“math is hard”
Some traditional economists might ask, “And how do you intend to calculate the effects of herd mentality, blind faith or self-destructive foolishness when dealing with a mortgage broker?”
well, we’ll just check the ‘aura’ to see if the behavioral theory has good ‘karma.’
I think the Skinner box is stored up in the rafters in the garage.
There's the problem.
If you neighbor voted for 0be, he'll be wanting more of your pie. Some folks are more rational than others. 'Rats are emotional.
We need two separate economies. May the better side win and be able to retire early. The other folks can carry 0be and Mugabe around in their sedan chairs.
“including some on President-elect Barack Obama’s economic team, argue that humans cannot be relied upon to obey the efficient, orderly tenets espoused by free-market thinkers.”
The brainiacs of the beltway need to realize one thing. Most of us out here in the backwoods know one simple fact that they don’t get.....You spend more than you bring in you are in DEBT!
Good think that politicians are not humans, we are saved! Heil Ooooobama!
The new fad is “libertarian paternalism.” Obama’s friend Cass Sunstein is a big promoter of this. The argument is people make errors in making decisions and sometimes go against their own self-interest; therefore, the government should exploit people’s inherent biases to help them make the ‘right’ decisions.
Isn't this a pathetic, false argument? We don't assume that people act rationally with THEIR OWN money at all! Of course, government planners will action rationally with OUR money, right? The fact is, if it's your money, you get to spend it, save it, waste it, donate it... whatever. This is a trick to justify taking more from the "stupid boobs" who actually get paid for something, and spread it around. Sickening.
Two interesting quotations.
“When directing people to certain decisions without forcing anything on them, it’s unwise to promote too many choices or we will freeze and do nothing, say Thaler and Sunstein.”
We’re going to get a lot of this from the new administration. They will talk of giving freedom to choose but they will only offer the choices they agree with.
Now, here’s the most important point from the article: “If people mess up all the time, who’s to say the policymakers won’t get it wrong?”
Yes, policymakers are people and subject to the same kinds of mistakes and errors. Too bad the policymakers don’t see themselves as less than superhuman.
This statement is both wrong and simplistic.
Traditional economic theory doesn't state that rational actors “always” act rationally. It states that enough of us act rationally, often enough, that predictions can be made.
The implicit equivalence of “informed self-interest” to greed is simplistic. Traditional economic theory actually holds that people will tend to want to maximize their “utility”. For instance, people value long-term relationships, and will forgo money to preserve them. They are also altruistic — e.g. giving money to a charity often provides more “utility” than squandering it on luxuries. Our self-interest also includes the well-being of our families and friends — we'll sacrifice a lot for them.
There seems to be a lot of interesting things happening in “behavioural economics” — but, writers in the mass media display little to no understanding of what comprises traditional economics. Mathematical modeling has played too prominent a role in economics of late. Too many math geeks playing with their models have removed a lot of the relevance from modern economics. A large number of the quants have no real understanding of economics. They're very much like climate modelers, who forget that the model is not the world.
Behavioral Economics is not new. Dr Daniel Kahneman won the Nobel Prize for Economics with his theories in 2002, even though he had been studying this since the early 1970’s.
Moshe Milevski is another Behavioral Economist.
John Huggard is a law professor that also covers this.
It has nothing to do with politics, but it does have a lot to do with tax policy.
I’m a firm believer that the public generally gets what it wants, individually and collectively. It was noted in China over a thousand years that invaders and conquerors of China would “become Chinese” after just a few generations.
This is because if the conquerors ordered the Chinese to do things they didn’t want to do, they would either not do them, or do them slowly, expensively, and not well. But if they were told to do what they wanted to do, it was done quickly, well, and far under budget. It was just easier for everybody to do things, “the Chinese way”.
But the same thing applies everywhere else as well. Right now, Obama is full of all sorts of schemes. However, unless the public wants them, they will fall flat.
It would not be so bad if Bush or Obama thrusted their hands in our pockets, their parents’ pockets and their children’s pockets, as if it were theirs, patheticaly...
but to see added to it grandiloquent holier than thou “theories”, excuses and self-messianisms, is the epitome of insults and ridicule at the same time.
I cannot stand these jacka$$es.
The thing is, it’s always the ones with good behavior who volunteer themselves under the commands of a leader who helps keep them in check. The rest, they are rebellious and do not care, or, they even claim themselves to positions of leadership.
The world is in need of correction, and the earlier we let go of the rot, the better it will have a chance of “degangrening” itself of socialism.
That’s absurd, counterfactual … and now they’ve created a catastrophe,”
But markets are always self-correcting, even if the correction is painful. "Catastrophic" is what you get when governments believe that they can direct economic activity better than the market can.
bookmark