Comment by DrNosferatu | Hacker News Reader

Comment by DrNosferatu | Hacker News Reader

Careful, as that can be a slippery slope: that exact expression, “financial literacy”, has been used in Europe as a way to push ideology - all economy is political.

Will they teach the fallacy that economic agents make rational choices?

Will they teach the fallacy that running a country is the same as running a household or a grocery store (in terms of supposed thrift)?

Will they teach that market growth guaranteedly means improved living standards for all?

Will they overwhelm students with technical jargon to make contestable theories seem irrefutable?

Will they present market dynamics as "natural laws" rather than human constructions?

Will they teach that widespread economic practices must be correct simply because they're common?

Will they equate market freedom with political freedom as if they're the same thing?

Finally, will they teach Keynesian Economics or Neoliberal Economics?

Furthermore, will they teach austerity is mathematically self-defeating and in 95% of cases, will fail?

>Will they teach the fallacy that economic agents make rational choices?

The alternative ideology (ies?) you sound like you're proposing assumes that economic agents do not make rational choices, or at least they don't on average. But if that were true we would all be better off making as few choices as possible, because most possible exchanges are not beneficial to both parties. I just don't see evidence for that at all.

There are several books with the word “Zombie” on the title that can specifically teach you exactly about that!

Some of them actually authored by Economics Nobel Prize winners ;)

Here:

"Arguing with Zombies: Economics, Politics, and the Fight for a Better Future" by Paul Krugman (2020)

"Zombie Economics: How Dead Ideas Still Walk Among Us" by John Quiggin (2010)

Bonus:

"Predictably Irrational" by Dan Ariely - 2008

"The Myth of the Rational Market" by Justin Fox - 2009

"The Black Swan" by Nassim Nicholas Taleb - 2007

This is a motte and bailey.

Your original claim is "[individual] economic agents do not act rationally" (either at all, or on average, take your pick, both are pretty out there).

When challenged, you retreat to "No no I don't mean like you and me economic agents. Obviously when I buy eggs from the supermarket it's probably because I wanted eggs more than the $x I paid for them, and not because I picked some random thing to buy for no reason. I'm really talking about" + insert some more complicated idea X from one of the books you mentioned.

There are many such X you could choose from. That's why folks like you like to recommend entire books instead of giving a plain argument - so long as even one askance X seems to resonate with your audience, you can latch onto it and use it to emotionally persuade them. That is if anyone even bothers to read the book in the first place.

1. What “no no, I don’t mean anything like [that]”? - I never wrote any such thing.

Economic irrationality isn't binary but exists on a spectrum. Humans *simultaneously* make mundane rational choices (like buying eggs) while being systematically influenced by cognitive biases, social pressures, and emotional factors that traditional economic models don't capture.

I recommend books not to obfuscate but because complex economic behavior *can't be reduced to simplistic arguments*. The evidence for bounded rationality, hyperbolic discounting, and other psychological patterns affecting economic decisions is robust and empirically demonstrated across numerous studies - those books explain this.

Your accusation uses a straw man fallacy and assumes rationality is simple and self-evident, when - guess what - real economic behavior is nuanced. This isn't retreating to a "safer" position—it's acknowledging that economic reality is more complex than idealized models suggest.

…idealized, provenly wrong models - whose severe (and many times outright dangerous) limitations omission allows those who peddle them to keep earning their salary.

2. In other words, your answer misses the mark. When economists talk about economic agents not acting rationally, they’re not claiming people make completely random decisions devoid of reason. They’re pointing out that real human behavior consistently deviates from the idealized "rational actor" model in predictable ways.

People exhibit cognitive biases, use mental shortcuts, are influenced by emotions, have inconsistent time preferences, and often lack complete information. These aren't rare exceptions - they're fundamental patterns documented in decades of behavioral economics research. Hence the books.

This isn't a retreat to a more complicated position - it's simply acknowledging that the simplified models have practical limitations, AND, benefit some people far more than others. The evidence for these failures is robust enough that even mainstream economics has incorporated behavioral insights.

Rather than hiding behind book recommendations, I'm happy to discuss specific examples of these systematic deviations from rationality if you're genuinely interested in the substance of the argument.

You've qualified your original claim enough in these follow up comments that I'm happy leaving it here, thank you for your time.

> Finally, will they teach Keynesian Economics, or Neoliberal Economics?

What about Classical or Austrian?

Jesus Christ mate, they're talking about personal finance, not political economy.

Basic personal finance, like interest rates, simple statistics (namely about casinos), sure.

BUT, during the European austerity footgun days, they put an animated talking bear on tv teaching this “financial literacy” and illustrating the “run your country as a thrifty household” tale as meritorious and not a fallacy, among other stuff like that.

I saw this YouTube video recently that said there are four main categories to spending money:

A. Your own money A1. On yourself A2. On others (not necessarily the same others)

B. Other people's money B1. On you B2. On others (not necessarily the same others)

It is kind of a wordy way to describe the principal agent problem.

Problem is that we can't really wrap our heads around large numbers. I get overwhelmed just thinking about how the relatively small town I live in manages its finances. I don't think I have the mental model to fit how the US economy functions much less how it should function.

Talk to some political scientists. You're never getting a polity that understands the issues and votes largely based on policy. Won't happen, not even remotely close. They'll always be voting on forehead-slappingly dumb shit like "running government like a business is a good idea", or more likely on a dozen extremely stupid misconceptions at once, plus just "do I perceive that bad things are happening, generally, regardless of whether they have anything to do with the office I'm voting for".

I've seen that point made before. In Portugal for example the left wing parties are openly against financial literacy in schools exactly because they say it is political. I get the point, if you're a socialist or a communist, having everyone participating in the stock market puts your goal further away. They also have an argument that financial literacy is correlated with losing money on the stock market. In general I don't think it's that separate of an issue, even though I'm not as left.

It seems you have studied that exact tv talking bear’s lesson very well :D

I didn't get the reference unfortunately.

Unfortunately.

May I recommend a book by an Economics Nobel Prize winner?

Here:

"Arguing with Zombies: Economics, Politics, and the Fight for a Better Future" by Paul Krugman (2020)

And maybe even better:

"Austerity: The History of a Dangerous Idea" by Mark Blyth - 2013

I'm not sure I get your point still, I was merely describing the arguments of one side of the aisle of my country, did it give you the impression I'm somehow pro austerity? I'm not sure how you made that jump. And you still didn't explain the bear reference. Descriptive comments aren't endorsing something.

Recommending two books to someone that asks you to explain a short expression is a bit rich though. Good luck with that.

Simple: pro-austerity people made the bear show and used similar blanket generalizations to yours.

The books debunked them.

I'm not pro austerity! I didn't even make any generalizations, my whole comment is about the position of a few political parties in my country. Are you unable to distinguish relaying the position of a third party from relaying your own beliefs?

Is the bear show the kitchen TV series? I'm still trying to understand what the heck you are referencing but I'm starting to realize you are very difficult to talk to so this is me giving up. I'm sorry I don't have more patience you seem like you know some stuff but are too preoccupied with sounding smart rather than speaking plainly.

Ad hominem all you want - but I don’t really know what to say anymore.

Did you read our complete chain of comments / debate?

> They also have an argument that financial literacy is correlated with losing money on the stock market.

I think that the issue here is the definition of financial literacy that classifies people who effectively engage in gambling "financially literate".

It is political of course, because the left would like to provide to the financially illiterates, such that they don’t have to manage their own money. If everyone is saving/investing, the socialist system is mostly redundant (except for the extremely poor, non-working, ill or disabled people).

Sure: poor people are usually guilty of being poor.

Nice thinking ;)

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