I woke up this morning to find Roger Farmer and Noah Smith had been discussing my review of Richard Thaler’s excellent new book [amazon_link id=”B00SSKM714″ target=”_blank” ]Misbehaving[/amazon_link]. Roger and Noah are presumably asleep now, giving me the opportunity to chip in again.

To recap, I expressed some unease about the eagerness with which economics is embracing behavioural psychology. Roger agreed, tweeting:

Here is his follow-up post on the subject. Noah replied:

His Bloomberg column argues that we economists need to accept whatever the empirical evidence tells us about how people behave and using it to improve our models. The fear of Big Brother government is overdone, he argues.

My anxiety is not really about the paternalism involved in using nudges, because to govern is to be paternalistic which is why elections are vital; and of course it’s preferable to have better than worse outcomes. I’m more worried by the habit almost all economists have of thinking about policy as if society is our play pen and we are benign, omniscient deities, outside society. My sense is that the enthusiasm for behavioural “anomalies” is that it gives us new toys to play with. There is a characteristically striking Adam Curtis blog post on this tendency, which I suggest my students look at when I do the behavioural policies lecture in my course.

So my conclusion is not that we reject behavioural insights, but that we develop a more becoming humility. We pay far more attention to how the data we use are created and what they mean. We remind ourselves that “rational” is not the benchmark from which human behaviour diverges in anomalous way (cf [amazon_link id=”0141015918″ target=”_blank” ]Gerd Gigerenzer[/amazon_link]). We recall that not everyone is like us (especially as most of ‘us’ dominating economic thinking are male, white, western). We note that people change their behaviour in response to policies (as @billwells_1 pointed out in the Twitter debate, arguing it is better to inform people about the consequences of their ‘non-rational’ choices).

In short, we recognise that economics is a social science characterised by performativity, reflexivity, and great uncertainty. That’s all. (I’ve gone on about this before – anyone interested might like to look at my Tanner Lectures (pdf) and Pro Bono Economics lecture.)