Bryan Caplan  

Don't Believe Behaviorism's Dead? I Say!

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One of the many paradoxes of behaviorism is that the only way you can tell that Arnold Kling and I disagree about it is from our words. Observe our behavior for a hundred years; you'll never figure out where we stand without listening to us or reading us (or at least reading our "body language"). Lots of positions in philosophy have been called "self-refuting," but behaviorism is near the top of the list.

However, after carefully reading Arnold's words, I disagree with less than one might expect.

Seriously, I think that behaviorism is a reaction against two propositions. One is that we need to examine whether people really optimize.

I agree that we do not "need to examine" whether people optimize. Treat it as a tautology, I won't demur. But we DO need to examine what they optimize. Do they maximize what really is in their narrow self-interest? Do they maximize what they falsely believe is in their narrow self-interest? Or are they not even trying to maximize their narrow self-interest? These are interesting questions, and unless you listen to people, observing their behavior probably won't answer them.

The other is that we need to observe people's utility functions.

I agree that we do not "need to observe" people's utility functions. Good thing too, because with the exception of one's self, that would require telepathy. But is listening to other people a helpful way to learn more about their utility functions? I say it is.

The doctrine of revealed preference, which I associate with Samuelson, says that we do not need to observe utility functions. Instead, we can infer relative marginal utility indirectly by observing choices.

Yes, we can infer relative marginal utility (in a textbook ordinal sense) by observing choices. But what opponent of behaviorism ever denied that? The real behaviorist position, though, is that observing choices is the ONLY way to gain information about utility functions. Otherwise, they would not object when other economists conduct surveys.

A short way of putting this form of behaviorism is "watch what people do, not what they say." For example, so-called "happiness research" will come up with results that say that people get little or no incremental happiness beyond $20,000 of income. Yet their behavior contradicts that, since many people could easily cut back on work and still have $20,000 a year. I believe the behavior, not the surveys.

Does their behavior really contradict their answers? Only if people maximize their own happiness - as philosophers would say, if psychological hedonism is true. Common sense and my introspection say it's not true. People opt for less personal happiness all the time. Sometimes, of course, they are trading off happiness now for happiness later. But other times, they are trading off their own happiness for the happiness of others. Or they might give up some happiness to have more kids, more success, or more neuroses.

Personally, if happiness research didn't find a small effect of money on happiness (for people who are already middle class or richer), I wouldn't trust it. A vast increase in income hasn't made me much happier than I was in grad school. And I see lots of rich workaholics who never crack a smile. Their money brings them lots of happiness? Gee, I'd hate to have known them when they were starving students. They must have been suicidal!

Incidentally, if humans really maximized their own happiness, there would be a big evolutionary puzzle: How come with have so many emotions when we only obey one? Why do we feel curiosity, for example? You could try to reduce curiosity to happiness, but that's implausible. I've felt curious and sad at the same time. Haven't you?

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The author at Truck and Barter in a related article titled Utility Functions and Limited Rationality writes:
    Brian Caplan writes "I agree that we do not 'need to examine' whether people optimize. Treat it as a tautology, I won't demur." Well, I mostly disagree; it might be a tautology in the limit of arbitrarily brilliant rational actors, but in the world of ... [Tracked on April 19, 2005 5:48 PM]
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Scott Scheule writes:

I have no idea which one of you's right, but keep fighting. This is fascinating.

Brandon Berg writes:

That people try to maximize happiness seems tautological to me. "Happiness" is the degree to which one is satisfied with the current state of one's affairs, and all rational action is aimed--albeit not always accurately--at bringing about a preferable state of affairs in the future.

The evolutionary purpose of other emotions, then, may be to cause dissatisfaction which would otherwise not have been felt, thereby prompting actions which improve chances of survival. Curiosity causes mild dissatisfaction with one's own ignorance, prompting experimentation which may lead to useful discoveries. Fear causes intense dissatisfaction with being in a dangerous situation, prompting flight.

So happiness is the meter that tells you how well you're doing, and the other emotions are just there to calibrate it.

