---Chris Perley <[log in to unmask]> wrote:
>
> Steve compares a belief in Evolution with a belief in Rational
Economic Man.
> I admit it - I believe the former, and don't believe the latter.  I
belief
> the former BECAUSE (this is a reason) I think the empirical evidence
for the
> former is too vast (from fossils to domestic breeding) to ignore.
It is too
> vast to even compare with the "rational economic man" hypothesis in
the same
> breath.  The latter is off the other end of the scale from evolution
in
You know Chris, I find this a rather depressing statement considering that
you have proabably only read a tiny tiny fraction of the empirical articles
on economics.  The literature is vast and I could rattle off at least a
dozen journal titles that deal solely with empirical research.  I myself
have read only a very small amount of the empirical literature and I have
spent over 10 years studying economics.  To just sweep aside the empirical
evidence makes your argument weak in my opinion.

Steve

The empirical evidence of rational economic man?  That I would like to see.
When ever I have brought this up with economists they talk of indifference
curves and utility functions that fit behaviour.  I keep trying to question
them as to whether that is how people came to their decisions - through
rational processes.  I keep challenging them that that is MERE description,
and that I could just as easily describe behaviour in any number of ways.
Have you empirically gone inside peoples' heads?




> terms of empirical support (but if someone wants to question it -
that's
> fine.  I won't get upset).  But we still happily question just about
> everything about it, including whether the mechanism has a taint of
Lamarke
> about it at times.  But we accept that nothing is certain, and we
(those
> trained in science) respect empiricism over an empty rationalisation
from
> debateable, an unquestionable axioms.  In that sense (scientific
empiricism
> over economic rationalism) I think economics is - frankly - the
lesser (and
> how's this for irony), and less RATIONAL discipline.

The axioms can be changed.  The primary reason in my opinion that they
haven't is 1) there is no viable alternative, and 2) the logical conclusions
derived from the axioms have largely been supported by the empirical
evidence.  In reading the Varian article he has pointed out that there have
been (experimental) studies on transitivity of prefrences.  This does not
mean that if a better alternative is found it will be ignored.  It might
take time for the majority of the profession to switch, which I think
happens in all fields of study.  Even Varian, a noted and frankly famous (in
the field of economics) economist acknowledges your criticisms.  Yet you
still feel compelled to call him and all other economists religious
fanatics.  So be it.

Steve
I suggested a discipline was a religion if it was based on axioms
(catechisms) that "were not subject to questioning" (your words).  You drew
your own conclusions.  As to your points 1 and 2 above - I disagree as to
alternatives.  I have suggested:
* an inclusion of psychological hypotheses like social construction and
emotion in human behaviour;
* sociological human power relationships (the fact we can be influenced - to
our disadvantage as well as advantage),
* a movement away from the individual as a basis for economics (recognising
society makes individuals as much as individuals make society, so economic
dictates have no relevance outside a detailed understanding of a culture -
including social mores and ethics - so no "people should act in this selfish
way" normative prescriptions that actually feed back into influencing a
society to that end [just another example of a non-linear, subtle,
intangible feedback loops where even the simple language of the debate has
the power to change values]);
*  a better understanding of human (historic, present and future)
relationships with the environment (with the environment as the pedestal
upon which the society and economy works rather than the market as the
arbiter);
*  an inclusion of ecological systems analogies that are not so obsessed
with mechanistic, quantification and the cult of certainty that the whole
reliance on mathematical tools would suggest.
* I could add another suggestion - an embracing of adaptive processes -
where uncertainty is acknowledged and monitoring and review is part of the
process (and not monitoring by just economists who see the world through a
maze of preferences and utility, either - but by other disciplines who ought
to have a say - such as resource biologists, sociologists etc).

I do not pretend that you will get prediction right all the time, but its
record would, I'm sure, be just as good as REM with regard to individuals
and markedly superior with regard to societies and the environment.

