Psychologist Explains Why Economists—and Liberals—Get Human Nature Wrong

Yves here. Opening yet another front against a favorite of economists.

By Lynn Parramore, Senior Research Analyst at the Institute for New Economic Thinking. Originally published at the Institute for New Economic Thinking website

For a fictional character, homo economicus has had a pretty good run. Since the 1950s, this mono-motivated, self-seeking figure has stalked the pages of economics textbooks, busy deciding each action according to a rational calculus of personal loss and gain. But more recently his territory has shrunk as experts on human nature have demonstrated what any decent novelist could have told them: our real selves are nothing like this.

Unfortunately, many economists still plug this flawed view of people into computer models that determine all kinds of things that impact our lives, from how much workers get paid to how we value life or common goods, such as a clean environment. The results can be disastrous.

Typically, economists aren’t that keen on admitting that their work is deeply connected to morality — never mind that Adam Smith himself was a moral philosopher. But if you ask a question as simple as how to price a used car, you quickly find that moral concerns and economic activity happen together all the time.

In his 2012 book, The Righteous Mind, New York University social psychologist Jonathan Haidt explored why so many perfectly intelligent people have misread human nature– and not just economists, but plenty of psychologists and even (shocker!) people who identify as politically liberal. For him, the key to getting to know ourselves properly lies with moral psychology, a newish strain that pulls together evolutionary, neurological, and social-psychological research on moral emotions and intuitions.

As Haidt sees it, we are creatures driven by moral intuition and attuned to both our personal interests as well as what’s good for the groups with which we identify. He points out that in order to thrive, we have to appreciate our complex, interactive natures and see each other more clearly and empathetically – an observation that may be especially useful at a time when threats like climate change and the concentration of money and power threatens all of us, no matter who we are or what groups we belong to. At the moment, we aren’t doing such a good job of this.

The Rider and the Elephant

Morality, Haidt argues, doesn’t arise from reason, and besides, humans aren’t winning any prizes for rationality. Heaps of studies show how factors beyond conscious awareness influence how we think and act, from judges giving out more lenient sentences after lunch to bottles of hand sanitizer making people more feel more conservative.

In Haidt’s view, the conscious mind is like a press secretary spewing after-the-fact justifications for decisions already made. Thinkers like David Hume and Sigmund Freud were certainly hip to this idea, but somehow a lot of economists missed the memo, as did psychologists following dominant rationalist models in the 1980s and ‘90s.

Haidt invites us to consider ourselves as a rider (our analytical, rational part) and an elephant (our emotional, intuitive part). The rider holds the reins, but the beast below is in charge, urged on by the complex interaction of genetic influence, neural wiring, and social conditioning. The rider can advise the elephant, but the elephant calls most of the shots.

Fortunately, the elephant is quite intelligent and equipped with all sorts of intuitions that are good for conscious reasoning. But elephants get very stubborn when threatened and like to stick to what’s familiar. The rider, for her part, is not exactly a reliable character. She’s not really searching for truth, but mostly for ways to justify what the elephant wants.

That’s why a rebel economist challenging conventional thinking about subjects like human nature faces a heavy lift. Experts have to see a lot of evidence accumulating across many studies before they reach a point where they are finally forced to think differently. Scientific studies are even less helpful in persuading the general public.

When I asked Haidt how the mavericks could help their cause, he noted that humans are social creatures more influenced by people than by ideas. So, it matters who says something as much as what they say. It also makes a difference how they say it: elephants don’t like to be insulted, and they lean towards arguments made by people they like and admire. Not very rational, perhaps, but likely true.

Homo Duplex

The notion that human beings are social creatures is another strike against homo economicus. We are selfish much of the time, but we are also “groupish,” as Haidt puts it, and perhaps better described as “homo duplex” operating on two levels. Here he offers another animal analogy, suggesting that we’re 90% chimp and 10% bee, meaning that from an evolutionary perspective, we are selfish primates with a more recently developed a “hivish” overlay that lets us occasionally devote ourselves to helping others, or our groups.

