February 25th, 2008

Baby and me

Reductio ad Absurdum: The Poverty of the Economist

It's always risky to attack a thinker based on a newspaper profile, but Sarah Hampson's interview with Tim Harford in today's Globe and Mail suggests that the former World Bank economist and now self-proclaimed "undercover economist" (read: columnist and author) is as fatuous and smug an apologist for laissez faire neo-liberal Capitalism as any "Smash the state!" chanting anarchist could wish for.

On the surface, Harford's approach seems reasonable. Examine how people actually behave, then analyse their decisions to determine whether or not they are economically rational. As an example, the interview quotes Harford on his decision to propose to the woman who is now his wife.
"I was deciding whether to propose to my wife," says the intense, bespectacled author, whose new book The Logic of Life explains the hidden incentives and rational calculations underlying people's everyday decisions.

"And so I did what a lot of guys do. They think, ‘How long can I get away with not proposing?' and ‘Am I still learning about this relationship? Am I learning about outside options? Am I learning about how it feels to be in a serious relationship?'

"It turns out you can model all this mathematically," he continues. "It's the same way you think about purchasing stock options," he says, elbows on the table. "So when I was deciding, I just explicitly switched into that mode. I thought, ‘I love my girlfriend. I am not learning that she's a psychopath or whatever. I have learned that I am happy with this relationship. I don't need to wait any more.'"

So far, so good; that sounds like a reasonable description of what most of us do when faced with an important life decision. We weigh the pros and cons as best we understand them and sooner or later, we make the decision. And if we don't, we are rightly labelled a "ditherer".

But like so many "experts", Harford quickly over-reaches himself, creating a one-size-fits all template for analysis which simply ignores data which don't support the theory; the kind of "rational" thinking which leads to ideology and all of the senseless suffering that entails.

To put it simply, Harford appears to make the mistake common to most economists: he assumes that human beings a strictly rational beings, who make decisions based only on a cost/benefit analysis.

Obviously a natural when it comes to self-publicity (er, not that there's anything wrong with that, in principle), he tackles such issues as "...why prostitutes in Morelia, Mexico, often choose to have unprotected sex" (answer: the prostitutes calculate that the risk of AIDS is "...low in that part of the world" and the women can "...barter for a 25-per-cent increase in pay [for] condom-free intercourse") and why it makes sense for ethnic minorities not to bother with higher education.
In a fascinating chapter on racial discrimination, he analyzes studies in which researchers generated 5,000 fake job applications, to which they randomly assigned typically white or black names. They then showed that employers favoured the Bobs and Janes over the LaTonyas and Jamals. Worse, the employers paid attention to the qualifications of the "white" candidates and paid little heed to “black” candidates with excellent post-secondary education and work experience.

"What is the rational response to that if you're an ethnic minority and you're thinking about going to college; all that time, all that expense, and you know how your employers are likely to respond to your degree?" he asks. The answer: You don't see any value to getting an education, so you don't bother.

Donning the mantle of the scientist, he goes on to claim that he is "not political" and asserts that is his "...basic view is that people are quite good at making decisions...", thus permitting him to eschew any effort to integrate society or politics - let alone morality - into his thinking.

His most egregrious reductionism concerns the recent fad among teenager girls for giving boys oral sex at parties.
In The Logic of Life, he writes that his perspectives are "refreshingly disrespectful of the conventional wisdom." And they are. For example, he shows that the teenage oral sex craze in America, which alarmed Oprah, is actually a rational choice because young people perceive that sexual intercourse carries more risks.

By discussing a variety of factors, including abortion laws for teenagers and intensive education about the risk of AIDS, Mr. Harford concludes that rather than being a sign of increased, porn-influenced depravity, the blow job trend among teenagers might very well be a smart, responsible choice.

Talk about missing the forest for the trees! Talk about accepting the status quo!

If Hampson's interview is at all representative of Harford's thinking (and my admittedly brief) glance over the author's website suggests that it is), his work is as shallow as it is smug.

Why has oral sex (apparently) become a de riguer spectator sport at teenagers' parties? God help me for suggesting it, but might not abstinence be at least as "rational" an option as getting so drunk that you think nothing of getting down on your knees to "service" random acquaintances at a parties?

Harford's approach to human interactions and decision-making may have its virtues, but if he is seriously using it to explain the human condition, it is limited at best and at worst a perverse apologia for any and all economic and social injustices in the world.

If anyone out there has read the book under discussion - Colin? - and thinks he's been seriously misrepresented by Hampson's profile, please feel free to jump in.