Wednesday, October 21, 2009

more about science

My last post was about how, if you start with a strong conviction that creationism is true (and some people have this drummed into them from an early age), the belief can persist for roughly the same reasons that scientists belief in evolution persists. And how we can seem as frustrating to them as they are to us.

I've actually had similar thoughts about economics. One of the assumptions that economists make is that people are rational. So if you see some puzzling behaviour, we should think twice about concluding that people people (or the institutional arrangement) are messing up. There's probably something going on that explains what's going on in a way that makes the behaviour seem much more reasonable.

This is usually true even though we know for damn sure that individuals are not especially rational. If people are doing something in a familiar, reasonably clearly incentivised situation, their behaviour probably more or less makes sense.

The difference between this and evolution though, is that though most of people in my extended social group are willing to sign up to, and defend evolution, they're not that keen on markets, so when they see outcomes they don't like, stories about how it actually makes sense for people to be doing what they're doing seem forced and pretty lame.

I think this is part of the reason for skepticism about quite a lot of the accepted wisdom in economics.

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