This helps explain why you can’t predict how someone is going to vote based on their narrow self-interest. Political opinions are like badges of social membership. We don’t just ask what’s in it for us, but also what it means to our groups. Having a kid in public school doesn’t tell you that a person will support aid to public schools, probably because there are group interests in play. What unifies us in groups, Haidt argues, are certain moral foundations that allow us to share emotionally compelling worldviews that we can easily justify and defend against any attack by outsiders who don’t share them. And we can get pretty nasty about those outsiders.

This begins to sound like ugly tribalism, the kind of stuff that leads to war. But Haidt reminds us that this propensity also prepares us to get along within our groups and even to cooperate on a large scale — our human superpower. We differ from other primates because we exhibit shared intentionality: we’re able to plan things together and work together towards a common goal. You never see two chimps carrying a log – they just don’t act in concert that way. We do, and in our groups we’ve developed mechanisms to suppress cheaters and free riders and reap the benefit of division of labor. Groups of early humans may well have triumphed over other hominids not because they smashed them with clubs , but because they out-cooperated them.

To better understand how we operate in political groups, which have lately become more antagonistic, Haidt created a map of our moral landscape called Moral Foundations Theory which delineates multiple “foundations” we presumably use when making moral decisions, including care/harm, fairness/cheating, loyalty/betrayal, authority/subversion, sanctity/degradation, and liberty/oppression. (Some scholars have challenged his system, offering alternative maps). His research indicates that liberals and conservatives differ in the emphasis they place on each of these foundations, with conservatives tending to value all six domains equally and liberals valuing the first two much more than the other three.

Haidt argues that liberals tend to home in on care and fairness when they talk about policy issues, which can put them at a disadvantage vis-à-vis conservatives, who tend to activate the whole range of foundations. Republicans are thus better able to talk to elephants than Democrats because they possess more ways to go for the gut, as it were. If Democrats want to win, Haidt warns, they need to think of morality as more than just care and fairness and to try to better understand that foundations more important to conservatives, like deference to authority or a reverence for sacredness, are not pathological, but aspects human social evolution that have helped us survive in many situations.

When he wrote The Righteous Mind, Haidt noted that Democrats had espoused a moral vision that did not resonate with many working class and rural voters. In the current presidential race, he sees some progress on economic populism from the Bernie Sanders wing, in part because Occupy Wall Street got people attuned to issues of fairness and the oppression of the 1%. When politicians talk about the abuse of political and economic power, they can activate not only care and fairness concerns, but also the liberty/oppression foundation which people respond to across the political spectrum.

But this line is also tricky because, as Haidt pointed out to me, “Americans don’t really hate their rich.” (One recent study suggested only 25% of Americans have a negative view of the rich, though a majority said they should be taxed more).

Haidt also worries that many Democrats, particularly elites, are currently engaging with cultural issues by embracing a what he called a “common enemy” form of identity politics which “demonizes people at the intersectional point of evil (white men)” rather than focusing on a “common humanity” story which “draws a larger circle around everyone. (Haidt plunged into controversial territory with his 2018 book, The Coddling of the American Mind, which argues that college campuses are shutting down useful debate through “safetyism” that protects students from ideas considered harmful or offensive).

He observed to me that while the polarizing Donald Trump may have turned off the younger generation “for the next few decades,” Democrats may be failing “to look seriously at the ways that their social policies—and their messengers— alienate many moderates.” Newly “woke” white elites, for example, who see racism as the driver of nearly every phenomenon, may be having an unintended negative effect in his view. When they ascribe Trump’s victory to racial resentment and ignore the concerns of those who fear sliding down the economic ladder, for example, they may turn off potential allies. Call a person or a group racist and you won’t be able to convince them to support your view on anything. Their elephants aren’t listening.

Haidt acknowledges that our moral matrices are not written in stone; they can and do evolve, sometimes quite rapidly within a couple of generations. Economic forces surely act to shift attunement to moral foundations, making people more susceptible, for example, to anti-immigration arguments. If you fail to consider the economic influence on this kind of moral activation, you’ll be less equipped to address problems like ethnic conflict. Being able to step outside our own moral matrix is essential to persuasion. We not only have to talk to the elephant, but see the beehive.

