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Why Philosophers Hate Economists
I can’t be the first person on Ricochet to have noticed that philosophers and economists don’t always get along. The tension between the two bears some resemblance to the tension between conservatives and liberals. As the old trope goes, conservatives believe that liberalism is wrong, while liberals believe that conservatism is evil. Similarly, when economists and philosophers disagree, the economists believe it’s because the philosophers aren’t making sense, while the philosophers believe it’s because the economists are morally bankrupt.
Do you have a theory about this? I do. Here goes:
Perhaps the main reason philosophers hate economists is because philosophers and economists both use the same word to mean very different things. To be fair, philosophers used the word first (philosophers existed way before economists). But you’d think philosophers would have no problem understanding that some words are simply semantically overloaded, and this word is one of them.
If you haven’t guessed what the word is by now, it is “rational” (along with its sister word “rationality”). My understanding of philosophy is somewhat on the shaky side, but it seems to me that philosophers generally consider a rational actor to be one who is both self-aware and capable of discursive reasoning.
To an economist, being a rational actor requires neither self-awareness nor discursive reasoning. Rather, being rational in the economic sense simply means responding fairly predictably to incentives. By this logic, even trees could count as rational actors, as Milton Friedman hypothesized:
Let us turn now to another example, this time a constructed one designed to be an analogue of many hypotheses in the social sciences. Consider the density of leaves around a tree. I suggest the hypothesis that the leaves are positioned as if each leaf deliberately sought to maximize the amount of sunlight it receives, given the position of its neighbors, as if it knew the physical laws determining the amount of sunlight that would be received in various positions and could move rapidly or instantaneously from any one position to any other desired and unoccupied position.
Now some of the more obvious implications of this hypothesis are clearly consistent with experience: for example, leaves are in general denser on the south than on the north side of trees but, as the hypothesis implies, less so or not at all on the northern slope of a hill or when the south side of the trees is shaded in some other way. Is the hypothesis rendered unacceptable or invalid because, so far as we know, leaves do not “deliberate” or consciously “seek,” have not been to school and learned the relevant laws of science or the mathematics required to calculate the “optimum” position, and cannot move from position to position?
Clearly, none of these contradictions of the hypothesis is vitally relevant; the phenomena involved are not within the “class of phenomena the hypothesis is designed to explain”; the hypothesis does not assert that leaves do these things but only that their density is the same as if they did.
Despite the apparent falsity of the “assumptions” of the hypothesis, it has great plausibility because of the conformity of its implications with observation. We are inclined to “explain” its validity on the ground that sunlight contributes to the growth of leaves and that hence leaves will grow denser or more putative leaves survive where there is more sun, so the result achieved by purely passive adaptation to external circumstances is the same as the result that would be achieved by deliberate accommodation to them.
Most likely, a philosopher’s gut reaction is that calling a tree a rational actor debases the very concept of rationality.
Hopefully, his second reaction is that different disciplines may use the same word in different ways without debasing each others’ concepts, but I doubt many philosophers get that far. Not because philosophers are unusually obtuse, but because our own conception of rationality is so bound up in our self-identity that we instinctively want to defend “our” definition of the word in order to defend who we are:
Being human means being a motivated reasoner, even when you’re a philosopher.
Philosophers might find some consolation in the fact that good economists do indeed know how weak the economic notion of rationality is. As Ronald Coase (an economist so insightful that he won a Nobel prize for work that included no calculations beyond simple arithmetic) put it,
The rational utility maximizer of economic theory bears no resemblance to the man on the Clapham bus [the British equivalent of the man on the street] or, indeed, to any man (or woman) on any bus. There is no reason to suppose that most human beings are engaged in maximizing anything unless it be unhappiness, and even this with incomplete success…
[W]hatever makes men choose as they do, we must be content with the knowledge that for groups of human beings, in almost all circumstances, a higher (relative) price for anything will lead to a reduction in the amount demanded. This does not only refer to a money price but to price in its widest sense.
