This Thing For Which We Have No Name [View all]

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The problem—in terms of understanding human behavior, and I go even further, in understanding economics—is, why is neoclassical economics so disproportionately influential among the social sciences in influencing policy and bank behavior and, indeed, business? I mean, the finance director—the chief financial officer—is now typically the second most powerful person in any organization. He will, unconsciously or not, base quite a lot of his decisions on the unproven assumptions of neoclassical economic theory. So why has neoclassical economics, which is a pretty appalling predictive guide to individual human behavior, achieved this influence? One of the reasons is it's mathematically neat so people just fall in love with the elegance of the thing and are happy to ignore the fact that, empirically, it ain't all that.

Another one, I suspect, is a peculiarity of academics. My brother is an astrophysicist. I once said to him, "Look, you do extraordinarily advanced math about galaxy clustering and such. Why don't you just bugger off to a bank for three years, make a stack of money, and then return with the freedom to do what you like?" And he said, "The problem is, for example, in astrophysics, disappearing off to work in a bank for three years is effectively career suicide." Now, there's one group of academics where working for Citibank for two years on a highly-paid gig is possibly not career suicide, and that would be among economists.

By contrast, I imagine that if you're an anthropologist and you spend three years working for Unilever, it's actually a career setback. My guess would be that if you were a sociologist in 1975 and you went and worked for an advertising agency, you might as well retire afterwards because no one else in academic sociology was going to give you a job. But economics has this disproportionate influence and my mission is to rebalance things a little bit.

The other problem in overcoming the disproportionate influence of economics is that to understand why conventional economic approaches are wrong—and to understand what is needed to replace them—you possibly don't have to understand one thing, you have to understand about five or six different things. You probably need a bit of game theory, a bit of evolutionary psychology, a bit of behavioral economics, a bit of complexity theory. Now, the problem then is if you have a case where in order to reject the consensus you need people who know a bit about six different things, then simply by statistical averages, the number of people who appreciate all of those five or six different things is going to be a hell of a lot smaller. And that's genuinely the case.

http://edge.org/conversation/this-thing-for-which-we-have-no-name