Economics and similar, for the sleep-deprived

A subtle change has been made to the comments links, so they no longer pop up. Does this in any way help with the problem about comments not appearing on permalinked posts, readers?

Update: seemingly not

Update: Oh yeah!

Friday, February 08, 2013

From my email outbox, on behavioural economics ...

sadly, behavioural economics is really really plagued with the same sort of pathological incentives as "Freakonomics", because like quirky-dataset regressions, it really lends itself to small-topic research of the sort that will get your PhD completed on schedule and/or produce a stream of publishable[1] papers to demonstrate one's value to a department research assessment exercise.  As a result it has basically spent the last twenty years working on producing a theory to describe the behaviour of one particular class of person (economics graduates students) in one particular situation (behavioural economics laboratories) and is nearly there.  IMO, behavioural economics is to a significant degree responsible for the suspicion in which interdisciplinary research is held by economics profs, as it appears to me to be chock full of people who have used the psychology department's ignorance of economics and the economics department's ignorance of psychology to play the two off against each other and avoid going into either in any depth[2].  Which is a form of arbitrage, so I suppose they know a bit about economics after all.

The trouble is - as I say, most interesting economics problems are not really about psychology.  If it takes 9 minutes of labour and 10c worth of metal to make a widget which sells for $2.50, then the answer to "what is the wage rate in widget manufacture" is going to depend on specific conditions relating to the widget industry, not general theories about altruism.  Nearly all the time spent on behavioural economics would be better spent on specific institutional work.  It is notable that the puported big success of BE - the "hyperbolic discounting" theory of why people undervalue future benefits and costs - is so transparently nothing more than a redescription of the problem that after ten years it still basically hasn't left the psychology lab (apart from showing up in a couple of Freakonomics papers).


[1]Where "publishable" is defined in strictly empirical terms related
to the current academic journal industry and implies no wider
judgement on whether these articles ought to be stuffed in a bottom
drawer somewhere forever.

[2] Apologies to any list members working in the field but come on,
you know what I'm talking about.


ah yes, I forgot the other tendency of economists - the appropriation of already existing concepts by claiming that it was economists that put them on a rigorous footing.  I mean, the  Yorkshire Penny Bank was founded in 1859, and the concept of weakness of will was being noted by the Ancient Greeks.  British Leyland in the 1960s actually had an automated machine that could split a worker's pay packet into a number of different envelopes of cash, reflecting family preferences for housekeeping, rent and beer money.  There's probably a good article for someone in finding out how many of the hard-won results of behavioural finance had already been discovered by Victorian ironmasters.


3 comments this item posted by the management 2/08/2013 04:36:00 AM

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