Wednesday, April 02, 2003

Thaler unplugged

Had my first class with Dick Thaler today, Chicago's Behavioral Economist of choice. Two of my buddies are TAs, and I'm looking forward to the material. Thaler trotted out some optical illusions, as well as puzzles demonstrating how people are bad at complex trigonometry, statistics, and probability. The optical illusions he used also happened to be in Pinker's Blank Slate so I asked him if any type of biological/evolutionary foundation underpinned his work. He said no, and that he found evolutionary explanations to be useless because they could be used to explain anything, and offered the example of how signaling arguments explaining peacocks' tails, or thrill seeking in young men, could be cooked up for anything and go both ways.

He is, of course, exactly right, but only in the narrow sense that asymmetric information/signaling stories can explain anything and are usually unfalsifiable wherever they appear, be it evolutionary genetics or economics. (My PhD buddies tell me that this is why the field is virtually dead in academia, even though it won a Nobel Prize a couple of years back.) In other areas this is not true. The fact that eyes get tricked by optical illusions show that they are not simply light meters, but that they process visual signals in specialized ways as well. These specializations are genetic, so it is not crazy thinking they've evolved under adaptive pressure. I have a feeling that the answers Thaler et al are trying to dig up will come out of experimental neurocognition, not empirical behavioral economics, but we'll see. I'm looking forward to the class.

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