Is Homo Economicus a Psychopath? • Hacker News Board

Re: Is Homo Economicus a Psychopath?

#51

Post by alexbecker » Tue, Dec 23, 2014, 12:45 AM UTC

dragonwriter wrote: post #49

alexbecker wrote: post #44

Earlier quoted context omitted.

I'm familiar with utility functions, although I think they don't accurately reflect people's values; I think people's values more closely resemble a poset. But even assuming a cardinal utility function, we run into the problem that money isn't all that widely fungible. I cannot buy friends, family, love, legal or social reform, etc., all of which must weigh heavily in many people's utility functions.

> I cannot buy friends, family, love, legal or social reform, etc., all of which must weigh heavily in many people's utility functions. The concept is that while you can't do so directly, the degree to which you value these things can in principle be quantified monetarily by the monetary value of the things you can buy with money that you are willing to forego in order to attain the things that cannot be bought with…

I don't think that is consistent with preference being transitive, but I guess that's not a necessary assumption for most economic theory, only that it is cycle-free. If you model my preferences as a directed graph (say an edge A -> B exists if I can and will trade A for B), then in order to be able to use money as a proxy, every node must have a parent and a child which are both amounts of money. This seems unlikely to me.

Re: Is Homo Economicus a Psychopath?

#52

Post by alexbecker » Tue, Dec 23, 2014, 12:50 AM UTC

defen wrote: post #50

alexbecker wrote: post #40

Earlier quoted context omitted.

You're missing his point. "Interests" is a technical term in economics which means something different from the common usage. In short, it means things you consciously seek for their own value. Love, being moral, fulfilling duties; all of these are interests in the sense economists use the term. NB: Economists largely study specifically monetary interest because it's something they can measure. A number of criticisms…

> "Interests" is a technical term in economics which means something different from the common usage. In short, it means things you consciously seek for their own value. Love, being moral, fulfilling duties; all of these are interests in the sense economists use the term. So what is the "utility" (sorry, I couldn't resist) of this term? It seems to be a tautology - what else could people pursue besides their "interes…

Most of my actions do not achieve goals in themselves. Example: I don't work for its own sake, nor do I work for the sake of money. I work because it is one in a chain of actions I take to satisfy my actual values.

Re: Is Homo Economicus a Psychopath?

#53

Post by dragonwriter » Tue, Dec 23, 2014, 12:56 AM UTC

alexbecker wrote: post #51

dragonwriter wrote: post #49

Earlier quoted context omitted.

> I cannot buy friends, family, love, legal or social reform, etc., all of which must weigh heavily in many people's utility functions. The concept is that while you can't do so directly, the degree to which you value these things can in principle be quantified monetarily by the monetary value of the things you can buy with money that you are willing to forego in order to attain the things that cannot be bought with…

I don't think that is consistent with preference being transitive, but I guess that's not a necessary assumption for most economic theory, only that it is cycle-free. If you model my preferences as a directed graph (say an edge A -> B exists if I can and will trade A for B), then in order to be able to use money as a proxy, every node must have a parent and a child which are both amounts of money. This seems unlikely…

> I don't think that is consistent with preference being transitive

Its certainly consistent with preference being transitive (since it is intimately tied in with cardinal utility, which is a much stronger position which includes transitive preference.) Transitive preferences in a poset aren't sufficient to support money-as-general-utility-scorecard, however.

Re: Is Homo Economicus a Psychopath?

#54

Post by icebraining » Tue, Dec 23, 2014, 12:59 AM UTC

cmdkeen wrote: post #34

AnimalMuppet wrote: post #16

Earlier quoted context omitted.

> You can not understand the anger about HE until you understand that Marxists desperately need humans to not behave "slightly irrationally under some circumstances" (the real scenario) but need humans to be profoundly irrational, so they can justify their handing over all sorts of power to the government so they can save everyone from themselves. You had me until that sentence. I don't think the Marxists need humans…

You mean Marxist-Leninists, Marxism in and of itself doesn't require violent revolution. The real irony is that if governments are rational actors, and power is in their best interest, then the Leninist insistence on the need for proletariat dictatorship as a step to true Communism (where the government isn't needed) is undermined by the rationale that the government won't give up power. Which is of course what has h…

> You mean Marxist-Leninists, Marxism in and of itself doesn't require violent revolution.

Well, maybe not require, but

In depicting the most general phases of the development of the proletariat, we traced the more or less veiled civil war, raging within existing society, up to the point where that war breaks out into open revolution, and where the violent overthrow of the bourgeoisie lays the foundation for the sway of the proletariat.

Marx/Engels -- Manifesto of the Communist Party

Re: Is Homo Economicus a Psychopath?