We also have to remember the truth is not likely to be something held by any one individual, but rather something that emerges as a large number of flawed and limited minds exchange views on a given subject. Our smarts and flexibility are increased by our ability to cooperate and share information. Economists, for example, improve their understanding of human nature by opening up to other social sciences and the humanities for insight.

There is evidence that economists are paying attention to moral psychology. In their book Identity Economics, Nobel laurate George Akerlofand Rachel Kranton argue that people identify with “social categories,” and that each category, whether it be Christian, mother, or neighbor, has associated norms or ideals to which people want to aspire. Sam Bowles’ The Moral Economy shows that monetary incentives don’t work in many situations and that policies targeting our selfish instincts can actually weaken the institutions which depend on our more selfless impulses– including financial markets. At the Institute of New Economic Thinking (INET), the connection between economics and morality has been explored by INET president Rob Johnson and political philosopher Michael Sandel as well as thinkers like economic historian Robert Skidelsky and economist Darrick Hamilton.

All of this rather bad news for homo economicus. But pretty good news for humanity.

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54 comments

  1. Carolinian

    we’re 90% chimp and 10% bee, meaning that from an evolutionary perspective, we are selfish primates with a more recently developed a “hivish” overlay that lets us occasionally devote ourselves to helping others, or our groups.

    Well if one wants to take an “evolutionary perspective” (works for me) then obviously our instincts are shaped to promote survival of the species and not just the individual. And if that’s true then the Randian/economics version of rational isn’t rational at all. Perhaps it would be clearer to talk about this problem in terms of rational versus irrational rather than appealing to some “altruism gene” that will supposedly save us. IMO only that rational, intelligent, creative aspect of humans will save us from that irrational side that is indeed totally instinctive. Somehow we’ve gotten this far–despite everything–“by the skin of our teeth.” Here’s hoping those minds will find a path.

    Reply
      1. erik

        Over what? Carol’s point about the sociology of Ayn Rand?

        In point of fact, Carol, altruism is always secondary (where it appears) in nature. Selfishness ensures the fittest genes survive to carry on the species. Only in the face of catastrophe does altruism at
        the individual level become more valuable than selfishness. So, indeed it is because of our selfishness, because we’ve struggled by the skin of our teeth, that we as a species have survived and prospered.

        Reply
        1. Susan the other

          but, but erik, that leaves out all the energy saving advantage we get from a cohesive group which is also determined to survive and carry on centuries of knowledge on just how to do so….

          Reply
  2. H. Alexander Ivey

    Just a quick jab: why does Haidt, and others, assume that feelings are inferior to logic and intellect? Seems to me they are inter-twined, separate-able, but equal in value, if not dimension.

    It could be a three way set-up instead of a two way (like markets, which are commonly spoken of as two: buyer and seller, but are three: buyer, seller, and banker /money man). Man’s consciousness could be 1) feelings, 2) logic /intellect, and 3) the decider (call out to ex-prez W, so got political jab in too!).

    But all that rather kicks Haidt’s argument…

    Reply
    1. eg

      In fairness to Haidt, I think he’s more nuanced than “rationality good; feelings bad”

      I have encountered more of that rather rigid approach among those who have read “Thinking Fast and Slow” perhaps because that book doesn’t do as good a job of outlining as crucial the capacity to recognize which situations favor System 1 thinking and those which favor System 2 — a problem compounded by the emphasis in the book on the rather narrow range of circumstances in which System 2 is clearly superior.

      Reply
  3. vlade

    Social scientists can’t add:
    “value all six domains equally […] valuing the first two much more than the other three.”

    More seriously, yes. Years ago, Heinlein wrote “Man is not a rational animal, he is a rationalizing animal”.

    Reply
    1. somecallmetim

      Jeez – I spent years getting an Econ degree in the homo economus/monetarist era (dark times), when I should’ve been making my way through my D&D Dungeon Master’s sci fi collection!