Whether men are rational or not in deciding to walk across a dangerous thoroughfare to reach a certain restaurant, we can be sure that fewer will do so the more dangerous it becomes. And we need not doubt that the availability of a less dangerous alternative, say, a pedestrian bridge, will normally reduce the number of those crossing the thoroughfare, nor that, as what is gained by crossing becomes more attractive, the number of people crossing will increase.
It’s unfortunate, in retrospect, that “rationality” should be the economic shorthand for “responding fairly predictably to prices in their widest sense”. If economists had simply used a different word, I think they’d get a lot less hate from philosophers. Moreover, us ordinary folk would have one less overloaded term to deal with. It’s difficult to carry on a conversation when people use the same cluster of letters to refer to such wildly different concepts, especially when both concepts are intimately tied to human identity.
Published in General
Roth and Shapely won the 2012 Nobel prize in economics for their work in optimizing swaps in situations where the lack of price-signals is a given. Even if we’re forbidden from charging prices for a particular thing, it makes sense to apply what reasoning we can to optimize people’s satisfaction with its distribution. Nonetheless, “no prices” is a constraint, and, as with any constrained optimization problem, the more constraints you have, the more potential optima you rule out. In fact, “no prices” is a very big constraint, indeed.
I think that the response regarding Maths is pretty accurate. Having had epistemology as my theology focus, I found (see #92 for a rough guide) that epistemology was a helpful way of evading the naval gazing of ontology, in part because it was superior on the hierarchy of knowledge; you need to know what you can know (and why) before you can build hypotheses on that knowledge.
This is so great, Misthiocracy! May I use this formulation? It makes the distinction so clear!
You can send royalties to my PayPal account.
;-)
And we all know how important it is to avoid naval gazing. Wouldn’t want to end up like Lord Nelson,
atop a pillar in Trafalgar square.
So, do you believe in an objective hierarchy of knowledge, too, James? As opposed to some other model of knowledge (perhaps, say, a web-shaped model)? Or is pointing out that there’s more than one possible apex for the hierarchy your way of pointing out that there isn’t an objective one?
Anyhow, if clearly intelligent people such as you and Rachel find it “obvious” that different disciplines belong at the apex of the hierarchy, I’m inclined to chalk it up to a difference in what you find beautiful and say that, if there is an objective hierarchy, aesthetics must go at the top. Too bad aesthetics is so hard for people to agree on :-)
Man, I was pretty horrible at this. I remember quite vividly the fights I had with my math teacher over the quadratic formula… “But how can you expect me to remember it if I don’t know why it works?” “Because you’re too young to understand the proof.” Anyhow she bet me I couldn’t do the proof on my own, and with some struggling, I won the bet. Too bad adults often don’t pay up when children win bets with them.
It was, I admit, to my detriment that I trusted teachers so little. I would have learned more sooner had I placed marginally more trust in them.
(continued…)
I am not sure about this. I suspect all knowledge, including abstract knowledge, is experiential. Rather than appealing to a hierarchy that takes us further and further away from experience the “higher up” we get, I think Son of Spengler describes it better:
Learning a discipline means experiencing it, even for “abstract” disciplines.
I can’t speak for others, but what I learned fastest was what I felt in my “gut”, even when it was supposedly an “abstraction”. Fractions are supposedly more “abstract” than integers, but if you can easily imagine dividing up objects and smooshing parts of them back together, they’re not. Calculus is supposedly more “abstract” than high-school algebra, but… You can imagine surfing the tangent line, with that funny flipping feeling in your stomach as the function changes; can “feel” the physical bulk of what accumulates in integration.
Maybe e e cummings was right. Feeling is first.
Just re-connecting with this thread, and I find the discussion wonderful. These discussions are why I stay at Ricochet.
I’ve often said that there is Reality (ontology) and Knowledge-of-Reality (epistemology), and one should not confuse the two … but we do, all the time. In criminal law, there’s the distinction between what we believe to be true, versus what we can prove in court. But then the “rules of evidence” of what we can prove in court are influenced by other factors. We may have videotape of the defendant committing the crime, but we can’t use it because it was obtained by an inappropriate search. That’s a conflict between The Truth (i.e., Reality, aka ontology) versus our knowledge of the Truth (epistemology).
