Behavioral Economics

Critique

Heinrich Joseph in an interview with David Sloan Wilson:

“DSW: As you know, one of the strongest challenge to orthodox economics has come from behavioral economists such as Richard H. Thaler and Cass R. Sunstein, who call for an economic theory based on “Homo sapiens, not Homo economicus” in their book Nudge. Yet, in my own opinion, the field of behavioral economics falls far short of the fully rounded evolutionary approach that you provide in The Secret of Our Success. How would you distinguish your paradigm from the field of behavioral economics in its current form?

JH: I see two problems with behavioral economics at least as you just framed it. The first problem is that many behavioral economists haven’t fully confronted what I call the WEIRD People problem.(Western, Educated, Industrialized, Rich and Democratic) Researchers often think they’re studying “Homo sapiens“, but actually they’re studying a particularly peculiar form of cultural psychology. This is because, until recently, most studies have been done with WEIRD undergraduates. But, it turns out when placed in cross-cultural perspective WEIRD undergraduates are psychologically rather unusual and a really poor model for our species psychology. This remains a problem but I think economists are now tackling it more quickly and efficiently than anyone else.

The second problem is that most behavioral economists, like most psychologists, still think in proximate terms. That is, they don’t think about where aspects of psychology including preferences and beliefs come from. One needs a generative theory that aims to explain how and why particular aspects of psychology emerge. If you don’t have an ultimate theory about where these aspects of psychology come from you end up with a disorganized mess of heuristics, biases and preferences, which is what I see when I look much of this literature. Without a theory there’s nothing to discipline and organize the empirical research.

These two problems bring us back to where I was on your last question. Economics needs a broad evolutionary framework that allows theorists to endogenize preferences, beliefs and potentially other aspects of psychology. Then, utility functions and decision-making rules can be embedded within this larger framework.

I’m hopeful on this front. I see economists like Tim Besley at the LSE gradually taking up the cultural evolutionary framework and building a synthesis with existing tools from economics.”

(https://evonomics.com/scientists-discover-what-economists-never-found-humans/)