#55

Post by nickff » Tue, Dec 23, 2014, 12:59 AM UTC

clairity wrote: post #38

jerf wrote: post #4

"Homo economicus, is a creature of coldly calculated selfishness, dispassionately maximizing its best interests even if that comes at the expense of others." For the second time today, I get to point out that in economics is neutral about "best interests" and is metaphorically happy to accommodate people whom consider happiness or other such "soft" things as part of their personal value function. If your definition o…

economists (particularly of the capitalist variety) certainly have a point of view that the economic utility function can be directly transformed into and represented by monetary value. literally the point of the utility function is to represent behavioral preferences with a number, which can then be calculated on. by turning decisions into math, this transformation has the effect of shielding rational actors from th…

>"economists (particularly of the capitalist variety) certainly have a point of view that the economic utility function can be directly transformed into and represented by monetary value"

Which economists have that point of view? Some have accused Smith of this, but it is plainly untrue, as made clear in his "Theory of Moral Sentiments".[1] Austrian economists such as Mises (who few would call socialist) criticized even the cardinal utility model, and argued that only lists of ordinal utilities are useful.[2]

[1] http://en.wikipedia.org/wiki/The_Theory_of_Moral_Sentiments

[2] http://en.wikipedia.org/wiki/The_Theory_of_Money_and_Credit

Re: Is Homo Economicus a Psychopath?

#56

Post by alexbecker » Tue, Dec 23, 2014, 1:08 AM UTC

dragonwriter wrote: post #53

alexbecker wrote: post #51

Earlier quoted context omitted.

I don't think that is consistent with preference being transitive, but I guess that's not a necessary assumption for most economic theory, only that it is cycle-free. If you model my preferences as a directed graph (say an edge A -> B exists if I can and will trade A for B), then in order to be able to use money as a proxy, every node must have a parent and a child which are both amounts of money. This seems unlikely…

> I don't think that is consistent with preference being transitive Its certainly consistent with preference being transitive (since it is intimately tied in with cardinal utility, which is a much stronger position which includes transitive preference.) Transitive preferences in a poset aren't sufficient to support money-as-general-utility-scorecard, however.

Brain fart on my part, I was thinking about a different comment.

I meant that it isn't consistent with people's observed preferences being transitive; if they are, then there is no need to make the inferences you suggest. But of course you were talking about things that can't be traded for money, not things that people refuse to because they value them more, so ignore my criticism.

Actually, that makes me realize that I need to change the edge criterion in my previous comment.

Re: Is Homo Economicus a Psychopath?

#57

Post by nickff » Tue, Dec 23, 2014, 1:08 AM UTC

chimeracoder wrote: post #11

ddebernardy wrote: post #7

Earlier quoted context omitted.

> A better question might be "Is Homo Economicus a Strawman?" > To which the answer is: yes, it is. Classical economics does not actually assert that individual humans behave in a purely rational and fully-informed manner. (Actually, classical economics does, in the sense that markets follow a price-demand curve rather than a wiggle as seen experimentally.) Worst yet, though: it's sheer lunacy. In the words of Steve…

This is like claiming that physicists are "wrong" because they spend time thinking about a frictionless vacuum[0]. > (Actually, classical economics does, in the sense that markets follow a price-demand curve rather than a wiggle as seen experimentally.) That's the difference between the limitations of an idealized model and the limitations of experimental process. That doesn't mean that either one is "wrong", any mor…

>"classical economics describes the behavior of rational actors with perfect and symmetric information."

Where does it describe the problems this way? Smith's "An Inquiry into the Nature and Causes of the Wealth of Nations" is not a theoretical exercise in a moral and emotional vacuum, but an explanation of how development and prosperity come to be in the real world.[1] There are some examples laid out by classical economists which make the assumptions that you describe, but those assumptions were not key tenets of the classical school. Men like Ricardo and Bastiat spent their time addressing the real world, with all its corn laws, broken windows, and import tariffs; instead of the physicist's "friction-less vacuum".

[1] http://en.wikipedia.org/wiki/The_Wealth_of_Nations

Re: Is Homo Economicus a Psychopath?

#58

Post by nhaehnle » Tue, Dec 23, 2014, 1:11 AM UTC

alexbecker wrote: post #40

DanDanDanDan wrote: post #33

Earlier quoted context omitted.

Most people do not take care of their family because they think it's in their best interests. They often take care of their family for myriad reasons--e.g. a moral call to selflessness, sociocultural norms, a sense of familial duty, love, etc. The language of "best interests" really doesn't fit here. Taking care of an ailing parent is in no way connected to maximizing one's returns on anything (except maybe fulfillin…

You're missing his point. "Interests" is a technical term in economics which means something different from the common usage. In short, it means things you consciously seek for their own value. Love, being moral, fulfilling duties; all of these are interests in the sense economists use the term. NB: Economists largely study specifically monetary interest because it's something they can measure. A number of criticisms…

The problem with the concept of "utility" as introduced by economists is that it is commonly used in a bait-and-switch.

You can either use utility as a technical and unassailable term, taking it as axiomatic that humans are utility-maximizers. As a consequence, the term becomes vacuous, because whatever any human does at any point in time, well, it must have been because she or he had some unobservable notion of utility that was maximized by whatever they happened to be doing at the time. So you end up with a "scientific theory" that does not actually allow you to make any predictions, which makes it totally worthless.

