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I find it odd that economists generally ignore the field of human psychology / behavior in their assessments. Things like mental and physical health, addiction

I find it odd that economists generally ignore the field of human psychology / behavior in their assessments. Things like mental and physical health, addictions and substance use, thought manipulation and mind control, the fears and desires, sexual fantasies, even popular movies and music affect the economy greatly. Not just a little bit, but greatly. A CEO's addiction to cocaine or promiscuity will have an impact on his company's bottom line. A young man starts a disrupting startup because he got inspired by a sci-fi movie a couple of years earlier. Adam Smith's "invisible hand" is "invisible" because those forces can't be explained by the mechanistic rules of economics or mathematics. We just need to look elsewhere for a comprehensive picture. What makes customers choose a product over the other ? Why do some companies retain great talent better than others - and hence reap greater profits ? How does pop music affect industrial design ? Of course, human behavior and psychology is hard to quantify, that is why it's being left out, but I think we can start to make these connections now that we have the tools and information available. Take Google and Facebook - these companies make their profits from advertising. Tens of billions. Add the profits of the media market - print, tv, radio. Now consider how all that advertising affects the demand curve in all the other industries. And it's not just the quantity, it's also the quality of advertising - today's ads are scientifically designed to drill their way into our subconsciousness. The colors, the sounds, the motions, the emotions - all of these are carefully weighted so as just to make you want a certain brand over the other. And now my favorite part - is there a connection between advertising, corporate profits, pollution and climate change ? I think there is and it's a great one. To conclude, I think regulators should look at all these factors much deeper, determine the connection between mind and economy and exercise their influence by tuning other parts of society, not just traditional economic levers. Of course this is a monumental task for humans, but AI might just be perfectly suited for this type of analyses.