As to your point 2.  This is nonsense.  Logical deductions from rational
economic man include:
* "there is no such thing as society" (just a collection of individuals):
* people will always do what is "good" for them (it's their "preference"
right? - even Veblen's "conspicuous consumption" can be rationalised in such
ways)
* individual consumers have "sovereignty" over corporates, because they
"dictate" purchases - (ie advertising and social influence are no factors in
belief)
* the future is linear
* market equilibriums exist (just as we used to think the same about
ecological equilibriums (now we accept constant change as more
representative of reality);
* the market will provide the best environmental solutions (premised on an
"enlightened" REM);
* the market will provide the best social solution (ditto)
* the unfettered market will provide the best economic solution (because we
can ignore social and environmental costs - most of which are intangible)
* market corrections are rational acts by individuals
* where corrections are extreme and depressions occur then government
intervention is to blame
* disparities of rich and poor represent an individual's merit, or they
choose to be poor (it's all about rational choices right)
* policy decisions such as "we ought to sell national parks if people aren't
willing to pay the necessary entrance fee "famously promulgated by Friedman,
and also some maniac NZ Treasury officials (who also suggested Wellington
University sell its Milton collection - because "value" only relates to what
the market (in its omniscient benevolence) will pay.
* Pretty soon you get to believe the market is the best arbiter o all things
because it is just so damned simple

Q.  Does the empirical evidence support these conclusions?  A.  If your
world remains the quantitative linear model, and you describe a posteriori
events in terms of rational economic man then I suppose you could squeeze a
validation or two out of it (like Reagan's statement about the people who
"choose" to be homeless).  It depends how Pontius Pilate like you want to be
with regard to the empirical evidence and the rationalisations you make.

Granted I'm using extreme examples, but to suggest that the empirical
evidence supports these points is only more proof that the axiom cannot be
refuted through any falsification procedure.  The believers will always
believe it, while those with the common sense to question it will be
considered heretics.

Markets are great for your average baker supplying food to the town, but the
minute you get into relationships that can influence society and economy I'm
afraid there are real concerns.




 As far as the empirical data on human behaviour goes, societies and
> individual perspectives are too different to suggest anything other
than
> that socially constructed values filter our observations (yes even
in the
> science community) and genetics cannot explain the differences.
Compare a
> Taleeban Moslem Mujahideen with a Wall Street banker - they see the
world
> through different filters - not an attractive view through either.
My own
> value laden observation sees societies

True, and it would also be interesting to see if the Moslem has
non-transitive prefrences.  Would he really claim that he prefers oranges to
apples and apples to grapes, but grapes to oranges.  Now maybe being a
Moslem dictates that he have such prefrences, but neither you nor I know for
sure...although you claim that he would.  By the way isn't there a theory of
evolution in biology that people do everything just to enhance their chances
to reproduce?  Hmmmm....sounds kinda like a utility maximizer.



Steve

You're still using the language from within your paradigm (preferences,
utility maximiser, etc.) to DESCRIBE an event after the event.  It is still
individualistic.  It doesn't accord any weight to either the actual
cognitive processes, or the social influence on an individuals belief.  On
your basis no one, no matter what action they take, is doing anything other
than being rational and maximising utility.  No empirical experiment I could
devise would be able to refute it - ie - under Popperian criteria it is
pseudoscience.

As to the reductionist genetics of ethics - a la Dawkins and Matt Ridley -
you don't want to go there.





 (family/class/friends/education/state/country) influencing
individuals, I
> "see" advertising/propaganda and other social factors influencing
beliefs,
> wants and perspectives.  But this might just be a Platonic "shadow
on a cave
> wall" compared to what reality "really" is.  It is obvious that we can
> "reason" - if that means explicitly evaluating selective information
and
> coming to a decision from such a basis (the facts are these,
therefore I
> will do this), but most of our actions are too implicit in their
genesis,
> and too stoked with hormones, to call it "reason".  We eat because
hormones
> "tell" us we're hungry - not because we calculate and reason so.  We
show
> love, joy and hate out of biochemical emotions, not through reason.
We root
> for our team, and value our own institutions because we are born and
raised
> to them, not because of calculation.  I suggest that some of our own
tit for
> tat posting have the odd bit of emotion in them, even though we are
using a
> logical framework.  You want my belief (though I will keep questioning
> it)? - It is this: socially constructed implicit values (including
> metaphysical ethics) dominate human behaviour - not some ideal of
rational,
> asocial, acultural, amoral, individual.

