Bryan Caplan  

Posner on Personality

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It almost sounds like Posner's jumping on the personality-and-economics bandwagon:
Optimism is also a personality trait, and, as it happens, one essential to human progress. As I have argued elsewhere with reference to our current economic situation, what Keynes called "animal spirits" and, alternatively, confidence or optimism are essential to entrepreneurship because of the great uncertainty of a business environment. Someone who invests in building a factory that will not produce anything for years is taking a big risk of failure, and because it is a risk that cannot be reliably quantified he is taking a leap of faith, and he will not do that unless he happens to have an optimistic outlook. It is not that rationality implies such an outlook, but that rationality is not inconsistent with it. Optimists are often disappointed, but sometimes are richly rewarded for the risks they take; and as long as the prospect for such rewards confers on them greater ex ante utility than more cautious, pessimistic decisions would do, they are not behaving irrationally. "Nothing ventured, nothing gained" is the credo of the optimist and the terror of the pessimist, but neither reaction is irrational. The optimist and the pessimist just have different personalities.
I like where he's going, but I think he's going a little too far.  Optimism could be unusually mild risk-aversion.  It could just as easily be a tendency to think the world is better than it really is.  Or as I've argued before, optimism could be a strategy and an attitude:
[O]ptimism, as I practice it anyway, is an attitude and a strategy, not a description of the world. As an optimist, I try not to dwell on boring careerists and derivative claptrap. Instead, I seek out the exceptions to the rule and appreciate what I find. Just because the average is low doesn't mean that you can't personally consume high quality. And even when the quality I consume is far from ideal, I try to mentally change the subject to another dimension where I have blessings to count.
Regardless of which definition of optimism you use, it's hard to see why optimism is "essential" for human progress.  Optimism probably gives progress a boost, but it's highly unlikely that progress would grind to a halt if everyone had rational expectations and risk-aversion. 


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COMMENTS (2 to date)
Daublin writes:

Here's one reason it could be essential, Brian. If you think of an economy as a learning machine, the way Arnold describes it, then you need individual members of the society to try a variety of alternatives. If, to contrast, everyone simply made the rationally best choices all the time, then they would comparatively try a smaller variety of things. A smaller variety of things tried would give the learning machine less data to work with.

How do you get people to try a variety of ideas? Optimism, combined with imagination, is one straightforward way.

If this is true, then--sad to say--being too rational would be a selfish avoidance of societal duty. We would owe it to each other to try lame-brained ideas that no one else is trying.

John Stewart writes:

While I am very open minded, to say the least, about religion, I do think it is a deep source of optimism or at least a kind of fatalism that allows people to keep trudging along. Progress, of course, requires a lot more than "trudging," but I do think that the strength that has historically come from religious belief -- a kind of optimism -- is an essential part. Whether or not rationality can tap the deep emotional wells of what is called the human spirit isn't so clear.

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