The idea of "nudging" is growing in popularity in the popular culture. The idea is that the right government policy can nudge the individual to perform the obviously rational self-interested choice. The policies are innocuous enough that many reasonable people do not oppose them directly. Who thinks getting their fellow denizens to invest more of their savings or eat a little more healthfully is a bad idea?<p>But when you think about it more, you can see some troubling trends of petty bureaucrats trying to control your life through nudging. The most offensive example that comes to mind is politicians in the UK trying to convince ISPs to (by default) block adult content because, you know, think of the children [0]. Of course you could call your ISP and remove the block so what's the concern, right?<p>Be ready to give up ever more and more autonomy through slight manipulation all backed up by intellectuals tearing down Homo economicus straw-men.<p>[0] <a href="http://en.wikipedia.org/wiki/Internet_censorship_in_the_United_Kingdom" rel="nofollow">http://en.wikipedia.org/wiki/Internet_censorship_in_the_Unit...</a>
> Economists discount any factors that would not influence the thinking of a rational person. These things are supposedly irrelevant.<p>I realize this is the setup for No True Scotsman, but are there any "serious" economists who actually believe the things this article criticizes? I hear these criticisms a lot, and I'm sure there are plenty of people who appeal to these simplifications to support a particular political belief, but from what I have read of modern economics (including some heterodox schools), economists don't operate under these assumptions. The criticisms get more bizarre throughout the article:<p>> Economists create this problem with their insistence on studying mythical creatures often known as Homo economicus. ... An Econ would not expect a gift on the day of the year in which she happened to get married, or be born.<p>That example doesn't even make sense in the context of the Homo economicus criticisms. A perfectly rational person who is aware of the custom of giving gifts for important anniversaries absolutely would expect a gift on those days. They'd probably give gifts as well. There's nothing irrational about that.
Playing devils advocate, maybe the students were being rational, but based their reaction on the information at their disposal. I taught college once, and observed that students make rational and sophisticated decisions based on what grades they expect to receive from their courses. They are also justifiably insecure about their math skills.<p>They have to decide under time pressure whether this is a good teacher or a bad one, easy grader or hard, fair or unfair, etc. The students have to combine what they know about the mechanics of the grading scale, with their own internal information about whether they trust this guy -- especially if it's before the deadline for dropping the class. Introducing an unorthodox or weird grading scale could influence this judgment. The students may have a rational interest in nudging teachers towards a more favorable grading system.<p>I have a couple of major misgivings about psycho-economics. First, any empirical failure of theory could be blamed on irrational behavior, when the theory itself is wrong for other reasons. We might just not be considering all of the information that people have at their disposal. Likewise, psychology could be blamed for any failure of economic policy, or of entire economies.<p>Second, deciding who is capable of rational decision making, based on sex, race, or social class, has a long and sorry history. I'd rather let economics be the study of that which can be understood based on the behavior of rational actors, and put bigger error bars around the predictive ability of economic models.
The idea of a 'suboptimal' decision is a core tenet that keeps capitalism's wheels spinning.<p>If you are poor, you must have just bought too many gifts, or refused to live in a house share with 5 other people, or took the bus instead of cycling to work, and so on.<p>You didn't act entirely rationally, and so you 'deserve' to be poor.<p>It seems hilarious when phrased in those terms but this sort of thing happens _all the time_. Especially because some people are capable, either by repression of emotion (stoicism) or by deference to authority (it's always been this way...) of jumping through these hoops.<p>If we modeled the world in a reasonable way we'd discover how horrible it really is. The fact we don't is part of the cognitive dissonance that surrounds us.<p>(Nudging has been mentioned lower down here - yet another example of a statistical calculation that completely overlooks individual plight, one that treats the populace as a flock to be herded...)