I keep telling you this and you keep ignoring it.  Economists do not
disagree with this.  Most economists would argue that such differences would
be accounted for in various shapes of the utility function.  Economists do
not assign utility functions to people, since they tend to be unobservable.
(This would be like saying "I know what you are thinking".)  Instead, they
attempt to estimate demand curves (while again not observable peoples
actions [i.e. purchases] are observable) which are a logical conclusion
derived from maximizing utiltiy functions subject to constraints.  Thus, it
is the data that would determine the shape of demand curves and the utility
functions underlying the demand functions.
Tell me Chris, do you really think that people from a different culture
would have intransitive prefrences?  Do you really think people have
non-convex prefrences (convex prefrences mean people like a mixture of goods
and don't prefer to consume just one good)?


Steve,

I don't believe people act out of explicit preferences at all.  I think that
preference curves and utility functions are the particular shadows you see
on the cave wall.  The reality is somewhat different.  The only virtue of
REM and the quantitative baggage such as functions and utility is that it
allows mathematical convolutions that essentially divorce their analysis
from the reality that remains veiled behind the unquestioned assumptions and
ignored intangible interrelationships.  The danger is that people start to
believe the outcomes, especially if the mathematical complexity is admired
and values for its sophistication.  The trouble is that people don't see the
sophistry behind the sophistication.







> But I suppose you could argue that if I'm not going to junk a belief
in
> evolution, then it is hypocritical to suggest a junking of REM.
Keep it
> Steve.  It's all yours.  But I BELIEVE it's still a theory with an
extremely
> tenuous relationship to reality, and it remains a belief to many
(even an
> ethic for how people ought to act - like Ayn Rand and the
"normative" [how
> people OUGHT to act] neoclassical economic advice some countries
have to
> bear).  That wouldn't be so bad if it did not have the potential to
destroy
> social and ecological structures in its rationalisation of an ideal.
> Especially when there are alternatives that are far more
accommodating to
> society and environment.

Personally, I think that economics should be used very cautiously in
determining public policy.  There are, as you point out, a large number of
policies that have had negative effects (some very bad).  Other economists
feel the same way as I (although not all to be sure).  For example, when
asked what he would do if he was an economic advisor to the President Robert
Lucas said he would quit since he thinks politicians don't really want the
advice, but are looking for support for a policy they have already decided
upon.


Steve

I agree with you.  You obviously don't have some of the horns of the
Friedman worshippers.  You being in this list is also testimony to that.
Politicians do look for predetermined policies.  But consider this.  We have
had 15 years of reforms and the social relationships between chiefly a
Treasury given huge power some 12 years ago has influenced belief.  When the
belief of the politicians accords with the beliefs of the Friedman
worshippers what do you have.






> Thanks for the references to Amartya Sen and Hal Varian.  I heard
that Sen
> won the Nobel Prize for Economics - a huge surprise for some given his
> attacks on orthodoxy.  I hadn't heard of Varian's reference, though
you
So has James Buchanan, and he was and still is very unorthodox.  He has a
very strong connection to the Austrian School, and they are definitely not
"mainstream".
> One final point.  Economics is not a "hard" science (not that that
is a bad
> thing because ecology and physics are getting softer by the day).
> Quantification and mathematics only creates an illusion to that
effect.  And
> you are probably right - I do have it in for economics.  My reason
is that
> it is SO influential in socially constructing human values.  I have
a quote
> that sums it up - "Practical men, who believe themselves to be quite
exempt
> from any intellectual influences, are usually the slaves of some
defunct
> economist. . . . It is ideas, not vested interests, which are
dangerous for
> good or evil." - economist John Maynard Keynes.

Keynes was a unique guy from what I have read.  Also, he is probably rolling
over in his grave right now given what many macro economists have done with
his views on macro theory.
> I believe in the power of ideas - FOR GOOD OR EVIL.  It such were
not the
> case, perhaps I wouldn't be so obsessed with economic "ideas".
Keynes was
> an insightful guy, but perhaps you think he didn't know what he was
talking
> about.  Do you accept the power of ideas Steve - the social
construction of
> ethics and other human values?  If you do, then the corollary is an
> acceptance of the questioning of those values.

Of course I do, I would think my posts have stated this.  The problem is I
feel you really haven't delved into economics or read the empirical
literature to determine if there is indeed anything to economics.  Show me
an alternative to the current axioms, and demonstrate that they work better
and I will switch until then keep working on it.



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