In law, the rules of evidence are self-imposed barriers to what we can say to be true. Science, as it has developed under the scientific method, also has self-imposed barriers to what you can say. You’re not allowed to make public claims without tangible corroboration.
Those self-imposed disciplines have given science an impressive shield against useless speculation, yielding better results. But they are arbitrary, after all.
I forgot to add the smiley face to my comment. I in no way intended to get us back into that conversation.
Though I can’t resist adding: “no prices” is only a constraint if the seller or buyer consider the subject of exchange to be a good or service. If they don’t consider it to be a good or service, if they consider it a matter of human dignity or duty or charity, then price doesn’t matter, though there’s nothing wrong with reimbursing for costs. The bottleneck here and in that other conversation lies entirely with the initial possessor; that person has a choice, unless religion intervenes, either to give what they have (and don’t need or can’t use themselves) because it is right to help other humans or to let spoil what they have because they have no regard for others. I still believe that we shouldn’t incentivize people to treat other people (or their parts) as goods or services rather than humans with inherent worth. I also believe that incentivizing people to treat other people as goods or services will eventually work much too well for a good a free society to continue.
It’s unfair of me to do that and then retreat to: “But I really don’t want to talk about it”. But I really don’t want to talk about it. So you can have the last word. I stand open to your rebuttal; don’t hurt me too much.
No, “no prices” is still a constraint. It may be a constraint that all virtuous people agree to (or almost all), but it is a constraint nonetheless.
I think that the XKCD cartoon is probably accurate, although it is a generalization. There are many developments in mathematics that change our understanding of physics, but the reverse is harder. Similarly, while we used ontological examples (partly borrowing a professor from the math department for expertize in infinite numbers) like the Incarnation and the Trinity, I don’t think that we had to implicitly assume much ontology to do epistemology, whereas I do think that one needs to assume epistemology to do ontology.
If you declare epistemology unimportant, you suddenly find it very difficult indeed to avoid the classical pagan and enlightenment excessive regard for reason, and progressivism becomes much more logical. Burkean conservatism, which I would hold to be synonymous with conservatism, in the sense that “Scotsman” is synonymous with “man from Scotland”, is rooted in our ignorance.
Thanks!
My gut feeling is that there’s “Talking About Reality” (ontology) and “Talking About Knowledge of Reality” (epistemology).
The People Talking About Reality (ontologists), for reasons that aren’t always obvious to me, believe they are talking about reality in “realer” terms than ordinary people manage to do when ordinary people try to talk about reality. The People Talking About Knowledge of Reality (epistemologists) at least bother to wonder whether they’re really doing a better job than anyone else when they try to talk about reality.
I don’t think that this example shows any conflict between our knowledge of the truth and the truth. It does show a conflict for the jury and it shows a conflict between our use of the truth and the truth. Am I missing something?
I’m less sure about this than you. I suspect the dialog between the two is probably more equal than people think. (At the very least, physics is often what’s motivating new mathematical techniques.)
For example, Maxwell relied on Faraday’s work to motivate him in developing the mathematics of electromagnetism. Faraday was so ill-versed in math that he apparently never got beyond high school algebra and trig. But Faraday was very good at experimental and descriptive physics. Maxwell ultimately concluded that Faraday’s conception of “lines of force” showed that Faraday, without even knowing it, had been “in reality a mathematician of a very high order – one from whom the mathematicians of the future may derive valuable and fertile methods.”
I believe the relation between math and disciplines using math is much messier than we’re taught to suppose. People re-derive each others’ work all the time without realizing it, and even when a mathematical technique and a physical idea are well-suited to each other, it can take a surprisingly long time for the two to hook up.
Agreed! Agreement to the nth degree in fact, where n is very large.
Also agreed. My husband tells me we have an extensive nervous system surrounding our gut, so that a “gut feeling” really does involve our gut. Whether that’s true or not, we all know what a gut feeling is like, and everybody, even the most abstruse of mathematicians, starts out their reasoning process with gut feelings, which they will then authenticate or not, depending on whether the feelings can be authenticated.
Discursive reasoning is, in a sense, an afterthought, neatly tidying up after-the-fact the messy process of inquiry.