Furthermore, facts that seemingly contradict utility-maximization are easily argued away: For example, the fact that humans' behaviour does not appear consistent over time is explained by utility functions change over time.[1]

Once you accept the notion of utility based on this technically unassailable approach to it, however, people have a tendency to subtly shift what they mean by utility, sneaking a hidden value judgement into their argument that might be hard to catch (of course, that value judgement always tends to boil down to: the utility that should be maximized is somewhat equivalent to monetary value). [2]

Yes, there may be a small number of genuinely well-meaning academic economists who do this. However, public discourse has very few well-meaning economists[3], and even fewer academic ones. Given the difficulties of the term, it would be a pragmatic move to eliminate it.

Frankly, I think the main reason that eliminating the notion of utility is so difficult is that eliminating that term leaves a vacuum that is difficult to fill. Explaining human nature is an extremely tough problem, which we are basically unable to solve today. Rather than acknowledge that they are unable to do it, economists worship their variant of the "god of the gaps".

[1] Actually, this is very reminiscent of discussions with people who believe in the existence of a god. Whatever fact one points out that either contradicts or does not fit the existing (non-)evidence well, believers just tend to retreat to a technically unassailable definition of god that ends up making the statement "god exists" pretty vacuous.

[2] Again, this is very reminiscent of discussions with people who believe in the existence of a god. Once one concedes that yes, a god whose existence is so vacuous might well exist, they will at some point switch their definition of god back to one which implies that their god can affect the physical world.

[3] The problem is similar to regulatory capture, an idea expressed here: http://physicsoffinance.blogspot.de/2014/11/has-big-business...

Re: Is Homo Economicus a Psychopath?

#59

Post by nhaehnle » Tue, Dec 23, 2014, 1:18 AM UTC

Gimpei wrote: post #36

glenra wrote: post #5

A better question might be "Is Homo Economicus a Strawman?" To which the answer is: yes, it is. Classical economics does not actually assert that individual humans behave in a purely rational and fully-informed manner. A more accurate premise is that groups of humans tend on average to act at least somewhat as if they were rationally well-informed. We have tools to determine what "rational" behavior might look like a…

Economist here. You're right that "neoclassical economists" or rather macroeconomists assume self-interested behavior on average rather than at an individual level. Furthermore, most recognize that people do not typically behave in the manner posited by macroeconomic theory at an individual level. There's also a mountain of experimental evidence backing this up (see Kahneman for example). However, they don't provide…

Most microeconomists I know think that microfounded macro models are a joke.

The sad thing about this is that fundamentally, the Lucas critique has a lot of merit. It's just that what macroeconomists used as "microfoundations" is basically a joke because, like you explain, they aren't true microfoundations.

Furthermore, even if the kind of aggregation that "microfounded" macroeconomics always does would lead to reliable predictions, there is still the issue that aggregation makes the hidden value judgement that issues of distribution and fairness don't matter. After all, when you aggregate, you only see the averages.

Part of the problem is that the important problems of economics - i.e., macro-economic problems - are genuinely hard[1], but public economic discourse acts happens as if much more were known than really is. When it comes to the economy, it's as if we were trying to fly to the moon without knowing about Newton's laws of motion, while at the same time there are powerful and wealthy interests trying to convince everybody that the earth is a disk.

[1] They're not hard in the sense that research problems in mathematics are hard; they're hard in the sense that there is a crazy number of hard to measure variables, there's no way to run repeatable experiments, and so on.

Re: Is Homo Economicus a Psychopath?

#60

Post by joshjkim » Tue, Dec 23, 2014, 1:22 AM UTC

jasonisalive wrote: post #43

joshjkim wrote: post #19

This reminds of a thought I had a few months ago: how have there not been more thought pieces relating Uber-the-business's recent/relentless PR-debacles to Nietzsche's Ubermensch concept? I guess I'll give it a go. Uber/Travis and his execs seem to demonstrate the belief that they are "overmen" in that they seem to believe that they transcend the rules of society and are destined to shape society and its values rathe…

They outrightly express resistance to laws-as-is Here, I found another arrogant law-defying übermensch-wannabe for you: http://en.wikipedia.org/wiki/Mahatma_Gandhi

For sure - Gandhi (and pretty much anyone who we consider to have "changed the world" - MLK, Steve Jobs, etc.) fits a lot of the uberman characteristics - hence my note re: the fact that the uberman is actually viewed as a positive.

Distinction here for me is that Gandhi and/or MLK and/or Pussy Riot relied on and broke certain social rules based on what I consider to be moral abstractions that (I would argue) (1) pre-existed their own thinking and receive validation from a separate pre-existing moral code (love, human rights, spiritual dignity, etc.) and (2) the realization of which benefit others as equally as they would benefit the leader, if not more (Gandhi was, relatively speaking, part of the educated elite, and could have enjoyed a decent life under the status quo).

On the other hand, I would say that ubermen are (at least by FN's definition) wholly the creators of their moralities, and often are opportunistic in how they use moral abstractions, and (most interestingly) often tend toward creating moral systems that coincidentally(?) benefit themselves and those they value at the expense of others (see: Kim Jong Un, Stalin, Ted Cruz...haha).

I'm glossing over some meat about whether moral abstractions can pre-exist a person's understanding of them and what the difference is between benefiting yourself and benefiting others if benefiting others provides you with serious self-benefit, but those are totally separate discussions =)