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Outline

Title
Abstract
Introduction
Implications for Standard Economics
Conclusion
References
All Topics
Philosophy
Epistemology

Towards a Theory of the Social Determination of Behavior

Profile image of karla hoffkarla hoff

2015

Abstract

This paper is an attempt to broaden the standard economic discourse by importing insights into human behavior not just from psychology, but also from sociology and anthropology. Whereas the concept of the decision-maker in standard economics is the rational actor, and in early work in behavioral economics it is the quasi-rational actor, in some of the recent work in behavioral economics it could be called the enculturated actor. By the enculturated actor, we mean an actor whose preferences and cognition are subject to two social influences that go beyond the context of the moment of decision-making: (a) the social contexts to which the actor has become exposed and, especially accustomed; and (b) cultural mental models-including categories, narratives, and worldviews. We trace how these factors shape individuals' behavior through the endogenous determination of both preferences and the lenses through which individuals see the world-their perception, categorization, and interpretation of situations. We offer a tentative taxonomy of the social determinants of behavior and describe results of both controlled and natural experiments that only a broader view of the social determinants of behavior can plausibly explain. The perspective suggests new tools to promote well-being and economic development.

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Dirk Engelmann

2009

Psychologists and economists have at various times borrowed each other's ideas, criticized each other, as well as collaborated, but arguable more frequently, ignored or misinterpreted each other. The editors of this book set out to help improve understanding and exchange between the disciplines by showing the opportunities for mutual influence. They thus organized a conference of eminent scholars of both fields who have worked in the intersection. This book contains their contributions. These contributions point out, sometimes unintentionally, how this exchange can be fruitful, but also difficult due to differences in approaches and misinterpretations. For those willing to look closely, there are also some hidden treasures that point to interesting aspects of the relation between these fields. I will start with discussing the key chapters, briefly remark on the remaining ones and then discuss the hidden treasures. The first chapter by the editors sets out the motivation for the book and gives an outline of the following chapters. A brief description of the history starts with the remark that Adam Smith in 1759 used psychological arguments to a substantial degree, in a dualism between rational decisions and passions, previewing the dualism between psychological and economic approaches. Still, early 20th century economics often employed psychological arguments, albeit with scarce references to psychological theories, but from the 1940s rational choice was dominating economics. Only with the rise of behavioural economics from the 1980s have economists again become more interested in psychological results. The editors of the present book aim at fostering this interest and interchange. As they remark, while common interests (predicting and interpreting social interactions) as well as similarities and differences in methodology (laboratory experiments) create the potential for a mutually influential exchange, so far there was more influence of social psychology on behavioural economists than vice versa, partly because the former typically have little training in formal modelling. The core of the book is Parts VI and VII, which focus on the mutual influences between social psychology and economics and challenges for their interaction. These key chapters are highly recommended reading to economists, psychologists, as well as other social scientists and policy makers. Part VI covers ''Challenges to Social Psychology and Economics". In Chapter 14, Max Bazerman and Deepak Malhotra argue that society suffers from policy advice being focussed on economics with little impact of other social science (as Al Roth pointed out, the US president has a council of economic advisors, but no council of psychological advisors, and the same most likely holds for almost any other government in the world). The authors present a number of illuminating examples, where the application of standard economic assumptions and predictions led to bad policy advice and where the application of well-established results from psychology could improve policy. These include the effects of framing (incidentally, that example also illustrates how unreliable survey data can be, as recall of past choices is also highly influenced by framing), and the fact that people do not make use of all available information (for example, information about the conflict of auditors) and do not adjust estimates properly for that information. Another example is self-serving bias in social dilemma situations. These examples come with a lot of first-hand insights, as Bazerman has testified before the SEC in 2000 and hence before major accounting scandals came to light, but without major effect, to the stated regret of the then SEC chairperson. The conclusion from these examples might not necessarily be that the government should establish a council of psychological advisors, as many problems government will seek advice on are inherently economic problems. In line with what the authors state at the end, having (behavioural) economists on the council who are aware of relevant psychological research (possibly in addition to psychologists) provides an alternative, and I would guess more practical solution as this prevents having two competing advisory councils, which might leave government officials confused or allow them to pick their preferred solution. In Chapter 15, Daniel Batson touches on an issue that illustrates that debates between (or even within) fields are often somewhat circular, namely the discussion whether people are generally selfish. (This debate comes up in several parts of the book, notably Chapter 4, but Batson's approach appears more insightful than the average contribution to this debate, as I argue below). In general this appears an often fruitless debate among economists, behavioural economists and social psychologists, being characterized by a lot of repetition of the same arguments (specifically the claim by social psychologists and behavioural economists that they have disproved the fundamental assumption of economics that people are selfish,

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