I really enjoyed this article. I took a few sittings to read it, but I liked the continuous format.
Let me just make a general comment on the tone here:
But really, shouldn’t it have been obvious all along that humans are irrational? Perhaps it is, to everyone but neoclassical economists and Aristoteleans. (Okay, enough teasing...)
Teasing per se is fine, but this happens to reinforce a popular sentiment which I find misleading. Everyone likes to point out the differences between standard economic assumptions and actual human behavior. Pitted against other disciplines like neuroscience, whose goal here is to get an accurate reading on what makes an individual tick, economics loses.
But that’s an unfair comparison, because by and large the goal of economics is not to get an accurate reading on what makes an individual tick. Economics is much more concerned with what happens when you aggregate multiple individuals, through markets or games and so forth. The behavior that emerges from their interactions, that is the main focus of economics. Of course it can get pretty complex when you throw a bunch of people together, so we typically have to make a lot of simplifying assumptions at the level of the individual.
Rationality is certainly a simplifying assumption. Rationality is a standard assumption of economics because economists are typically looking at a more complicated situation than “how an individual behaves.” It’s a little unfair to compare the standard assumptions of economics with the standard assumptions of other disciplines—in a discussion of how an individual behaves—and conclude that economists “got it wrong.” Were they trying to get it right?
Thought it was worth bringing up because I encounter this sentiment so frequently, whereas I think that economists by and large are quite aware that their assumptions are simplifications in service of their models. On the one hand, this comment is irrelevant to the goal of communicating the neuroscience of human motivation. But on the other hand, economics is usually discussed from the individual angle on LW, and often with a similar sentiment, so in the long run maybe it’s worthwhile taking steps to avoid consistently giving a lot of people the wrong impression about an entire field.
[You may say, but economists do sometimes discuss individual behavior, and when they do, I often see them assuming rationality! But even here, I think it’s a bit misleading to criticize economists for making the assumption. For one, descriptive results aren’t the sole goal; prescriptive results can be important too, and rationality is the way to best achieve your goals. For another, because economists spend so much time around rationality for good reasons, they are very comfortable with it and have a lot of solid intuition about what follows from rationality, so to the extent that they can apply those tools to areas they aren’t necessarily optimized for, they may actually have something interesting and worthwhile and unique to say. For a third, in the absence of other information about what really makes people tick, sticking to rationality is a way of restricting oneself from making up just any story to explain the facts. Neuro—by putting irrationality stories on solid ground—will certainly be allowing us to break away from that, but I don’t think it will ever be fair to say that economists were “proven wrong” about their assumptions. Most economists don’t think people are actually rational. Most economists don’t think they already know what neuroscience will discover in the brain. They are just making assumptions, assumptions that have served them well and so far been enormously successful as a framework for human behavior]
I really enjoyed this article. I took a few sittings to read it, but I liked the continuous format.
Let me just make a general comment on the tone here:
Teasing per se is fine, but this happens to reinforce a popular sentiment which I find misleading. Everyone likes to point out the differences between standard economic assumptions and actual human behavior. Pitted against other disciplines like neuroscience, whose goal here is to get an accurate reading on what makes an individual tick, economics loses.
But that’s an unfair comparison, because by and large the goal of economics is not to get an accurate reading on what makes an individual tick. Economics is much more concerned with what happens when you aggregate multiple individuals, through markets or games and so forth. The behavior that emerges from their interactions, that is the main focus of economics. Of course it can get pretty complex when you throw a bunch of people together, so we typically have to make a lot of simplifying assumptions at the level of the individual.
Rationality is certainly a simplifying assumption. Rationality is a standard assumption of economics because economists are typically looking at a more complicated situation than “how an individual behaves.” It’s a little unfair to compare the standard assumptions of economics with the standard assumptions of other disciplines—in a discussion of how an individual behaves—and conclude that economists “got it wrong.” Were they trying to get it right?
Thought it was worth bringing up because I encounter this sentiment so frequently, whereas I think that economists by and large are quite aware that their assumptions are simplifications in service of their models. On the one hand, this comment is irrelevant to the goal of communicating the neuroscience of human motivation. But on the other hand, economics is usually discussed from the individual angle on LW, and often with a similar sentiment, so in the long run maybe it’s worthwhile taking steps to avoid consistently giving a lot of people the wrong impression about an entire field.
[You may say, but economists do sometimes discuss individual behavior, and when they do, I often see them assuming rationality! But even here, I think it’s a bit misleading to criticize economists for making the assumption. For one, descriptive results aren’t the sole goal; prescriptive results can be important too, and rationality is the way to best achieve your goals. For another, because economists spend so much time around rationality for good reasons, they are very comfortable with it and have a lot of solid intuition about what follows from rationality, so to the extent that they can apply those tools to areas they aren’t necessarily optimized for, they may actually have something interesting and worthwhile and unique to say. For a third, in the absence of other information about what really makes people tick, sticking to rationality is a way of restricting oneself from making up just any story to explain the facts. Neuro—by putting irrationality stories on solid ground—will certainly be allowing us to break away from that, but I don’t think it will ever be fair to say that economists were “proven wrong” about their assumptions. Most economists don’t think people are actually rational. Most economists don’t think they already know what neuroscience will discover in the brain. They are just making assumptions, assumptions that have served them well and so far been enormously successful as a framework for human behavior]