Human-ities · Public Space · Social/Politics · Theory

Economics and the Brain: How People Really Make Decisions in Turbulent Times

In a 2008 paper on neuroeconomics, Stanford economist George Loewenstein said: “Whereas psychologists tend to view humans as fallible and sometime even self-destructive, economists tend to view people as efficient maximisers of self-interest who make mistakes only when imperfectly informed about the consequences of their actions.”

This view of humans as completely rational – and the market as eminently efficient – is relatively recent. In 1922, in the Journal of Political Economy, Rexford G. Tugwell, said (to paraphrase) that a mind evolved to function best in “the exhilarations and the fatigues of the hunt, the primitive warfare and in the precarious life of nomadism”, had been strangely and quickly transported into a different milieu, without much time to modify the equipment of the old life.

The field of economics has since rejected this more pragmatic (and I would argue, realistic) view of human behavior, in favor of the simpler and neater “rational choice” perspective, which viewed the power of reflection as the only force driving human behavior.

But to paraphrase sociologist Zygmunt Bauman, our currently held views of what is reasonable, sensible and good sense tend to take shape in response to the realities “out there” as seen through the prism of human practice – what humans currently do, know how to do, are trained, groomed and inclined to do.

We compare ourselves to people we know, and come into contact with – either through social groups, or lately, with the advent of mass and, even fragmented media, people we think are like us.

Excerpt of an article written by Paul Harrison, The Conversation. Continue HERE

3 thoughts on “Economics and the Brain: How People Really Make Decisions in Turbulent Times

  1. Reblogged this on lesley-anne pittard and commented:
    Reflection is critical and as argued by the author, a significant driving force in cultivating change within humans & human systems. How often do we stop & assess our actions? Moreover, are we ever allowed to do that, considering our demanding lifestyles.

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