access to technology nor too capital markets are any longer exclusively American innovations or characteristics. Like commodities, both capital and technologies have become fungible. Capital is capital, whether in dollars or euros or yen. Technology Transfer assures that patented techniques are also available anywhere in the world necessary.

Meaning this: (1) The period of time when one could actually believe that because the economic pie was expanding steadily and healthily in America there was enough to go around merits questioning. It is entirely possible that that historic phenomenon has come to an end, after more than a century and a half of existence. And, the sizable global economic pie must now be shared by more people. Many, many more individuals.

(2) This ineluctably leads us, as a nation, to the necessity of facing the question of Income Fairness. Which America remains reluctant to do, since it is anchored in a laissez-faire (the sky's the limit) political philosophy that is largely dated, if not obsolete.

[Blissex]

«david: Culture? ... ["]that the income distribution is determined mathematically by productivity["]...That's what culture is.

With that sort of reasoning, you'd probably find culture in a Petri dish.»

Indeed Petri dishes are used to keep cultures in. :-)

Hey, if you give me a well endowed Mozilo Chair of Financial Risk Management, I'll put several cultures in several Petri dishes if that's what it takes :-).

«Or, a jungle where survival is of the fittest?»

Culture is always what winners pay for. Sometimes with grace (and then you get Mozart's chamber music), sometimes coarsely (and then you get Greg Mankiw).

He who pays the piper calls the tunes...

[reason]

David Robb...
And the people who think they can run markets aren't arrogant?

Straw man alert. Who exactly thinks they can run markets?

Setting and policing the rules by which markets run (and all markets are essentially created by a set of rules) is not the same as "running" the markets.

The arrogance that people often feel associated with Libertarians, comes from the denial of the value of collective decision making.

In a sense that is both right and wrong. It is true that there are severe limitations on collective decision making. But some systemic changes can overcome some of those limitations. It is also true that truth cannot be determined by a show of hands. But that is mistaking the value of collective decision, the fact that all viewpoints are represented and as a consequence (it is to be hoped) acceptance of the outcome is greater.

Essentially, markets require the acceptance by the participants of the rules of the game. This is why collective processes are important. Libertarians seem to want voluntary compliance, where people have no input to the rules and feel the decks are stacked against them. There is no guarantee in this case that the eventual outcome is not another Paris or St Petersburg.

[reason]

David Robb
It's the same nonsense argument that religious nuts use against atheists. "They're arrogant not to believe in god." But it's just as arrogant to posit that you know anything about the nature of any god.

No it isn't the same argument at all. Your argument he in effect posits that the Market is some sort of natural process. It is an emergent process, but it is an emergent process based on certain rules, the rules are man made and changes in the rules change the outcome. It is an artificial arrangement made for pragmatic purposes. If the outcome is one that is not seen in the general interest, there is no reason to suppose that the rules should not be modified. It is up to Libertarians to convince others that there version of the rules works in the general interest. When pressed Libertarians often resort to a phony moral argument (shortened - taxation is theft). Repost - so is property.

[swells]

reason, as a person with decidedly libertarian inclinations, I don't necessarily think I'll do better personally in a "dog eat dog" world than I would in a collectivist world. Smart people wind up manipulating pretty much whatever system they find themselves in to their own advantage.

If I had to put a finger on it, I'd say that when leverage is greatly increased more mischief is possible. It's pretty much just a recognition that the leading cause of death in the 20th century, outside old age and disease, was government sponsored genocide. In the current environment, I'd point to the huge numbers of nuclear weapons extant. Not really possible without government being able to focus huge investments into death merchantry shenanigans. I tend libertarian because I think it's incredibly dangerous to put a lot of power into a few hands. Idiots are just constantly hijacking the power of government to nefarious ends.

For every good that state power can accomplish, there is just as much evil in my view. Until there are fewer idiots, I'd like to limit the potential damages.

[Lafayette]

blissex: Culture is always what winners pay for.

Randian bollocks. Most wouldn't know culture if it bit off their nose. Which is why they are reduced to buying it.

Culture is the composite of our best achievements. And, by that measure, making money is certainly not one of them.

A wee bit of chance, a tinge of greed, a sprinkling of effort and a dose of opportunity ... presto, it's done!

A Mozart comes around once every 1000 years. A Buffet every ten or twenty. The difference is that Mozart remains remembered whilst the plutocrats recede from memory with amazing alacrity.

Here today, gone tomorrow and always unsung.

[Patricia Shannon]

Lafayette,
Hormones are a tool of the genes.

[reason]

swells
In the current environment, I'd point to the huge numbers of nuclear weapons extant. Not really possible without government being able to focus huge investments into death merchantry shenanigans.

You've obviously never watched James Bond movies!-) Swells, I thoroughly recommend finding (not easy) and reading "Einstein on Peace".

Unfortunately, nuclear weapons are not the only way to kill people. It is not obvious that the world is a worse place for there being nuclear weapons, as nuclear weapons have been a very effective deterrent, but are pretty useless as offensive weapons. The danger is that they will fall into the hands of the relatively powerless (i.e. those with little to lose).

[reason]

It is also not necessary to have huge concentration of power to create dangerous weapons. Ask a passing anthrax spore.

[David Robb]

Reason:

And the people who think they can run markets aren't arrogant?

Straw man alert. Who exactly thinks they can run markets?

Yes, you're right. A better verb to use would have been appropriate, or commandeer or perhaps destroy the mechanism of.

We both know exactly what and who I am referring to, Reason.

[Lafayette]

Einstein on Peace

Free, gratis and for nothing.

[Lafayette]

DR: A better verb to use would have been appropriate, or commandeer or perhaps destroy the mechanism of.

Pathetic reasoning.

It smells of burnt feathers.

[reason]

Lafayette ...
Thanks for that. Copies of the book on Amazon are really expensive. It is a very interesting historical reference book. Einstein, typically for a scientist, doesn't think in political or national terms. He just sees nuclear weapons as a symptom of the fundamental problem (persual of national interests via violence) and not the cause of the problem. Remember that Einstein both was a refugee from Nazi Germany and marginally involved in the creation of nuclear weapons. He was never a naive peacenik.

[reason]

Lafayette...
btw...
It seems to me only the index is free. And prices from Amazon are down a lot (but are amazingly varied).

[Lafayette]

reason: It seems to me only the index is free

That is curious. I clicked on an index chapter and the text came right up. But, I now see that it is only sample text from each chapter that is displayed.

So, I misled you and I am sorry.

Curious, though, there is no way to purchase the work, that I can make out ...

Remember that Einstein both was a refugee from Nazi Germany and marginally involved in the creation of nuclear weapons.

There was a biography of him that just this week was transmitted on French TV. He was an amazingly complex person, perhaps even complexed.

Which somehow did not affect his reasoning. Thank god.