[Paleopsych] TCS: Why People Hate Economics
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Fri Dec 9 21:34:48 UTC 2005
Why People Hate Economics
[This is good, the idea those who reason from consequences of a proposal and
those who reason from the supposed motives of the proponents. But Mr.
Mencken said one thing the author did much better:
["The whole aim of practical politics is to keep the populace alarmed (and
hence clamorous to be led to safety) by menacing it with an endless series
of hobgoblins, all of them imaginary" (_In Defence of Women_).]
By Arnold Kling Published 11/21/2005
"the separateness of these two mechanisms, one for understanding the
physical world and one for understanding the social world, gives rise
to a duality of experience. We experience the world of material things
as separate from the world of goals and desires.
...We have what the anthropologist Pascal Boyer has called a
hypertrophy of social cognition. We see purpose, intention, design,
even when it is not there."
-- Paul Bloom, writing in The Atlantic
Paul Bloom's essay "Is God an Accident?" in the latest issue of The
Atlantic, suggests that humans' belief in God, Intelligent Design, and
the afterlife is an artifact of brain structure. In this essay, I am
going to suggest that the same artifact that explains why people are
instinctively anti-Darwin explains why they are instinctively
Bloom says that we use one brain mechanism to analyze the physical
world, as when we line up a shot on the billiard table. We use another
brain mechanism to interact socially, as when we try to get a date for
The analytical brain uses the principles of science. It learns to make
predictions of the form, "When an object is dropped, it will fall
toward the earth."
The social brain uses empathy. It learns to guess others' intentions
and motives in order to predict their reactions and behavior.
The difference between analytical and social reasoning strikes me as
similar to the difference that I once drew between Type C and Type M
arguments. I wrote, "Type C arguments are about the consequences of
policies. Type M arguments are about the alleged motives of
individuals who advocate policies."
Type C arguments about policy come from the analytical brain and
reflect impersonal analysis. Type M arguments come from the social
brain. In my view, they inject emotion, demagoguery, and confusion
into discussions of economic policy.
As a shortcut, I will refer to the analytical, scientific mental
process as the type C brain, and the emotional, empathic mental
process as the type M brain. What I take from Bloom's essay is the
suggestion that our type M brain seeks a motive and intention behind
the events that take place in our lives. This type M brain leads to
irrational religious beliefs and superstitions, as when we attribute
emotions and intentions to inanimate objects.
We need our type M brains, but in moderation. Without a type M brain,
one is socially underdeveloped. In extreme cases, someone with a weak
type M brain will be described by Asperger's Syndrome or autism. On
the other hand, as Bloom suggests, there are many cases in which we
over-use our type M brains. For example, social psychologists have
long noted the fundamental attribution error, in which we see people's
actions as derived from their motives or dispositions when in fact the
actions result from context.
Economics is an attempt to use a type C brain to understand market
processes in impersonal terms. We do not assess one person's motives
as better than another's. We assume that everyone is out for their own
gain, and we try to predict what will happen when people trade on that
Perhaps one of the reasons that economics is taught using math is that
mathematics engages the Type C brain. By getting students to look at
equations represented in graphs, the instructor steers them away from
thinking in terms of motives. The down side of this is that when they
go back to looking at the real world, many people who have taken
economics courses simply revert to using their type M brains.
Explaining Higher Gas Prices
For example, consider the run-up in gasoline prices that occurred
after Hurricane Katrina. Looking for the cause of higher gas prices,
the type M brain asks, "Who?" The type C brain asks "What?"
Some Senators, appealing to the type M brains among their
constituents, hauled oil company executives into a hearing to ask them
to explain why they raised prices so high. One might just as well
imagine hauling people before a Senate hearing and holding them
personally responsible for gravity or inertia.
No one sets the price of gasoline. If they could, oil company
executives would charge $10 a gallon or more. However, because of
competition, they have to charge an amount that will allow them to
sell the gasoline that they are able to produce. After Katrina, they
were able to produce less gasoline, so that at $2 a gallon they would
have run out. They raised their prices to the point where they could
not raise them further without losing most of their business to
If an oil company had decided magnanimously to sell gasoline at low
prices, it would have run out of gasoline. If enough companies had
done so, there would have been so little gasoline left that by October
the public would have been at the mercy of those few suppliers that
held any inventories. If gasoline had cost $2 a gallon in September,
the shortage in October might have pushed the price up to $5 a gallon.
If a monopolist were in charge of the oil industry, he would shut down
some refineries in order to reduce the availability of gasoline. A
monopolist would rather produce less gasoline and charge $3 per gallon
than produce more gasoline but have to charge $2 a gallon to sell it
Fortunately, the oil industry is not run by a monopolist, and we do
not have to face $3 a gallon all the time. A competitive firm will not
shut down its refinery capacity to keep supply off the market, because
that only benefits its competitors.
Hurricane Katrina temporarily did for the industry what a monopolist
would do permanently. The hurricane shut down refinery capacity. As a
result, oil companies earned high short-term profits. But those high
profits did not reflect a sudden outbreak of greed among the oil
company executives. Profits are explained by type C analysis of
context, not by type M attributions of motive.
Politics and Government
Type M thinking views government as a parent. Conservatives want their
government/parent to police moral behavior. Liberals want their
government/parent to provide nurturance. Type C thinking instead
thinks of government as an institutional arrangement. Rather than
anthropomorphize government as a parent, type C thinking leads me to
prefer the Separation of Family and State.
Type M thinking treats political conflicts as battles between good and
evil. "Our" side is wise and sincerely motivated. The "other" side is
stupid and evil.
Many economists revert to type M thinking when they look at politics.
See my Challenge for Brad DeLong.
Type C thinking treats political conflict as an inevitable competition
among various interest groups. Actors in the political sphere respond
to incentives, just as they do in other spheres.
Politicians try to exploit the type M brain. Politicians appeal to
people's fears. Their message is, "You are in danger. Fortunately, I
care about you, and I will save you."
The many political crusades against Wal-Mart reflect type M thinking.
For example, the state of Maryland, where I live, is considering
legislation forcing Wal-Mart to provide expensive health insurance to
The type M brain sees Wal-Mart management as Scrooge, and Maryland's
politicians as the ghosts that are going to get the company to see the
evil of its ways. However, Basic type C economics says that forcing
the company to provide more health insurance benefits would lead to
lower wages for Wal-Mart workers.
Economists view international trade as equivalent to the discovery of
a more efficient production process. As Alan Blinder put it recently,
"It has long been a mystery to economists why so many people view
creative destruction that stems from technology as okay, while similar
creative destruction that stems from international trade is something
to be opposed."
Hardly anyone feels guilty about using tax preparation software rather
than paying an accountant to handle their tax returns. Yet many people
would tell you that there is something wrong with outsourcing tax
preparation to accountants in India.
Neither economists nor non-economists tend to think of tax preparation
software as an alien outsider trying to steal our jobs. However, many
non-economists' type M brains instinctively think of Indian
accountants as trying to do us harm. Economists are trained to look at
international trade through the same type C eyes that we view
technological innovation, and we are constantly amazed by the general
public's hostility toward it.
Paul Bloom offers extensive evidence that the majority of people do
not accept the type C approach to evolution, death, and other matters.
If biologists have been unable to get people to change their type M
minds, then perhaps economists should not feel so bad.
Arnold Kling is author of Learning Economics.
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