Behavioral economics is moving from theory to policy

The Kansas City Star ^ | 12/20/2008 | RICK MONTGOMERY

[HawaiianGecko]

As the economy sinks and investors buckle over, the behavior buffs are rising up. From the lesser-appointed corners of academia, psychologists, sociologists and a youthful breed of economists scoff at the revered mathematical models that have driven economic thought and snared Nobel Prizes. These preachers of “behavioral economics,” 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.

[yefragetuwrabrumuy]

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.

[Comparative Advantage]

The study of economics is less reputable than astrology nowadays.

[dr_who]

Man, and look at how much good our current tax code has done! You’ve pretty much nailed it.

[JudgemAll]

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.

[camas]

good advise

[JudgemAll]

“Libertarian Paternalism”... hmmm... that is straight out of the communist “Opinion Making” handbook of arrogance of thieves and plagiarists.

[JudgemAll]

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.

[freekitty]

Exactly

[AuntB]

What is so difficult about that simple concept to grasp? Yet some of the econ genius’ on this forum STILL don’t get it.

[denydenydeny]

The article is "interesting" only in the sense that being able to watch a train heading at top speed towards a cliff is "interesting."

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.

[freekitty]

I don’t know. Its clear as a bell that is what is happening.

[GoodDay]

Of course, in a further display of their ignorance and blindness, members of the left will undoubtedly characterize the line of argument I’ve presented in this article as the “trickle-down theory.” There is nothing trickle-down about it. There is only the fact that capital accumulation and economic progress depend on saving and innovation and that these in turn depend on the freedom to make high profits and accumulate great wealth. The only alternative to improvement for all, through economic progress, achieved in this way, is the futile attempt of some men to gain at the expense of others by means of looting and plundering. This, the loot-and-plunder theory, is the alternative advocated by the redistributionist critics of the misnamed trickle-down theory. The loot-and-plunder theory is the theory of Obama, of the Democratic Party, and of much of the Republican Party. It is time to supplant it with the sound economic theory developed by generations of intellectual giants ranging from Smith and Ricardo to Böhm-Bawerk and Mises.

-George Reisman

[GOP Poet]

bookmark

[expat_panama]

another way to get deeper into your pockets.

That's just part of it; it's also a good way to cover up blunders.  When asked by Congress (Greenspan admits ‘mistake’), "Greenspan said he had made a "mistake" in believing that banks in operating in their self-interest would be sufficient to protect their ..." 

So Greenspan's saying the only thing he did wrong was underestimated the public's stupidity.