blfr 11y ago
I find it odd that economists generally ignore the field of human psychology / behavior in their assessments. Psychology, especially social psychology, is an epistemological disaster area[1][2] and everyone would be better off ignoring its "findings", not just economists. [1] http://www.nature.com/news/over-half-of-psychology-studies-fail-reproducibility-test-1.18248 http://www.nature.com/news/over-half-of-psychology-studies-f... [2] http://michaelinzlicht.com/getting-better/2016/2/29/reckoning-with-the-past http://michaelinzlicht.com/getting-better/2016/2/29/reckonin...
- lgieron 11y ago
  Economy is similar (though perhaps not as horrible) - economic Nobel laureates have profound disagreements w.r.t. basic "laws" of economy.
  - listentojohan 11y ago
    Out of curiosity, could you give an example?
    - lgieron 11y ago
      Keynes vs Hayek (well Keynes didn't get a Nobel, but is nevertheless regarded as a seminal thinker in the field) - their views on the role the state can and should play in shaping the economy are totally opposite. The debate is unresolved to this day, with Keynesians taking an upper hand post-2008.
- SpaceCadetJones 11y ago
  You mean to tell me a subject still in its infancy, studying some of the most complex and dynamic systems, has some bad findings? Shocking As someone who studied psychology, I've always recognized a lot of it is a bunch of wankery (as everyone should). That doesn't mean you toss it out, it means you think critically about any findings. This is the same reason I'm wary of a lot of economic talk: it's another social science studying something possibly even more complex. People seem to often carry a definitive tone
icebraining 11y ago
What makes you think economists don't try to study all those things? Even the caricatured "homo economicus" model, while defined as being perfectly rational in the methods, had an utility function (ie, goals) that was completely subjective; the idea that it was necessarily an Ebenezer Scrooge type is nonsense.
- justsaysmthng 11y ago
  I derive my conclusion based on articles I read in financial/economic press. I know that's not a very good heuristic, but somehow I feel like economic thought is mostly based on mathematical models and political science, while the study of human behavior and more generally, human mind is left to psychologists/psychiatrists as something marginally useful. I think economics and society in general would benefit greatly from a more unified theory. I'm sure that hedge funds do exactly this and reap great returns as a result.
  - forgetsusername 11y ago
    >political science And political science isn't concerned with the behaviour of people or groups? >benefit greatly from a more unified theory. Economists are generally concerned with things that can be measured. As others have pointed out, psychological findings are often irreproducible. So what's the point in incorporating them into models? And this all ignores the fact that behavioural economics is a popular and growing field...
thori 11y ago
Rather than calling it human behavior and psychology I prefer to call it human weakness. Human weakness, bias, ignorance etc are like software bugs in systems that mostly can't be patched. We have got so good at detecting and exploiting these bugs at speed and scale that all I see happening is another Greenspan type moment, where a future Google\Facebook CEO is sitting before a committee wondering how everything imploded. I mean Google\Facebook\Twitter etc benefit from the traffic Porn, Trump and ISIS pay for and generate much more than anyone else does. It's ridiculous.
- takno 11y ago
  I'm not sure it's useful to dismiss human behaviour as human weakness. It is what it is, and adding in essentially a moral dimension won't add much to the analysis
- SpaceCadetJones 11y ago
  It's not a bug, it's a feature! Just because it can be taken advantage of doesn't make it a bug. There are reasons these features developed, they were/are evolutionary advantageous. Things like bias are important because they help make us more efficient. They create blind spots, but they also allow us to more wisely spend our limited processing power. We have to compartmentalize things to understand them, we have very limited capacities. We have to do mental rounding in order to make sense of the world around us, there's simply too much information.
untog 11y ago
> Of course this is a monumental task for humans, but AI might just be perfectly suited for this type of analyses. How? AI doesn't magically solve problems, it still has to be programmed by a human, and as yet we really have no good models to assess exactly how, for example, cocaine abuse affects a CEO's performance.
- justsaysmthng 11y ago
  Some of you who are actively working on this will probably smile at my naïveté, but I'll take a wild shot at an example anyway: See people's music listening trends on Spotify (or torrents or whatever). Examine the lyrics (or lack of lyrics) of the songs. I would guess that an AI could find patterns and relationships between what songs people listen to and their emotional or mental heath (plus many other indicators). Are people falling in love or are they breaking up, are they having more or less sex ? Are people using more drugs, partying or drinking more ? Now you have some macroeconomic indicators - vectors - which affect a wide range of industries - from contraceptives to baby cribs to concert tickets. Again, a wild guess, but I think AI could be applied to this kind of fuzzy analyses and probably be quite effective at predicting economic trends.
coldtea 11y ago
>And now my favorite part - is there a connection between advertising, corporate profits, pollution and climate change ? Sure, unless there is real popular pressure for change, they the all increase together ad maximum, reinforcing one another...
mjohn 11y ago
It's not that economists ignore human psychology / behaviour, rather economists are interested in finding simplified models that provide some kind of generalizable insight. The models will include varying levels of complexity depending on what question the economist is trying to answer and what data the economist could reasonably access. In many cases what motivates a particular individual provides little insight into what happens in the economy as a whole. For example, a model of start-up success that included founder education level and sci-fi movies watched by founders would provide little, if any, greater insight than a model the model that looked at just education level. It's similar to over-fitting in machine learning – the extra parameter is probably harming the usefulness of the model by making it less general. On the other hand, CEO cocaine addiction might be a very good predictor of company profits, but you would have a hard time getting accurate data for that regardless of how good your AI is. Furthermore, I could reasonably hypothesize that some CEO's would respond to cocaine by out-performing non-cocaine users while some would under-perform depending on physiological factors. Again, without massive invasions of privacy, economists will not be able to factor this into their models.
- qaq 11y ago
  "On the other hand, CEO cocaine addiction might be a very good predictor of company profits" hmm looking at Wall Street it would seam a very good predictor.
iamnothere 11y ago
> Things like mental and physical health, addictions and substance use, thought manipulation and mind control, the fears and desires, sexual fantasies, even popular movies and music affect the economy greatly. > To conclude, I think regulators should look at all these factors much deeper, determine the connection between mind and economy and exercise their influence by tuning other parts of society, not just traditional economic levers. Can you clarify? I'm probably just misreading you, but it sounds like you're implying that we should be "regulating" culture -- or even thought itself ("thought manipulation and mind control") -- in order to improve the economy. Just wanted to make sure I was reading that correctly. If that is what you meant, could you give some kind of hypothetical example? Would this be like banning certain themes because they cause social unrest? Requiring shows to carry certain messages? Eliminating styles of music that lead to "unproductive" activities? Bonuses for creators of films that cause a jump in profits? I'm legitimately baffled.
- justsaysmthng 11y ago
  Not at all. I wasn't trying to suggest any fixes. I was just rhetorically questioning the validity of our economic theory without including the "laws" of human behavior and the factors that influence it. Culture and the economy are in a constant feedback loop and we should look at both components when building our theories. There is this fallacy that companies offer customers what they want, when in fact companies do everything possible to suggest to people what they want or need by using all kinds of mind manipulation techniques. And the theory doesn't address this at all. I don't know about regulation of culture - that never works as expected, but some activism is always welcome. Facebook or Google could potentially alter the whole global economy and ecology, just by carrying certain messages on their websites or apps. Like "plant trees and recycle" ! Or .. "be generous, help the needy" or something like that.
  - iamnothere 11y ago
    Thanks, that makes a lot more sense then. Culture informs economy and vice versa, and it makes sense to study that. It just worries me when it looks like someone is advocating the elevation of economy over culture, especially when potential regulation is on the table.

