Unless You Are Spock, Irrelevant Things Matter in Economic Behavior

> The idea is that the right government policy can nudge the individual to perform the obviously rational self-interested choice.

I would be concerned with any discussion of that idea that is unaccompanied by a discussion of public choice. Discussing the "right government policy" is interesting, but not very useful without also discussing whether we're more like to get the right government policy than the wrong one.

More generally, the entire field of "behavior economics" has a very strong paternalistic, authoritarian subcurrent to it. The message is: people can't be allowed to make decisions for themselves because they aren't capable of acting rationally or in their own self-interest. Of course the idea that the government is more likely to act in people's best interest than people themselves is laughable, yet is actually being advocated as a policy rationale.

This is a slippery slope argument. Social Security has been around for a long time, and although folks said it would lead directly to a socialist overthrow of American democracy, it hasn't happened...

Considering that the typical reaction is to ban things instead of taxing or otherwise making them less convenient, I'm pretty happy with these sorts of policies. Perfect is the enemy of good and all that.

There's all kinds of nudging I'm sure you can get behind, such as opt-out organ donation. Or would you rather everyone be forced to donate their organs at brain-death?

Since "nudging" is rather new, there are many more opportunities for it to benefit society, either by discouraging a popular behavior or encouraging an unpopular one. For example, I despise loud cars and motorcycles. They have crazy externalities, yet there are few laws regarding them (and even those are rarely enforced). A Harley[1] riding through a dense city can distract and annoy thousands of people. Bystanders can even have their hearing permanently damaged. Some of my friends wish they were banned. I'm more sensitive to noise than most, but I disagree. A tax commensurate to their damage would satisfy everyone. Granted, such a tax would be quite steep. But if someone really wanted to, they could pay it. That's the sort of nudging I can get behind.

1. I realize not all Harleys are obnoxiously loud and many other vehicle brands can be annoying. It's just a stereotypical example.

We're constantly swimming in a stew of nudges from the private sector, from social norms, in addition to hard-and-fast rules and laws.

Giving some thought to how they impact behavior and how one might improve them seems like a pretty low bar.

In particular the private sector spends hundreds of billions of dollars to nudge you towards a lifestyle that's more profitable for them, via ads to get you to eat unhealthy foods, buy a premium vodka that's indistinguishable from the next one on the shelf, not to mention gamble, smoke, etc.

Someone comes along to study these polluted waters and ask why the fish are so unhealthy and the fish say, "what's water?"

Let's not even study this stuff, since God forbid the gummint varmints use it to, I dunno, get people to save for retirement by default or sign up as organ donors, those bastards.

Some further discussion

http://www.bloombergview.com/articles/2015-05-13/wonks-expla...

Does nudging actually cause you to give up any autonomy?

> Economists discount any factors that would not influence the thinking of a rational person.

This is meaningless. Insofar as many models in economics are based on the rational choice model, the definition of a rational actor is one who acts to maximize their experienced utility with perfect knowledge of how their actions will affect their experience utility.

Anything that will affect a persons happiness would affect the decisions of a rational actor.

Now, its true that, even so, reality is known not to comply with the rational actor model, but this article misses most of them and attacks a giant strawman. And I wonder why, because as a professor of economics, the author has to know that, its not plausibly a mistake of ignorance.

>I realize this is the setup for No True Scotsman, but are there any "serious" economists who actually believe the things this article criticizes?

Believe them maybe not, and in their more theoritical papers and private company, they would admit not believing those.

But the effective guidance they give to governments, and their arguments in policy issues, are all taken from crude models like those.

And those are also the same models preached by economists to the general public, and which inform the way the people think about economics.

almost all economic theories are based on the rational model, although many have incorporated some ideas from behavioral economic.

For example, the reason why many countries tax income in brackets, with increasing percentage is the realization that a dollar is not worth the same as a dollar. Which stated this way, seems quite irrational.

But if you have $0 then $10 is probably a big deal. If you have $100,0000 it probably isn't. So the pain incurred by taking more if the top is smaller, then taking less of the bottom.

Giving gifts is a destruction of value. Rarely can the gift giver buy a thing of same utility as the gift receiver could for the same money (given both are econs). Therefore the whole gift giving society is irrational.

There's a tradition where behavior economists first come up with an esoteric model of rationality that would require people to do things that defeat their self interest, then perform experiments to see if subjects do them or not.

This guarantees them publishable results: either you get "humans not rational!" or "rational behavior leads to bad result!" no matter what the subjects do.

My experience is like yours: I've read a decent amount of economics stuff, and nothing that didn't have an axe to grind about the subject of rational actors itself ever proposes the kind of broken rationality models that the pop behavior economics stuff claims every economist believes.