Economists who lack an imagination
By Scott Sumner
One thing that bugs me is economists who seem to think that their way of looking at life is the right way. Indeed the only sensible way.
1. Economists who complain that Christmas presents are inefficient.
Do they ever consider the fact that people might get utility from the thought that others are thinking about them? You don’t have to think about someone else to give them money, whereas you do have to try to think about their preferences if you give them a gift.
2. Economists who complain that buying lottery tickets is foolish.
Do they ever consider that people with dreary lives might get utility from buying a little bit of hope for the future? I seem to recall a study that suggested that people with unrealistic expectations about the future are happier.
3. Economists who assume that smoking is inefficient because (they assume) the health risk is greater than the benefit (i.e. enjoyment) from smoking.
My dad knew the health risk, and smoked anyway. Why assume it was not rational? He was highly intelligent, and seemed rational to me. Do they know something that my dad did not?
4. Economists who say that voting is not rational because there is only a tiny probability that your vote will swing an election.
Why not assume that people get utility out of voting? Maybe they are patriotic.
This is not a left/right thing; I see this narrow-minded thinking among economists on both sides of the political spectrum. Rather it seems to reflect a lack of imagination.
This kind of thinking led Deirdre McCloskey to turn away from “maximizing utility” models of behavior. I see her point. But I don’t see utility as the problem, but rather a lack of imagination as to all the subtle ways that people can derive utility.
PS. This is my biggest problem with behavioral economics. The field has certainly produced some interesting results, but at times it seems like the practitioners are over-confident about their ability to second guess the decisions of people they have never even met.
PPS. And I think the problem goes far beyond behavioral economics. I often find it hard to even have a conversation with my fellow economists. Sometimes their views on “scientific” methodology are so narrow that any claim that doesn’t fit some arbitrary mathematical model is ruled out of order. Or the failure to follow some arbitrary testing procedure results in claims being ignored. Or vast consequences are assumed to flow from whether a statistical test yields a “significant” result.
PPPS. I will be traveling today, and may do less blogging over the holidays.