Economics should be subsumed under the general study of human behavior, not the other way around....I have no sympathy for the economic imperialists who insist that every action must be explained in terms of the rational, self-interested calculator. Instead, I would start with the presumption that every action can be explained in terms of habits, customs, and the like. Making rational economic decisions is just one of many habits. Rational, economic behavior is like a hat. Sometimes we wear the hat, and sometimes we do not.
I also have no sympathy for behavioral economics. All it does is take the rational, individualistic model and extend it to include common biases and mistakes. It generally ignores the larger context of behavioral influences, particularly the social ones...Finally, I should emphasize that I have no sympathy with those who view self-interested economic calculation as a bad habit. On the contrary, I believe it is a very good habit, particularly when it is combined with other habits and ethics for commercial behavior.
Thursday, March 15, 2007