The only questions worth asking today are whether humans are going to have any emotions tomorrow, and what the quality of life will be if the answer is no. - Lester Bangs, rock critic
“An Indian born economist once explained his personal theory of reincarnation to his graduate economics class,” Paul Krugman writes in the opening paragraph of his Preface to Peddling Prosperity. “If you are a good economist, a virtuous economist,’ he said, ‘you are reborn as a physicist. But if you are an evil, wicked economist, you are reborn as a sociologist.” The evil economist is closer to reality but many economists want to emulate the virtuous economist and achieve the precision of physics.
Adam Smith recognized that humans are not always guided by reason. His Theory of Moral Sentiments begins, 'How selfish soever man may be supposed, there are evidently some principles in his nature, which interest him in the fortune of others, and render their happiness necessary to him, though he derives nothing from it except the pleasure of seeing it.' But many later economists try to subsume human behaviour into their imposing theories and complex calculations involving the rational maximiser whose resemblance to reality is highly questionable.
Commenting on the new methods of reproduction like IVF and surrogacy, one professor of business administration at Harvard said that this 'unbundling the supply chain' has prompted 'growth in the surrogacy market' since people who participated in this market 'essentially needed to purchase a single package of egg-bundled-with-womb. 'This description instrumentalises women's bodies and treats babies as tradeable commodities. Philip Ball writes in Critical Mass about Gary Becker's analysis of the economics of the family (which helped him win a Nobel Prize in 1992):
In Antifragile, Nassim Nicholas Taleb (no admirer of economists; he often calls them charlatans and advocates throwing out everything in economics that has an equation) relates a hilarious story. It is about a highly cited academic in the field of decision theory who helped develop "something grand and useless called 'rational decision making' loaded with grand and useless axioms... and grand and even more useless probabilities".
When at Columbia university, he struggled over a decision to move to Harvard. A colleague suggested that he use some of his greatly honoured and discussed techniques which "included something like like 'maximum expected utility'". He angrily responded, 'Come on, this is serious!' (Taleb is not sure whether the story is apocryphal or not but thinks it true to type.) As Yogi Berra said, 'In theory there is no difference between theory and practice. In practice there is.'
Economists often come up with such cartoon models of human behavior because they are conducive to deriving simple equations and getting exact solutions. But modeling human behaviour without any role for emotions is unrealistic. It is like the drunk who was searching for his keys under a streetlight. When a passerby asked him where he had lost his keys, he replied that he had lost it in the next street. Then why search here? The drunk said, 'Because this is where the the light is present.' Similarly economists use only reason in their models because that is where light is present. In The Black Swan, Nassim Nicholas Taleb gives an idea of why economists make bizarre models:
But researchers are finding that reason and emotion work together. The evolutionary journey has equipped us with two distinct information processing systems. Researchers such as Daniel Kahneman have classified these systems as System 1 which can be called the emotional brain and System 2 which can be called the rational brain. These systems are in constant communication with each other. The attentive System 2 is who we think we are but it is not a paragon of rationality and is often derailed by the automatic System 1.
“An Indian born economist once explained his personal theory of reincarnation to his graduate economics class,” Paul Krugman writes in the opening paragraph of his Preface to Peddling Prosperity. “If you are a good economist, a virtuous economist,’ he said, ‘you are reborn as a physicist. But if you are an evil, wicked economist, you are reborn as a sociologist.” The evil economist is closer to reality but many economists want to emulate the virtuous economist and achieve the precision of physics.
Adam Smith recognized that humans are not always guided by reason. His Theory of Moral Sentiments begins, 'How selfish soever man may be supposed, there are evidently some principles in his nature, which interest him in the fortune of others, and render their happiness necessary to him, though he derives nothing from it except the pleasure of seeing it.' But many later economists try to subsume human behaviour into their imposing theories and complex calculations involving the rational maximiser whose resemblance to reality is highly questionable.
Commenting on the new methods of reproduction like IVF and surrogacy, one professor of business administration at Harvard said that this 'unbundling the supply chain' has prompted 'growth in the surrogacy market' since people who participated in this market 'essentially needed to purchase a single package of egg-bundled-with-womb. 'This description instrumentalises women's bodies and treats babies as tradeable commodities. Philip Ball writes in Critical Mass about Gary Becker's analysis of the economics of the family (which helped him win a Nobel Prize in 1992):
'Participants in marriage markets', argues Becker, face a difficult choice because they 'have limited information about the utility they can expect with potential mates.' People are compelled to marry across boundaries of race, religion and class when 'they do not expect to do better by further search and waiting'. Let us be thankful that Shakespeare did not have Romeo and Juliet put it that way.In this TEDx talk,Gerd Gigerenzer talks about this idea of economists of marrying by maximizing expected rational utility. When he asks economists how many married this way, no one says he did so. Finally, one economist admitted that he calculated the maximum utilities of his girlfriends and married the one who had the highest score. Not surprisingly, when they met a few years later, the economist was divorced.
In Antifragile, Nassim Nicholas Taleb (no admirer of economists; he often calls them charlatans and advocates throwing out everything in economics that has an equation) relates a hilarious story. It is about a highly cited academic in the field of decision theory who helped develop "something grand and useless called 'rational decision making' loaded with grand and useless axioms... and grand and even more useless probabilities".
When at Columbia university, he struggled over a decision to move to Harvard. A colleague suggested that he use some of his greatly honoured and discussed techniques which "included something like like 'maximum expected utility'". He angrily responded, 'Come on, this is serious!' (Taleb is not sure whether the story is apocryphal or not but thinks it true to type.) As Yogi Berra said, 'In theory there is no difference between theory and practice. In practice there is.'
Economists often come up with such cartoon models of human behavior because they are conducive to deriving simple equations and getting exact solutions. But modeling human behaviour without any role for emotions is unrealistic. It is like the drunk who was searching for his keys under a streetlight. When a passerby asked him where he had lost his keys, he replied that he had lost it in the next street. Then why search here? The drunk said, 'Because this is where the the light is present.' Similarly economists use only reason in their models because that is where light is present. In The Black Swan, Nassim Nicholas Taleb gives an idea of why economists make bizarre models:
Economics is the most insular of fields; it is one that quotes least from outside itself. Economics is perhaps the subject that currently has the highest number of philistine scholars - scholarship without erudition and natural curiosity can close your mind and lead to the fragmentation of disciplines.Humans have generally thought that reason is better than passion, thoughts are better than feelings. Plato thought that emotions are like wild horses which have to be controlled by the intellect which he thought of as the charioteer. I came across some sample sentences in Metaphors we Live by that show humans regarding reason as better than emotions - The discussion 'fell to the emotional' level, but I 'raised' it back 'up to the rational' plane. We put our 'feelings' aside and had a 'high-level intellectual' discussion of the matter. He couldn't 'rise above' his 'emotions'.
But researchers are finding that reason and emotion work together. The evolutionary journey has equipped us with two distinct information processing systems. Researchers such as Daniel Kahneman have classified these systems as System 1 which can be called the emotional brain and System 2 which can be called the rational brain. These systems are in constant communication with each other. The attentive System 2 is who we think we are but it is not a paragon of rationality and is often derailed by the automatic System 1.
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