Sunday, September 13, 2009

A Bone to Pick with the "Undercover Economist"

Tim Harford was on NPR's Morning Edition recently, plugging his new book, Dear Undercover Economist, a compendium of the advice columns he regularly writes for the Financial Times, where he serves on the editorial board. Ari Shapiro's interview with Harford is excellent. I enjoyed it so much that my class and I listened to it together during our meeting the same day.

Now I enjoy Harford's work immensely. Some of you may have even noted that his blog is one that has appeared in my blogroll for some time now. But I have a bit of a bone to pick with the way that Harford frames how economists think on things.

To give a backdrop the nature of my disagreement, here are a few snips from the NPR page. (I'd encourage you to listen to the entire interview, though. It really is good!)

Economists aren't known for their softer side. . . .

They should be the last people you ever ask for relationship advice.

"There is a certain irony in economists who have the least developed emotional register of any social scientist, giving dating advice," says economist Tim Harford, who lives that irony every day. . . .

"There's no consideration of morality," says Harford, who channels his pure inner economist when he writes the advice column.

And he sees that pure inner economist almost as an evil twin who doesn't care how rude he is or how much he cuts through the emotional complexities of a situation.

Sorry, but economics is not merely about sorting out the institutional arrangements in play, then pursuing unbridled hedonism with no thought to the social or emotional consequences. (That is, unless some anti-economist--as Harford tells it--should sweep in at the end and nudge us into some relatively moral direction.)

Our emotions, our feelings, our possible guilt, our concern for the well-being of others, and even a consideration of whether we will look ridiculous or not--all of these factors enter directly into our economic decision-making. They are not some mere final consideration before we plunge headfirst into the most opportunistic pool available. Adam Smith knew this, and said as much in both his Theory of Moral Sentiments and the Wealth of Nations.

And the fact that they are not an afterthought is one of the reasons that the same self-interested models of economic behavior that work well in explaining the life and work of Donald Trump work equally well in explaining the life and work of Mother Teresa. Both have lived their lives in the pursuit of their self-interest--in whatever sense "self-interest" has happened to mean to each of them. And for Mother Teresa, the plight of the world's most downtrodden and helpless was one of the primary influences motivating her life's work. Serving them was what she wanted to do.

Now, to be fair, economists--and Harford--often do not fully incorporate such considerations into their economic modeling because emotional and social consequences prove less tractable than, say, expected alternative monetary payoffs from one course of action versus another.

But just because they are less tractable than other factors that influence the choices we make does not mean that they do not matter, or more to the point, that they do not enter directly into our choice framework.

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