Behavioural Economics and Literary Criticism

I had an interesting email from a student constructively criticising me for dismissing the value of studying English literature for understanding behavioural economics. The context is a class where some of the students have joint majors - the value of studying political science, law and philosophy for studying behavioural economics is very obvious and I spoke a bit about the overlap between behavioural economics and these fields. Some of the students have English as their other major and I waved this away without going into potential overlaps. As pointed out by the student to me afterwards, there may be a lot of crossovers that are worth thinking about. He himself pointed to the training that literature students receive in deconstructing arguments and, in particular, linking text back to wider systems of power and social control. The email stimulated me to think further about the crossover between behavioural economics and literature, and below are a few random connections.

- Jon Elster is one of the most widely cited and influential authors in behavioural economics. He is a philosopher and social scientist who, among other things, wrote the epic work on time discounting "Ulysses and the Sirens". Elster has often argued for greater linkage between social sciences and humanities. His works frequently draw from deep literary metaphors and he often uses social science theory as a hermeneutic tool to uncover the meaning of texts and paintings.

- The importance of narrative is increasingly being talked about in economics. In particular, George Akerlof has been arguing that narratives have a causal role in the maintenance of group economic inequality and business cycles. His recent book Identity Economics, co-authored with Rachel Kranton, outlines their ideas in this area.

- Deirdre McCloskey has argued for decades that economics is a rhethorical science, by which she means that economic persuasion relies as much on stories and arguments as it does on statistical evidence. As far as I am aware, nobody has yet attempted to deconstruct the type of metaphors and narratives arising from behavioural economics. As it becomes the mainstream, it will be interesting to see how this will happen. The dominant neoclassical account of human decision making led to the "homo economicus" metaphor and has been critiqued thousands of times. We can think of a few instances where the new less than perfect vision of people has been critiqued e.g. Gigerenzer famously argued that the heuristics and biases literature created a distorted and unfavourable account of human decision making. Rubinstein has viciously attacked what he perceives as the arbitrariness and frivolity of a lot of behavioural economics, particularly neuroeconomics.

- The student mentioned continental philosophers such as Foucalt and Derrida in his email. Continental philosophy tends not to get a great time on this blog (I can picture Kevin rubbing his hands and choosing his weapon as I type). In the comments, Rob has been arguing in various guises that policy applications of behavioural economics are Orwellian ideology in disguise. There is not much in economics textbooks to help us understand the connection between theory, empirics and power structures/ideology etc., Particularly when we get into thorny issues such as social justice and individual freedom then relying solely on statistical evidence hits sharp limits.

- A number of people have looked at how paradigms are formed in economics. Mark Blaug, in particular, stands out as someone who has grappled with big questions underlying the philosophy of science aspects of economics. His book "The Methodology of Economics" is long overdue a spin at our book club. The entry by Daniel Hausman in the Stanford Encyclopedia of Economics deals with many of the philosophical problems at the heart of economics.

- Heterodox Economics is an umbrella terms for a wide range of approaches to economics that exist mostly outside of mainstream Economics departments and journals. This is a very broad church incorporating Marxist and feminist economists, eco-economists and a wide range of other schools of thought. A student-led group developed a movement know as post-autistic economics that heavily criticise mathematical formalism in economics and the atomistic depiction of the individual decision maker. Their journal Real World Economics review publishes many articles that draw from postmodernism and related areas.

- In my own current work, I am struggling with how to integrate qualitative research methodologies into studying well-being and economic decision making. For example, we are currently drafting a paper based on focus group interviews with about 100 people who have been made redundant. There is so much information in these interviews that is interesting and valuable yet it is very difficult for someone trained mostly in econometric methods to capture what is happening and even more difficult to write it up in a way that other economists will care about.

So I guess all of the above areas are points of contact that students from a literature background will have strong insights into.