Behavioral Economics Ready for (Sub) Prime Time?
By Arnold Kling
government would achieve simplified transparency by requiring all lenders to provide borrowers with an electronic file that contains, in standardized form, information on every feature of the contract.
Instead of fine print, there would be electronic information. And because disclosure would be standardized, consumers could easily compare one mortgage, and one credit card or school loan proposal, with many others.
This fails to take into account evolution. Idiot-proof systems fail because they can always build a better idiot.
Speaking of behavioral economics, happiness research, and the like, it turns out that the most important finding in the field is not robust.
Betsey Stevenson and Justin Wolfers argue that money indeed tends to bring happiness, even if it doesn’t guarantee it. They point out that in the 34 years since Mr. Easterlin published his paper, an explosion of public opinion surveys has allowed for a better look at the question. “The central message,” Ms. Stevenson said, “is that income does matter.”
The other day, Will Wilkinson sang “Tomorrow Belongs to Me.”
As happiness research becomes more fully integrated as normal social science, methods will continue to be refined, philosophical disputes will get hashed out, and results will become ever more informative. . .If Arnold doesn’t find an investigation into the causes and mechanisms of human flourishing useful, then I don’t know what to say. It’s called science.
I’ll call it science when the practitioners adopt methods that can produce reliable results.