      Reply
      1. Dell

        I always thought that the Professors who thought up homo economus never went with their wives (as it was back then) to the grocery store.

        The rational choice, always, was the store brand. DelMonte and all other such brands owed their very existence to non-rational, emotional choices–by tons of people.

        But the implications of that never sunk in.

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    2. erik

      ‘Rational’ just means ‘consistently following an internally sound logic.’ A machine does that – following the logic of its mechanics. A computer does that – following the logic of code. An animal does that – following the logic dictated by emotion. And an animal certainly does that better than we humans whose behaviors become muddled by ideas. Truly, by this measure animals are better machines than humans – more mechanical, more emotional, more logical, more rational.

      Reply
  4. Hayek's Heelbiter

    That’s why a rebel economist challenging conventional thinking about subjects like human nature faces a heavy lift. Experts have to see a lot of evidence accumulating across many studies before they reach a point where they are finally forced to think differently.

    As an ex-organic chemist, I was astonished to find that more than a few scientists cling to outdated paradigms with a tenacity that would shame the most rigid religious fundamentalist. Cf. heliobacter, continental drift, even the heliocentric solar system.

    Reply
    1. divadab

      Huh? Heliocentric solar system is an outdated paradigm? Are you talking about this planet or are you coming from another solar system?

      Reply
      1. vlade

        same for continental drift – pretty much no one in geology challenges plate tectonics, as it explains way more than any other theory on offer.

        Reply
    2. Anon

      While “continental” drift was first proposed in about 1600 AD it was not completely wrong. Like many initial geologic theories it was partially correct. It is now known that it is not the “continents” that move across the earth, but tectonic plates, on which the continents are located, that is creating movement. The convection of the earths interior magma is thought to be the movement vector for the plates.

      Reply
  5. Henry Moon Pie

    “this propensity also prepares us to get along within our groups and even to cooperate on a large scale — our human superpower”

    Yuval Harari’s central point revolves around this. Humans, like other primates, engage in “grooming” activities to maintain group cohesion. With the development of language, this “grooming” went from picking lice out of each other’s hair (fun!) to gossiping about each other. But this behavior seems to be unable to maintain a group size larger than 150 individuals, not surprising considering the person-to-person contact necessary.

    To gather a larger group around common goals requires myth, Harari says. Early myths involved gods, often imagined as living in a separate world with structures parallel to our own. In a polytheistic society, the head god related to the lesser gods as a king related to his human subjects. In the henotheistic Ancient Near East, nations like Babylon, Assyria and even the southern Israelite kingdom of Judah envisioned a parallel war occurring in “heaven” between the national gods when two countries went to war. These days, there are new, completely secular myths like what Harari calls “Money” that orient our world around materialism, competition and power.

    Reply
    1. eg

      William H. McNeill also noted the almost universal human behaviours of mass marching/dancing (which requires and reinforces cooperation) as indicative of a social behaviour rooted in a biological need

      We also have “mirror neurons” for a reason — one that baffles the proponents of “homo economicus” …

      Reply
  6. Eric

    I was more interested in this article from the political perspective; i.e. what liberals get wrong.

    Like many who read this site, I’m interested in the primary elections and want Bernie to win.

    But Bernie’s message could be better by being more attuned to some of the “Moral Foundation” issues Haidt raises.

    Take Medicare for All which, by most accounts, is the leading issue to most voters:

    Talking more about Medicare being a simple and successful 50+ year program appeals to authority. Medicare Advantage plans can be framed as subversion. Or loyalty / betrayal. Also consider sanctity / degradation.

    Talking more about the 80/20 aspect of coverage addresses fairness / cheating and “free stuff”

    Not talking about eliminating private insurance shows concern for liberty / oppression. I would actually make a joke about people who would still want private insurance after M4A becomes available…

    Just food for thought in terms of how the ideas contained in the article could be applied.