Bernard Yomtov writes:

I don't really get this happiness research business. We ask Jack, who makes $20K, and Jill, who makes $50K, how happy they are, and find only a small difference. So we conclude that Jill's extra $30K doesn't generate a lot of extra happiness.

But we are dealing with two different people. The comparison is meaningless. In fact, isn't it likely that individuals who follow financially less rewarding professions are precisely those to whom material rewards are less important, while the opposite applies to those who seek high-paying jobs? In other words, money means more to Jill than to jack, and the outcome of the survey is wholly predictable.

Maybe I'm missing something.

John Thacker writes:

Hmm. Seems the problem is mostly in the definitions of happiness. Of course, since many behaviorists would basically define happiness as "the thing that people try to maximize through their behavior" (i.e., what people want), it's a bit circular.

It is, certainly, fairly easy to argue that while people "trad[e] off their own happiness for the happiness of others," that this serves some sort of greater or truer happiness on their part. They would be more unhappier if they didn't do this.

In short, I don't think that the two of you really mean the same thing when you say happiness.

asg writes:

One thing that jumps out at me is what may be a tension between Bryan's earlier expressed ideas about irrationality and his rejection of behaviorism here. Specifically, in his writing about rational irrationality, he quotes an author who says that Muslim soldiers who have been promised paradise if they die in battle nonetheless often opt for retreat. In other words, their behavior contradicts their stated preferences.

Bryan's argument depends in part on this, since he wants to argue that certain types of irrationality have a marginal cost of zero to the "consumer" of that irrationality. But the only way to reach that conclusion is to say that the behavior of the religious fanatic is what matters, rather than what he says he believes (since if you believe what he says, and disregard the behavior, the marginal cost of his loony beliefs is very high indeed).

So which is it? When trying to figure out the marginal cost of a particular irrational belief, do we look at the consumer's behavior, or what he says?

Jason Ligon writes:

asg is spot on.

At the end of the day, you have to be able to address discrepancies between stated preference and action. The behaviorist approach is to try to describe costs to the person irrespective of what they say. The non behaviorist approach is what?

Are you trying to analyize economic behavior or are you trying to penetrate why people say X and do Y? I think it is clear that the analysis of ultimate behavior must discount reported preferences when the two disagree, which is just another way of saying that reported preferences are at best second rate tools of analysis that are only as strong as their correlation to behavior. Why not just study behavior?

Paul N writes:

The idea that people maximize happiness is bizarre to me. People are evolutionarily geared to reproduce, not to be happy. People (men especially) seek power and status to impress mates, at a cost to their happiness, whether they do so consciously or not.

Jason Ligon writes:

"Does their behavior really contradict their answers? Only if people maximize their own happiness - as philosophers would say, if psychological hedonism is true."

I don't think that hedonism is implied by Arnold's comments. All he is saying is that you want to study happiness, and happiness doesn't tell you very much about actual choices. Ergo, there is not much point in studying happiness.

Lawrance George Lux writes:

I agree with both of you, and think there is not that much difference. How does one define Happiness, with the existence of masochism? lgl

Lancelot Finn writes:

Caplan offers a whirlwind of objections to behaviorism, of varying persuasiveness. His last point-- why are there so many emotions if only happiness matters?-- is either missing or beside the point, because when economists say happiness they mean utility, and utility is a construct designed to capture all the things that people want. Does Bryan want to feel more curious? If so, curiosity is part of his utility function. But I sympathize with the thrust of his post.

I argued in the comments of the last post on this topic that the problem with constructing utility based on revealed preference is that we mostly have occasion to reveal our preferences with respect to goods that can be purchased with money and/or enjoyed individually; but much of the happiness we get from life meets neither criterion. The sociality of enjoyment, and the limitations of money as proxy for utility, are theoretical weaknesses of Kling's behaviorism which could help to motivate a new emphasis on the concerns raised by Caplan.

Kurt Brouwer writes:

OK. I believe you each have your point of view on this issue. Can we call it a draw so you can move on to other issues? How about the Current Account Deficit or if you like behavioral issues, how about Behavioral Finance? Or, almost anything, just not economic behaviorism.


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