The Economist takes on behavioral economics this week, lumping it in with other “alternative economics” approaches being surveyed by a new course at Harvard. Brad de Long already has a concise critique of the article on his blog, but there are a couple of more things to say. First is that The Economist stoops to cheap shots in their attempt to discount the new course:
The heterodox economists, however, deserve credit. Their bold move to offer students an alternative should be applauded for comprehending that students are consumers. That said, if consumers cannot be trusted to know what is best for them, how can students know that they have chosen the right course?
I don’t think that either the orthodox or heterodox economists think that the educational field should simply be a marketplace in which student consumer demand is matched with supply. The article is putting words in the course creator’s mouth and using those words to paint him as a hypocrite. You’d think that such a move wouldn’t be necessary as there might be intellectual ground on which to critique heterodox courses.
The intellectual critique, too, is sloppy: behavioral economics is not the same as Marxian economics after all. As DeLong notes, “Behavioral considerations make the economics of social welfare and of supply-and-demand more complex. But supply and demand curves do not lose their meaning.” The Economist is right to defend economics from the charge that its view of social agents as rational actors is not reality; all science simplifies reality and imposes models on it in order to make it manageable and allow some explanatory power. But eventually, as understanding grows, it might make sense to expand the model to become more complex - in this case drawing on psychology and sociology. Also, since neoclassical economics has in turn inspired dodgy and not terribly explanatory versions of sociology (such as Rational Action Theory), it doesn’t hurt to remind students that the rational agent of economics is a construct to allow work to proceed, not a universal truth about the way people behave.
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