    And the next time some nefarious reporter asks how we will pay for this or that; I wish someone will just say “Mexico will pay for it”.

    Reply
  7. LowellHighlander

    As an economist (M.A. in Econ), I am elated to see Jonathan Haidt’s work receive this kind of attention from serious thinkers. In addition to the reasons cited by Lynn Parramore, I believe Professor Haidt’s work validates, by building on, the work of Humanistic Economics by Professor Mark Lutz (Ph.D. UC-Berkeley) and Dr. Kenneth Lux. Moreover, Professor Haidt’s work appears, to me, to further validate the astute criticisms of Dean Baker and Mark Weisbrot for neoclassical Marxists’ use of “Rational Economic Man” in their paradigm’s modls (no “e”). Having obtained my degree about 25 years ago, basically in humanistic economics, I am sure that adoption of such thinking by grad students in economics can help rescue humanity from its current barbaric state. I just hope there’s still time left.

    Reply
    1. Jeremy Grimm

      But economics without homo economicus? Does that not mess-up a lot of beautiful economic proofs and their beautiful mathematics?

      Reply
  8. Ignacio

    On hate and having negative view on the rich: this article mentions that “only” 25% of Americans have a negative or very negative view of the rich”. Only is the proper word? I would say that is a lot of bad feelings. Hate is not a sane feeling and we are inclined to hate in stressful situations. So, if 25% of Americans, have these negative feelings (8% very negative) about the rich this spells quite a lot of despair/stress. It would be interesting a comparison with other countries to evaluate if this is normal by international standards.

    Reply
    1. Ignacio

      I mention this because stress & despair might explain, at least partially, the relative low turnout in general elections in the US compared with other OECD countries. Does anybody here know the evolution of electoral turnout in the US since 1950? Has turnout declined with time?

      Reply
    2. John Wright

      I remembered an old David Brooks column mentioning that Americans vote their aspirations.

      I’m not a fan of Brooks, but this 20 year old column may explain some USA citizens’ current attitudes..

      Here is a sample quote (about a proposed Al Gore estate tax):

      “The most telling polling result from the 2000 election was from a Time magazine survey that asked people if they are in the top 1 percent of earners. Nineteen percent of Americans say they are in the richest 1 percent and a further 20 percent expect to be someday. So right away you have 39 percent of Americans who thought that when Mr. Gore savaged a plan that favored the top 1 percent, he was taking a direct shot at them.”

      https://www.nytimes.com/2003/01/12/opinion/the-triumph-of-hope-over-self-interest.html

      While it has been 20 years since this was published, one might suspect American “I’ll be rich” aspirations have taken a beating during this interval.

      The economics profession has ridden the hydrocarbon energy spend of the last 100+ years as hydrocarbon energy has been pulled from the ground and converted into “economic growth”.

      It will be interesting to see how the profession responds to future events with climate change, peak human population and peak energy inexorably (in my view) arriving.

      Reply
  9. Donald

    One thing that has happened is that over the past several decades so- called liberals have agreed with conservatives that the market represents freedom and efficiency and the government represents the opposite. Some younger people are rebelling, but older voters have been hearing this their whole lives without challenge until Sanders came along.

    I just read a description of a Trump rally at the NYT and I think it was accurate. The reporters just repeated what ordinary people said there. One guy claimed the Democrats have just swung so far left he can’t support them anymore, yet on economics this simply isn’t the case. Sanders just represents what Democrats used to be on economic issues.

    Reply
  10. gsinbe

    I enjoyed the article, and agree with the main ideas, but he was a little rough on our primate cousins. Chimps may not cooperate by “carrying logs”, but, like a lot of social animals, they work together when, say, hunting other primates. And most social animals have a pretty well-developed sense of fairness (watch what happens if you give one of your dogs a treat and ignore the other one).

    Reply
    1. a different chris

      Yes I am trying to think about what chimps would actually need to transport a log for. That famous jocular saying by one of the researchers “we were beginning to think the difference between us was merely cultural”.