blfr 11y ago

I find it odd that economists generally ignore the field of human psychology / behavior in their assessments. Psychology, especially social psychology, is an epistemological disaster area[1][2] and everyone would be better off ignoring its "findings", not just economists. [1] http://www.nature.com/news/over-half-of-psychology-studies-fail-reproducibility-test-1.18248 http://www.nature.com/news/over-half-of-psychology-studies-f... [2] http://michaelinzlicht.com/getting-better/2016/2/29/reckoning-with-the-past http://michaelinzlicht.com/getting-better/2016/2/29/reckonin...

lgieron 11y ago
Economy is similar (though perhaps not as horrible) - economic Nobel laureates have profound disagreements w.r.t. basic "laws" of economy.
- listentojohan 11y ago
  Out of curiosity, could you give an example?
  - lgieron 11y ago
    Keynes vs Hayek (well Keynes didn't get a Nobel, but is nevertheless regarded as a seminal thinker in the field) - their views on the role the state can and should play in shaping the economy are totally opposite. The debate is unresolved to this day, with Keynesians taking an upper hand post-2008.
SpaceCadetJones 11y ago
You mean to tell me a subject still in its infancy, studying some of the most complex and dynamic systems, has some bad findings? Shocking As someone who studied psychology, I've always recognized a lot of it is a bunch of wankery (as everyone should). That doesn't mean you toss it out, it means you think critically about any findings. This is the same reason I'm wary of a lot of economic talk: it's another social science studying something possibly even more complex. People seem to often carry a definitive tone

icebraining 11y ago

What makes you think economists don't try to study all those things? Even the caricatured "homo economicus" model, while defined as being perfectly rational in the methods, had an utility function (ie, goals) that was completely subjective; the idea that it was necessarily an Ebenezer Scrooge type is nonsense.

justsaysmthng 11y ago
I derive my conclusion based on articles I read in financial/economic press. I know that's not a very good heuristic, but somehow I feel like economic thought is mostly based on mathematical models and political science, while the study of human behavior and more generally, human mind is left to psychologists/psychiatrists as something marginally useful. I think economics and society in general would benefit greatly from a more unified theory. I'm sure that hedge funds do exactly this and reap great returns as a result.
- forgetsusername 11y ago
  >political science And political science isn't concerned with the behaviour of people or groups? >benefit greatly from a more unified theory. Economists are generally concerned with things that can be measured. As others have pointed out, psychological findings are often irreproducible. So what's the point in incorporating them into models? And this all ignores the fact that behavioural economics is a popular and growing field...

thori 11y ago

Rather than calling it human behavior and psychology I prefer to call it human weakness. Human weakness, bias, ignorance etc are like software bugs in systems that mostly can't be patched. We have got so good at detecting and exploiting these bugs at speed and scale that all I see happening is another Greenspan type moment, where a future Google\Facebook CEO is sitting before a committee wondering how everything imploded. I mean Google\Facebook\Twitter etc benefit from the traffic Porn, Trump and ISIS pay for and generate much more than anyone else does. It's ridiculous.

takno 11y ago
I'm not sure it's useful to dismiss human behaviour as human weakness. It is what it is, and adding in essentially a moral dimension won't add much to the analysis
SpaceCadetJones 11y ago
It's not a bug, it's a feature! Just because it can be taken advantage of doesn't make it a bug. There are reasons these features developed, they were/are evolutionary advantageous. Things like bias are important because they help make us more efficient. They create blind spots, but they also allow us to more wisely spend our limited processing power. We have to compartmentalize things to understand them, we have very limited capacities. We have to do mental rounding in order to make sense of the world around us, there's simply too much information.