It’s that old philosophical debate about the proposition primum vivere, deinde philosophari.
Very cool teaching tip on how feeling and sensing help with grasping math concepts. First, let them daydream about racing, then work on differentiation problems.
I should know better than to base my arguments on my understanding of the relative positions of two groups of people I know little about. I have had a mathematician friend suggest that this was true, but your position seems like more of a statement against interest than his does, and I’m not entirely certain that I have his position straight.
I appreciate your charity in suggesting that mine is the received wisdom, thus de-emphasizing my anti-Burkean error and marking your position as distinctively correct, rather than mine as distinctively wrong.
It’s well to note that the full Aristotelian sense of “rational” is perhaps not something many laymen understand (I include myself among them). Indeed, it may be that, if laymen fully understood what “rational” meant in the Aristotelian sense, they would find “rational” as odd a descriptor for what Aristotle’s school was talking about as it is for what economists are talking about.
For example, I have some vague notion that, to an Aristotelian, being “rational” includes being virtuous – that is, avoiding wickedness of various sorts. So, for example, a man that laymen might describe as “rational but cruel [or wicked in some other way]” might not count as rational in the Aristotelian sense, and laymen would understandably find that odd.
I’ll jump in without having read the earlier comments (turning to that as soon as I post this). I majored in both philosophy and economics as an undergrad. My honors thesis was in part about the philosophical limitations of the Coase Theorem. As I don’t hate myself for having done this, I don’t think there should be any fundamental enmity between the disciplines.
I feel that economists are sometimes misrepresented (or misrepresent themselves) regarding the underpinnings of their work with respect to rational behavior and perfect information. I find that microeconomics is a “normative” study—it tells us what we should do—rather than a positive study of actual human behavior. Microeconomics tells us, given relative costs, production functions, demand, etc., how to optimize something (typically profit, but also social welfare and other quantitative values). It doesn’t claim that anyone actually knows enough to do this, but it helps you articulate economic problems and solutions.
Macroeconomics is shamanism.
200 words has put me in the same conundrum as the economists I criticize. When I say microeconomics tells us what we should do, I mean should do if we decide (for independent reasons) to do something economic. It tells us how a given enterprise should operate to maximize its profits (and how we should define profits), but it doesn’t tell us we should maximize profits. The ethical justification of maximizing profits must come from outside economics.
I suppose you’re aware, then, of the problems Coase himself had with what was called “the Coasian world” (the world of zero transaction costs)? Coase’s remarks on the subject are withering and rather funny. The man could flat-out write!
It’s like Newtonian mechanics without friction. We leave friction out to simplify the equation and clarify the concepts. But friction is literally what makes things “go” in the real world, and generates much more interesting problems.
And what of our society, where irrational behavior is rewarded and emulated?
I now see Mulville has anticipated my normative point, and, as typical, stated it better.
In which comment? Can you give a comment number or a link? (KC made several comments.)
There was a study of Harvard students who were asked to choose among mutual funds that were all invested entirely in the same index. In other words, they held identical portfolios and had identical returns; the only difference were the fees (the price). A majority failed to select the lowest fee fund, which may say more about Harvard than about economics.
No, the thesis of the Declaration is “Governments are instituted among Men, deriving their just powers from the consent of the governed.” Property rights are a premise, secured by governments.
# 48. So isn’t this suppose to nest?
James, how much Descartes, and which of his works? Or, to put it more bluntly, what is the least amount of Descartes I can get away with reading in order to be basically informed on this? And do you have a favorite translation?
I will PM you. What goes on in that bizarre mind of yours is quite often interesting, to say the least :-)
Dumb question, maybe, but did the students know what a mutual fund was when they chose?
If they’re like a lot of people, they might picture a mutual fund as being “some guy invests your money in a lot of stuff for you”, and, I dunno, might have worried that a lower-than-average fee was a signal that the “guy” doing this investing was unreliable in some way.
At any rate, if I thought a dozen guys were offering to invest my money in the exact same way, I would look for some signal – any signal, really – that I was choosing a reliable guy, not a con man or someone who’d, you know, simply forget to invest my money or something.