      Reply
    2. Carolinian

      Is that a sense of fairness or a sense of competition or perhaps a sense of both? Each dog would prefer being the favorite but will accept being the equal.

      Dogs are an interesting analogy because in my observation they are, as social animals, so much like us. Perhaps the main takeaway from the above article is the belief that there is such a thing as “human nature” and that we have a kinship with the other species. Needless to say such a view was once anathema in an intellectual climate dominated by religion and a human centric world view. Even now people like Pence are “dominionists” and believe that humans have been given dominion over the planet and all its other species because of what it says in the Bible. Power always needs to justify itself–perhaps because of that innate sense of fairness/competition that you mention.

      Reply
      1. Susan the other

        Haidt got me thinking about language too. His thesis could be talking about the evolution of language itself. The evolution of rationalization. Since he seems to premise his insights on human intuition and a certain bedrock of morality that all animals seem to have. Pre language. Can we attribute the morality of animals to a lack of rationalization? They do seem to lack immorality. If we were mute, but very intuitive as we are, what effect would our intuition have on our communication skills and our actions? Raising the question here, Is language the emotional middleman that is always (duplex) less than rational and causing all this confusion? Sort of thinking here about someone giving an over-the-top sermon, like an economics professor claiming that we are all homo-economicus.

        Reply
        1. Carolinian

          Morality traditionally implies conscious choice so I’m not sure that’s relevant to the animal world. Guess what I’m saying is that we are similar to certain animals in our instincts, not our intelligence.

          However the language of economic profs is deceptive since they should be saying “irrational self interest” rather than “rational self interest.” Pure selfishness usually ends up being bad even for the selfish.

          Reply
          1. Susan the other

            Also on this very subject, last night on Nova, the one about dogs, their domestication (or ours?) and their amazing ability to relate – communicate. They attribute a dog’s ability to communicate to oxytocin – because they thrive on love and friendship. I do believe that because I’ve only had one aloof dog and he was very wolf-like. A throwback. Indicating that evolution tends toward love – not to be too corny. Maybe Oxytocin will save us ;-)

            Reply
        1. Carolinian

          If by “pack animals” you mean species that live in societies I never said they didn’t. But obviously there is also cooperation on some level and social bonding. I do think this is a very complicated subject and not easily reduced to simplifications by yours truly–not a biologist–or the above article. But arguably the above is correct in asserting that economists themselves are ignoring the complications.

          Reply
  11. Ignacio

    And for those interested, here is a paper published in 2008 that empirically demonstrates that the “Homo economicus” approach in this case disguised in the form of “median-voter model” is bullshit regarding inequality, redistribution and public opinion, though they regard it as intelectually compelling. Economists!

    Reply
  12. a different chris

    >Experts have to see a lot of evidence accumulating across many studies before they reach a point where they are finally forced to think differently.

    Ummm, the whole, underlying maybe, point of the rest of the article is that the dominant economic thought of our age has nothing to do with evidence. Yet they overthrew Keynes. “Trust us, We’re Experts” or something like that right?

    Reply
  13. DJG

    I just finished slogging through The Master and His Emissary by Iain McGilchrist, which harmonizes with this article. Instead of the rider on an elephant, McGilchrist writes of the functions of the left and right hemispheres of the brain, which are significantly different. The left brain is verbal, analytical, and task oriented. It likes straight lines. (This strikes me as a description of the pseudo-accuracy and busyness of economics.) The right brain sees a larger picture, is less talky, and is generally better at perceiving the world around us. It is the hemisphere that can attain greater knowledge even if it is not as adept at expressing such knowledge in words. (The “bee” part of the brain–and more than 10 percent.)

    McGilchrist’s book is good, but way too long, which is an irony given that he asserts that the left brain, the emissary, is trying to subvert the master, the part of the brain less likely to go on and on and on in words.

    But this era of too many easy paradigms (economics, “free markets”), too much flimsy analysis (critical studies, queer studies, economics, New York Times op-ed columnists), and too much talk (social media) is very much left-brained. I think that what is wearing all of us out is the endless tsunami of word salad. Economics, with its insistance on rationality rather than reasonableness (left brain rather than right brain), fell into the salad bowl a long time ago.

