December 31, 2017

Review Corner

Behavioral economics, as this flourishing movement is called, has in its own turn generated new policies and new critics. It purports to come closer to adding the human dimension to economic models, but as we will show, although it has made some advances, it does nothing of the kind. The human beings it imagines behave just as mechanically, only less efficiently (judged by the same criteria as traditional economists use). They are still abstract monads shaped by no particular culture. You still don't need stories to understand them. In short, they bear as much resemblance to real people as stick figures do to the heroines of George Eliot or Leo Tolstoy.
Cents and Sensibility: What Economics Can Learn from the Humanities is an ambitious book. Nortwestern University President Morton Schapiro and Slavic languages and literatures Prof. Gary Saul Morson bridge the divide between economics and humanities. What can economics learn from the humanities' depth and story-telling? What can the humanities pick up from economics' rigor? [Bojack Horseman fans will say "Let's find out!"]

The model for "Cents & Sensibility" is the dichotomy between Adam Smith's "Theory of Moral Sentoments" and "Wealth of Nations." I'm more skeptical of the gulf between the two works than most, but it's a fair backdrop for the task at hand.

Human lives do not just unfold in a purely predictable fashion the way Mars orbits the sun . Contingency, idiosyncrasy, and choices -- all of which allow for alternatives \-- play an indispensable role. That is why, as the great novelists recognized, personhood and sociality demand biography and history. Novels are a distinct way of knowing; and the very shape of the stories they tell -- what sorts of events are represented as plausible, effective, or important -- conveys vital, if elusive, information.

Shapiro is not an economist in the libertarian, lassiez-faire mold. He represents the discipline well, but I would have enjoyed more push-back on the morality of individualism and freedom. He does get points for dropping St. Deirdre:
The third area -- ethics -- has attracted the attention of a number of interesting recent thinkers. We are particularly impressed with ideas long promoted by Deirdre McCloskey, who argues for an ethics based on the virtues, a way of thinking newly important among philosophers.

And a bit of Karl Popper and William Easterly lurking in the shadows. It is the "expert" pointy-headed economist dictating lives and behaviours which attract the authors' scorn.
For a proposition to be meaningful, let alone scientific, it must in principle allow for circumstances in which it could be tested and so proven false. But if it is true by definition, it can't be tested. Those who argue this way literally play fast and loose --- a phrase in which the word "fast" is used in its older sense of "close" or "tight," as in the expression "hold fast." When they want to make a prediction, they use a tight definition so they can make one prediction rather than another; but when the wolf is at the door, they switch to a loose one so they cannot be wrong. These objections did not convince the social scientists.

Not to pile on Shapiro, but here's where I'd like to see the Hayekian wing promoted, as it makes more room for the human nuances they seek in literature.
Plato represents the archetypal hedgehog, Aristotle the perfect fox . As Plato looked to the world of mathematics, Aristotle was fascinated by the amazing variety and complexity of biological organisms. Plato composed the first utopia, Aristotle surveyed existing constitutions and examined how they fared in practice. Dante, Leibniz, Hegel, Marx, Freud, Bentham, Einstein, and Skinner exemplify hedgehogism; for foxiness we turn to Montaigne, Erasmus, Shakespeare, Hume, Darwin, George Eliot, William ( and Henry ) James, and Wittgenstein. The hedgehogs sound like Leibniz: "God does nothing which is not orderly, and that it is not even possible to conceive of events which are not regular." 19 Wittgenstein speaks for the foxes: Don't say something must be the case but "look and see." 20

A few quibblles about a thoughtful and engaging book which I would heartily recommend. Four stars. For better or worse, it finally forced me to read "War & Peace." As I struggle to complete 2017 Review Corners, Tolstoy is next.

Review Corner Posted by John Kranz at December 31, 2017 12:11 PM

Fred Smith @ FEE reviews this same book today.

Posted by: jk at January 3, 2018 4:10 PM | What do you think? [1]