untog 11y ago

> Of course this is a monumental task for humans, but AI might just be perfectly suited for this type of analyses. How? AI doesn't magically solve problems, it still has to be programmed by a human, and as yet we really have no good models to assess exactly how, for example, cocaine abuse affects a CEO's performance.

justsaysmthng 11y ago
Some of you who are actively working on this will probably smile at my naïveté, but I'll take a wild shot at an example anyway: See people's music listening trends on Spotify (or torrents or whatever). Examine the lyrics (or lack of lyrics) of the songs. I would guess that an AI could find patterns and relationships between what songs people listen to and their emotional or mental heath (plus many other indicators). Are people falling in love or are they breaking up, are they having more or less sex ? Are people using more drugs, partying or drinking more ? Now you have some macroeconomic indicators - vectors - which affect a wide range of industries - from contraceptives to baby cribs to concert tickets. Again, a wild guess, but I think AI could be applied to this kind of fuzzy analyses and probably be quite effective at predicting economic trends.

coldtea 11y ago

>And now my favorite part - is there a connection between advertising, corporate profits, pollution and climate change ? Sure, unless there is real popular pressure for change, they the all increase together ad maximum, reinforcing one another...

mjohn 11y ago

It's not that economists ignore human psychology / behaviour, rather economists are interested in finding simplified models that provide some kind of generalizable insight. The models will include varying levels of complexity depending on what question the economist is trying to answer and what data the economist could reasonably access. In many cases what motivates a particular individual provides little insight into what happens in the economy as a whole. For example, a model of start-up success that included founder education level and sci-fi movies watched by founders would provide little, if any, greater insight than a model the model that looked at just education level. It's similar to over-fitting in machine learning – the extra parameter is probably harming the usefulness of the model by making it less general. On the other hand, CEO cocaine addiction might be a very good predictor of company profits, but you would have a hard time getting accurate data for that regardless of how good your AI is. Furthermore, I could reasonably hypothesize that some CEO's would respond to cocaine by out-performing non-cocaine users while some would under-perform depending on physiological factors. Again, without massive invasions of privacy, economists will not be able to factor this into their models.

qaq 11y ago
"On the other hand, CEO cocaine addiction might be a very good predictor of company profits" hmm looking at Wall Street it would seam a very good predictor.

iamnothere 11y ago

> Things like mental and physical health, addictions and substance use, thought manipulation and mind control, the fears and desires, sexual fantasies, even popular movies and music affect the economy greatly. > To conclude, I think regulators should look at all these factors much deeper, determine the connection between mind and economy and exercise their influence by tuning other parts of society, not just traditional economic levers. Can you clarify? I'm probably just misreading you, but it sounds like you're implying that we should be "regulating" culture -- or even thought itself ("thought manipulation and mind control") -- in order to improve the economy. Just wanted to make sure I was reading that correctly. If that is what you meant, could you give some kind of hypothetical example? Would this be like banning certain themes because they cause social unrest? Requiring shows to carry certain messages? Eliminating styles of music that lead to "unproductive" activities? Bonuses for creators of films that cause a jump in profits? I'm legitimately baffled.

justsaysmthng 11y ago
Not at all. I wasn't trying to suggest any fixes. I was just rhetorically questioning the validity of our economic theory without including the "laws" of human behavior and the factors that influence it. Culture and the economy are in a constant feedback loop and we should look at both components when building our theories. There is this fallacy that companies offer customers what they want, when in fact companies do everything possible to suggest to people what they want or need by using all kinds of mind manipulation techniques. And the theory doesn't address this at all. I don't know about regulation of culture - that never works as expected, but some activism is always welcome. Facebook or Google could potentially alter the whole global economy and ecology, just by carrying certain messages on their websites or apps. Like "plant trees and recycle" ! Or .. "be generous, help the needy" or something like that.
- iamnothere 11y ago
  Thanks, that makes a lot more sense then. Culture informs economy and vice versa, and it makes sense to study that. It just worries me when it looks like someone is advocating the elevation of economy over culture, especially when potential regulation is on the table.