    Reply
    1. Mel

      Yes. I, too, think this is a very important book. Being retired, I don’t think it’s too long. I revel in how much stuff I got for only thirty bucks (or whatever it was — something like that.)
      The neurological case is complete after 94 very dense pages. (535 citations. Pleasantly readable prose, though, and that bizarre experiment that “proves” that porcupines are monkeys.) After that he traces the effects and footprints of the two independent modes of thought through philosophy, art, music, and, generally, the working of our societies from ancient to post-modern.
      There’s a strong parallel to Daniel Kahneman’s Fast and Slow thinking, the right hemisphere being the fast one. The one wrinkle is that language is the province of the left hemisphere, but Kahnemann finds that fast thinking is perfectly adept at small-talk, as long as it doesn’t get too abstract.
      Worst for me is that now that I’ve read it, I’ve got to go back into Heidegger, all the other modern Germans, John Dryden, classical and modern painting, religion …

      Reply
  14. The Rev Kev

    So how would homo economicus work out in anything other than a modern industrial system? In earlier times, I would say that at the least they would be shunned as a danger to the community or maybe even thrown out altogether as being incapable of working in a close-knit community. Want a modern example instead? How about the fact that you cannot have a military based on the idea of homo economicus unless you are talking about a band of mercenaries. This whole stupid idea is why every relationship these days whether for work, employment, government, etc is defined by contracts. In short, it is a cookie-cutter idea that come in only one shape.

    Reply
  15. Sound of the Suburbs

    “Since the 1950s, this mono-motivated, self-seeking figure has stalked the pages of economics textbooks, busy deciding each action according to a rational calculus of personal loss and gain.”

    Advertising gave up with that sort of approach years ago.
    Advertisers appeal to deep seated wants and desires and this works really well, so they haven’t looked back.
    Are the wealthy much more rational?
    Let’s have a look at adverts targeted at wealthy people.
    Are they a long list of specifications and comparisons saying why these products are better?
    No.
    An advert for a Sunseeker luxury yacht conveys luxury, elegance, being able to get away from it all and there is usually a young woman in the back in a bikini; the less said about that the better.

    What about PR and propoganda?
    How do they work?
    The same as advertising really, and it’s got nothing to do with appealing to rational human beings.
    It works; they are not going to be doing it differently anytime soon.

    Economics seems to be the odd man out.

    Reply
    1. Mel

      A propos of nothing, long, long ago there was an ad during the Superbowl placed by Cadillac. It was all about authority, power, celebrity, and it hardly mentioned cars at all, if it even did. Blog commenters had to work very hard to explain how this was selling Cadillacs. IMHO, it didn’t sell Cadillacs. It told the top Cadillac executives all the things about themselves that they most longed to hear. It didn’t sell cars to wealthy people, it sold the ad itself to the Cadillac C-suite. It worked like a charm.

      Reply
  16. Sound of the Suburbs

    Inequality exists on two axes:

    Y-axis – top to bottom
    X-axis – Across genders, races, etc …..

    As long as the Democrats wealthy donors keep them focussed on identity politics and the X-axis, the donors should be able to keep making progress in the reverse direction on the Y-axis.

    Reply
  17. Rob Chametzky

    Samuel Bowles has examined these issues recently in “The moral
    economy”:

    https://yalebooks.yale.edu/book/9780300163803/moral-economy

    and he’s MUCH better than Haidt. I recommend this book and lots
    of his earlier work, much of it done with Herbert Gintis.

    Their 1976 “Schooling in capitalist America” is no less necessary
    reading now than it was then, and their 1986 “Democracy & capitalism”
    is maybe even more relevant now (Milanovic credits it as a forerunner
    to his current “Capitalism, alone”, which it is–and much more than that).
    More recent stuff is referenced in “The moral economy” and pretty
    much always worthwhile.

