33 Comments

Vichy: The fundamentals of economics is 'choice' (scarcity is one element that plays into market pricing, which is a different part of economics). What we choose and how we choose it has a huge overlap in psychology.

Take a look at the emerging field of Behavioral Economics

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That was a fantastic article, by the way.

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I dont know if this comment is appropriate. When i read this:

This all seems to add up to a consistent expert consensus that humans quite often, perhaps even usually, just don’t know why they do what they do. And this is extremely disturbing, as it calls into question our own opinions about why we do what we do.I remembered Nassim Talebs book "Fooled by randomness". There he talks about the role of human irrationality. He says all human decisions need not have reasons and could just be irrational and nothing much. May be when analyzing such questions we are too rational to not admit irrational behaviour that we are shocked at the "singularity" in human behaviour which is not knowing why they do what they do. Well another reason why experts may give different reasons(hopefully people take it in a right spirit) is that he has to find a justification,a reason, while there may be none. The following seems to fit perfectly: The authors of journals look for reasons and justify their point. People are also forthcoming with reasons;only that they are different. And there is no reason behind their decisions.It opens up another question. Suppose there is a case where reasons given by all coincides with the expert. It still does not mean it is the right reason . Probably there was no reason start with. Expert tries to find one and fit it. Even other people also try to explain their actions. But strangely the matter at hand is unique enough that there is less variance in reasons given by people and the mean happens to be that of the expert. Any comments?

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It's the introduction I usually recommend.

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This post is really inspiring me to be even more misanthropic. Of course, it's really nothing new on this blog, but it's nice to know you're thinking about how to put all the pieces together.

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Robin, have you read "Rational Choice in an Uncertain World" by Reid Hastie and Robyn Dawes? While including behavioural economics, it has nice coverage of expert errors. The book is very readable, and the authors are very knowledgeable, an excellent combination.

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If you accept E. O. Wilson on reduction and consilience (as I do), then economics can ultimately be reduced to (and hence should be based on) psychology, then psychology on neurology and so on down to physics. Statistics is a tool for understanding a variety of things, including economics.

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I don't see what psychology or statistics has to do with economics proper (that is, economizing scarce resources). Economizing within a means-end framework, and their relation within an overall market/distribution scheme is quite different from 'modeling' actual preferences, prices and historical situations.

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interesting topic, with many angles. thanks for being obsessed with it!

i'd like to offer an addition to what z.m. davis said re multiple levels of explanation. it's pretty simplistic to run on the assumption that behaviours have ONE reason/cause. there's usually a complex web of them, and it's hard to put it all in words.

also, let's not forget how ill-worded most surveys are, and how quickly we tend to want to get through them. i don't know if focus groups are any indication of how economists structure their methodology but the marketing-oriented focus groups i've attended, run by way-too-well paid industrial psychologists, were pretty abysmal from a research point of view.

you may find it interesting that there is a branch of brief therapy that is becoming more and more popular (proposed by people such as steve miller) that thrives on taking people by their word, assuming that what they say is as close to the truth as can reasonably be expected.

having said all this, i totally agree that there is a level at which humans are not overly familiar with, or interested in, the truth (whatever THAT is.)

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'In vino veritas' - some people tell the truth when under inebriation. Can we actually describe our motives ( why we do what we do) under a bit of inebriation as well? Not sure if any research has been done on this (besides decision making stuff). Does the 'sober self deception' transform into realisation under inebriation? If the answer under inebriation is emotional - rather than a rationalisation of some factors, what does that mean?

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"rather overt conspiracy" is a typo, I meant "rather than overt conspiracy". Coordination with nontransparent semiotics rather than overt conspiracy to pursue an outcome where the underlying motivation may be repugnant for an elite subpopulation to acknowledge to themselves as a subpopulation.

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I think it's great that you're obsessed with this project. One way I think you could usefully proceed is in making quantitative models that attempt to forecast behavior. I think a strand of research that does tie together the various combinations of self-deception and social functionality is the area of repugnancy. Self-deception may be optimizing when a functional activity or motivation is repugnant to ourselves. Goffman's concept of "covering" may occur when a functional activity or motivation is repugnant to others.

Also, I think it's really useful to look at how this works on the various social orders of magnitude from psycho to micro to macro. Countries may not have internally transparent propagandas about why they have an officially stated belief or religion, why they elect a president with particular traits, or why they go to war. Even at the most "elite" levels, where decisions are made, there may be internal micro-deception, with nontransparent semiotics for the purpose of coordination, rather overt conspiracy ("we should lie to the masses so they'll do this, because the truth would be repugnant to them").

The previous paragraph applies to smaller social units too, like corporations and neighborhoods. Building up from primate aesthetics to optimized algorithmic behavior may be the key here.

A useful model may be flexible rational agents optimizing for persistence (corporations, countries, trait distributions), playing a game where to persist they need to motivate primates with relatively inflexible, irrational (from the perspective of persistence optimizing) biases (repugnancies, motivations).

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Someone on OB (can't remember who) once posted this paper full of the psychological evidence for exactly the proposition you're arguing. It's pretty good. If you didn't read it the first time around, I have to recommend it.

However, there are also cases like the psychotherapists you described a few posts ago. They managed to do well and beat a control group, but the theories they used to explain their success were completely made up. The self-reports of patients probably would have been a better guide to what was going on in their minds than the therapists' Freudian models.

Compare this to the evolutionary psychologists, who usually try to confirm their theories by predicting weird facts that would not have been obvious without their theory and then confirming them in experiment (like how the grief parents feel at a child's death is proportional to the child's reproductive opportunities).

Some economists have managed to do this; others have not. I am only fully comfortable believing the economists' theories once they meet with such experimental success. If you want to convince people to believe those theories, you should publicize their successful non-retrospective predictions as much as possible.

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Yes, I agree with that too. I would also speculate that it is a defensive mechanism, even for innocuous behaviors. The split brain experiments mentioned by TGGP for example,suggest that the conscious human mind is desperate to always have some kind of excuse or explanation for both conscious and unconscious behavior. After all, to acknowledge that one's outward behavior may actually be due to in unconscious factors means accepting that we are not fully in control of ourselves. A second comment: When a child misbehaves, and and adult demands to know why, the child may sometimes look sheepish and answer "I don't know," even if asked repeatedly. Interestingly, that answer is very seldom considered acceptable by the parent (even when it may be true, in some cases). And so, for better or worse, I would assert that children (at least, those in our culture) are effectively trained from an early age that: (1) explanations for their behavior are mandatory, and (2) that it is a useful skill to be able to come up with them quickly.

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Are the laypersons' and experts' accounts are really so opposed to each other? There can be multiple levels of explanation: the individual might be perfectly sincere in their stated reasons for doing something, while the economist or the sociologist might have another complementary explanation for why social conditions exist in which people do this thing, and the evolutionary psychologist has yet another complementary explanation for why humans evolved to want to do this thing under such-and-such conditions, and the physicist can just as correctly say that it's all just quarks and leptons anyway.

This is just standard textbook reductionism, isn't it? What am I missing?

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Having no explanation or being very uncertain about an explanation is very different from humans, who act rather confident in their mistaken explanations.

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