Economics Behaving Badly

by George Loewenstein and Peter Ubel

New York Times
July 14, 2010

It seems that every week a new book or major newspaper article appears showing that irrational decision-making helped cause the housing bubble or the rise in health care costs.

Such insights draw on behavioral economics, an increasingly popular field that incorporates elements from psychology to explain why people make seemingly irrational decisions, at least according to traditional economic theory and its emphasis on rational choice. Behavioral economics helps to explain why, for example, people under-save for retirement, why they eat too much and exercise too little and why they buy energy-inefficient light bulbs and appliances. And, by understanding the causes of these problems, behavioral economics has spawned a number of creative interventions to deal with them.

But the field has its limits. As policymakers use it to devise programs, it’s becoming clear that behavioral economics is being asked to solve problems it wasn’t meant to address. Indeed, it seems in some cases that behavioral economics is being used as a political expedient, allowing policymakers to avoid painful but more effective solutions rooted in traditional economics.

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The Limits of the Coded World

by William Egginton

New York Times
July 25, 2010

In an influential article in the Annual Review of Neuroscience, Joshua Gold of the University of Pennsylvania and Michael Shadlen of the University of Washington sum up experiments aimed at discovering the neural basis of decision-making. In one set of experiments, researchers attached sensors to the parts of monkeys’ brains responsible for visual pattern recognition. The monkeys were then taught to respond to a cue by choosing to look at one of two patterns. Computers reading the sensors were able to register the decision a fraction of a second before the monkeys’ eyes turned to the pattern. As the monkeys were not deliberating, but rather reacting to visual stimuli, researchers were able to plausibly claim that the computer could successfully predict the monkeys’ reaction. In other words, the computer was reading the monkeys’ minds and knew before they did what their decision would be.

The implications are immediate. If researchers can in theory predict what human beings will decide before they themselves know it, what is left of the notion of human freedom? How can we say that humans are free in any meaningful way if others can know what their decisions will be before they themselves make them?

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Your Move: The Maze of Free Will

by Galen Strawson

New York Times
July 22, 2010

You arrive at a bakery. It’s the evening of a national holiday. You want to buy a cake with your last 10 dollars to round off the preparations you’ve already made. There’s only one thing left in the store — a 10-dollar cake.

On the steps of the store, someone is shaking an Oxfam tin. You stop, and it seems quite clear to you — it surely is quite clear to you — that it is entirely up to you what you do next. You are — it seems — truly, radically, ultimately free to choose what to do, in such a way that you will be ultimately morally responsible for whatever you do choose. Fact: you can put the money in the tin, or you can go in and buy the cake. You’re not only completely, radically free to choose in this situation. You’re not free not to choose (that’s how it feels). You’re “condemned to freedom,” in Jean-Paul Sartre’s phrase. You’re fully and explicitly conscious of what the options are and you can’t escape that consciousness. You can’t somehow slip out of it.

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