Amber Heard seems a little full of herself
She sounds like a female Holden Caufield in this interview. The only real person in a world full of phonies.
President Obama didn’t do away with the cost-benefit requirement, or with Executive Order 12866. Instead he kicked the can down the road, as he likes to say other people are always doing. He ordered the Office of Management and Budget to conduct a 100-day review of 12866 and report back to him. Among other things, he wanted the report to “clarify the role of the behavioral sciences in formulating regulatory policy.”
At this reference a few knowing observers pricked up their ears. During his campaign, the candidate Obama was often portrayed as an intellectual acolyte of “behavioral economics,” a très chic social science that culls up-to-the-minute laboratory research about why human beings behave the way they do and applies it to the world of buying, selling, borrowing, and investing. At the candidate’s elbow, said Time magazine, was a “behavioral dream team”: economists and psychologists steeped in the latest behavioral literature. And once in office the president surrounded himself with many dream-team veterans: Lawrence Summers, Austan Goolsbee, Peter Orszag—behavioralists all.
The behavioralists are often caught smuggling in a normative and political judgment under the cloak of disinterested science. A hidden assumption is easy to conceal because the science that the behavioral economists draw upon is highly elastic, not to say flimsy. One cognitive bias that the behavioralists don’t mention, though its lure seems irresistible, is the bias that makes human beings swallow uncritically the declarations of social science. The bias deters the layman from snooping around to see if the science makes sense. This is the well-established “chump effect,” a name I just made up. It accounts for the breathless reception given to the books by Gladwell and the other popularizers of sociological and psychological research. “Findings reveal . . .” “Scientists have uncovered . . .” “Research has shown that . . .” And we swoon.
But what does “research show”? What do “findings reveal”? Usually much less than the behavioral economists want to believe. And they do want to believe. They burrow through stacks of boring journals and come upon an article describing a new experiment with a deliciously provocative conclusion and looking up from the page they can hear the cry: “Generalize me, big boy! Make me relevant!” Skepticism flies off, and the economists never stop to consider the fishy process by which those provocative conclusions were reached.
Behavioral economists deny any ideological intent in their work. The closest I’ve seen any of them come to conceding a political point of view was when Thaler, in a recent interview, said, “If there’s a regulatory philosophy in behavioral economics, it’s that we should recognize that people in the economy are human and that there are people out there trying to take advantage of them.” In this sense, behavioral economics is just conventional 1960s liberalism—and conventional 1960s economics, too—that assumes the free market itself is a kind of unending con game, with the smart guys exploiting the saps. As an advocate for the market’s hapless victims, the government has the responsibility to undo the con, a task that will require only the smartest administrators operating according to only the latest scientific research and making the most exquisite moral judgments.
You can see how useful the notion of irrational man is to a would-be regulator. It is less helpful to the rest of us, because it runs counter to every intuition a person has about himself. Nobody sees himself always as a boob, constantly misunderstanding his place in the world and the effect he has upon it. Surely the behavioral economists don’t see themselves that way. Only rational people can police the irrationality of others according to the principles of an advanced scientific discipline. If the behavioralists were boobs too, their entire edifice would collapse from its own contradictions. Somebody’s got to be smart enough to see how silly the rest of us are.
Traditional economics has always been more modest. Assuming the rationality of man was a device that made the discipline possible. The alternative—irrational people behaving in irrational ways—would complicate the world beyond the possibility of understanding. But the modesty wasn’t just epistemological. It was also a democratic impulse, a sign of neighborly deference. A regulator who always assumed that man was other than rational was inviting himself into a position where he could exert a control over his fellow citizens that wasn’t proper for a true democrat. Self-government demands this deference. It won’t work otherwise.
I can’t say I like the idea of this. Yet another reason to take back congress-so cost benefit analysis can be codified as part of the (hopefully much smaller) regulatory process. Fortunately not all is lost yet. As the article points out the behavioral economists haven’t been especially successful where there efforts have been applied and they haven’t finished writing their proposal for including behavioralism in the regulatory process yet.