    –Rob Chametzky

    Reply
  18. Tim

    Morality is a big part of decision making, but I’ll argue that is secondary to our cognitive biases that exist at an even lower level of consciousness to enable us to retain function and decision making in the face of an overwhelming number of variables.

    The opposite of cognitive bias or perhaps the antidote is critical thinking, which must be taught/learned, so yeah it is preposterous to assume people use solid reasoning that could only come about with the use of critical thinking, which vasts swaths of society almost never exercise.

    Reply
  19. flora

    Thanks for this post. Homo economicus was/is always and only about the ‘one’.

    Whereas the basis of moral philosophy is about ‘the one and the many’ in equal importance, imo.

    Thanks for this post and to the commentors recommending more writings in this field.

    Reply
  20. Dirk77

    The article to me is all over the place, which builds on Haidt’s views that seem all over the place too. Interesting though. Comments too. The experimental data about Haidt’s classifications of moral decision making elements, and where self-described liberals and conservatives rank them in importance was interesting. I suppose the liberals regarding only two of the six as important could be due to their college educations. As a math professor I had once observed about a smart student in his class: “he learned his subject too well”. Or to paraphrase Othello: “One that learned not wisely but too well”.

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  21. TG

    Hmm… yes but…

    Humans are rational economic agents! Therefore we must ship our industrial base to China so that the rich can make more money.

    Humans are rational economic agents! Therefore we must allow big companies to merge and quash competition and raise prices.

    Humans are rational economic agents! Therefore we must allow “surprise medical billing” when insured people go to the emergency room.

    Humans are rational economic agents! Therefore we must do nothing to stop the use of slave labor in peeling shrimp for export in Southeast Asia.

    Humans are rational economic agents! Therefore we must bail out and subsidize Wall Street and big finance with tens of trillions of taxpayer dollars.

    Perhaps the “humans are rational economic agents!” argument is not really an argument, as such…

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    1. deplorado

      The most important takeaway from this is that we should not let economists guide the economy. Not the economists believing in homo economicus anyway (and, while we are at it, believing in equilibrium as well). The reason for existence of such a concept is clearly to replace ethics and morality as a guiding principle of human economic activity with a pseudo- “natural law” (humans by nature are “economicus” – i.e. self-interested and materialistic – phew!), which once entrenched, relieves those in power from moral obligations because it safely explains away almost any economic outcome as result of “natural” forces – i.e. no one to blame (globalization=natural force). It’s a great tool for them. Down with it.

      Reply
  22. Dick Swenson

    The asumption of rationality has been defeated by many economists, as well as psychologists, sociologists, etc.. Carrying on about this is unncessary. Assuming that humans worry about “care and fairness’ is true. The “12” prophets of the Tanakh (Old Testament”) raised this concern numerous times, and one can find it as a major issue in the Synoptic Gospels. Smith also worried about this in his first book on economocs, “The Theory of Moral Sentiments.” The only reason for any further consideration of “rationality” in economics is due to the attemprt by economists to treat economics as a “science” like physics. There are also numerous misguided attempts to mathemaize economics.

    But one insidious reason to pretend that economics is a “science” is to justify the idea of a “Nobel Prize” in economics, or to give a “halo” to economists that win the “Swedish Central Bank Prize in Economic Scholarship in Memory of Alfred Nobel.”

    Avner Offer and Gabriel Söderberg have written a good book about the creation of this prize, “The Nobel Factor.” Please note, the words “Nobel Prize” do not seem to appear on either the certificates or medal awarded.

    Daniel Kahneman who won the prize (justifiably, (and John Nash a famous mathematicin who won many real prizes) notd that giving labels often transfers a false aura to those being labeled. Offer and Söderberg noted that this is true of the label “winner of the Nobel Prize.” Given that there is no decent encompasssing theory of economics similar to Newton’s Laws and how often the prizes are awarded to economists who don’t produce anything like such a theory, we should once and for all abandone the pretense that economis is a science. It is an attempt to describe social behaviour in a very restricted context. Leaving it to psychologists, sociologists and others has produce better undertandings of human behaviour.

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