Scott Sumner  

I don't believe you (you're a liar)

Communist Medical Care... Cheap clothes and the marvels ...

In The Big Questions Steven Landsburg examines the problem of belief. He points out that 96% of Americans believe in God, but most go through their lives acting as if they don't believe in God. That raises the question of what do we mean by "belief"?

At one point Landsburg makes this interesting observation:

Sometimes we lie; sometimes we mouth platitudes. Many an atheist has thanked God for a Red Sox victory or promised to keep a sick friend in his (nonexistent) prayers. And sometimes we express our instincts instead of our thoughts. We scold and threaten our computers, even though we don't believe for a moment that they actually hear us.

Now, the cognitive scientists will tell you it's not that simple - depending on what you mean by belief, it's perfectly possible for different parts of your brain to believe contradictory things. One part says, "I think I'll have another cashew," while another says, "No. Don't you dare!" Perhaps some part of your brain does believe your computer is listening even while the thoughtful parts know better. But here's the sense in which I mean you don't believe for an instant in your computer's sentience: If you had to bet all your wealth (or your child's life) on the matter, there's no question which side of the bet you'd take.

It seems like people often hold contradictory economic ideas in their brains at the same time. Perhaps in their reptilian brains people are crude Keynesians or crude Austrians. At cocktail parties the crude Keynesians will claim that monetary stimulus will no impact at the zero bound. The crude Austrians will complain that QE will lead to hyperinflation. But when they go down to Wall Street, they put aside their reptilian brains and start buying and selling stocks, T-bonds, and TIPS as if QE has some impact, but will not lead to hyperinflation.

Of course this is also true of politics. What do Americans really believe about NSA spying? If the answer they gave were their "true belief," then would it matter whether Bush or Obama was president at the time?

Bryan Caplan seems to understand this point, as he likes to bet with people who say they hold different beliefs. As soon as money is involved, it becomes easier to infer people's "true beliefs," or at least the beliefs of what Landsburg calls the "thoughtful parts" of the brain.

I tend to avoid betting on beliefs, as I think one can get even better information from looking at market forecasts, where millions bet on their beliefs. Market monetarism is a sort of bet on the proposition that betting elicits thoughtful beliefs, and that the thoughtful beliefs of the crowd are humanity's best guess as to the "Truth."

PS. About the term "reptilian brain:"

1. It's a giveaway that I'm 50 years behind in cognitive science.
2. I don't mean it as a pejorative. Dinosaurs lasted 200 million years; we'll be lucky to last another 200. On the other hand I'm told dinosaurs were not exactly reptiles.
3. I also hold many incompatible beliefs in my brain, at the same time.

PPS. The post title is of course half-joking. What can lying mean when we have multiple beliefs? And it's a reference to the best song on the best rock album.

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CATEGORIES: Revealed Preference

COMMENTS (14 to date)
Sam writes:

Even market monetarists should be willing to make big bets, conditional upon the adoption of market-sensitive metrics.

Danny Kahn writes:

This song on this album?

Andrew_FL writes:

What does it mean to act as if one believes in God?

That rather depends on what the mental image the believer has of God is, does it not?

I believe in at least a deist God. A deist God has no implications whatsoever for how I act in my day to day life just by existing. That requires auxiliary beliefs like an afterlife and what God expects of people. None of which you can claim to know because people told you they believe in God.

My guess is that most of the people who say they believe in God, actually believe in God, "acting as if they don't" is just you misunderstanding whether they believe they are in good standing with God or misunderstanding what they think He expects of them.

Anyway, any Austrian worth their salt would say a policy could lead to an outcome subject to certain auxiliary assumptions, but I guess they wouldn't be "crude" then.

foosion writes:
96% of Americans believe in God
This means 96% answer survey questions saying they believe, which is not quite the same thing. BTW, the current figure is 74%
Many an atheist has thanked God for a Red Sox victory
Saying thank god is a figure of speech, not a profession of belief or even the mouthing of a platitude.
At cocktail parties the crude Keynesians will claim
You clearly go to different cocktail parties than I do. Almost no one I know has any idea what the Fed does or its importance.

I've read that all major banks use Keynesian models as their primary forecasting tools. About 5 years ago some predicted higher rates and inflation due to crude monetarism, but that didn't turn out very well.

I tend to avoid betting on beliefs, as I think one can get even better information from looking at market forecasts
See "revealed preferences".
Andrew MacKay writes:

^^ Thanks for the data corrections, there, captain literal.

We're all shocked SHOCKED you go to different cocktail parties than the economics professor and even more shocked you use your uninformed friends as an example on the economics blog you're commenting on.

Floccina writes:

I think that buying stocks is good even if one fears inflation. I hate gold as an investment so I am surprised that it was bid up after the great recession. It seems to me that some people are acting on their belief that inflation is coming.

I find it hard to take those who say that AGW will be really bad seriously if they are not at least looking into ways to capitalize on it, i.e. short low lying areas (Miami, New Orleans) and going long on cold places. Why are they not buying up Maine and Montana?
Or people who think peak oil will doom us who invest but are not buying the 7 year oil futures.

Scott Sumner writes:

Danny, Nope.

Andrew, Yes, they would no logner be crude.

foosion, When I mentioned crude Austrians I was thinking of people predicting high inflation due to rapid money supply growth.

Floccina, You may be right about gold, but for the most part it rose in price for the same reason as all other commodities, strong Asian demand.

Dan W. writes:

I suspect many people use god to explain the things they do not understand and/or do not control. This belief system clearly can create contradictions. But a knowledge based approach also encounters contradictions. The world is extremely complex and many aspects of it do not make sense. If it did would there not be greater social, political and economic agreement?

Who is more dangerous to society? The person who admits ignorance by assigning outcomes to god or the person who denies his own ignorance and claims knowledge when little actually exists? How much better or worse would society be if more people were inclined to say: "I do not know"

James writes:

Right now, the Fed trades cash for assets to affect the nominal rate in the overnight lending market. Market monetarism, as Scott uses that term, calls for the Fed to trade cash for assets to target a contract price in a NGDP futures market. In both cases, some group of economists has to choose the target value of the pertinent asset price (or choose a rule for choosing a target value, or choosing a rule for choosing a rule about...).

Okay, there are some incremental improvements such as getting rid of the primary dealer system and creating a NGDP futures market. But besides the choice of which variable to target, how are these meaningfully different? Neither one gets away from the problem of expecting a committee of economists, rather than a market, to decide the right value of some variable.

Thaddeus writes:

It's like a rolling stone on Dylan's live 1966 album.

Daniel Kuehn writes:

On God specifically, one can of course believe there's a God but not believe all the details of a particular view of God. Most people are probably best described as deists, in which case it's hard to see how they're going through "their lives acting as if they don't believe in God". The people that aren't deists probably are going through their lives as if there's a God, although they'd be the first to admit they succumb to temptation.

I'm pretty much an atheist, though I don't find the idea of something like God entirely inconceivable. But if something like that is out there I'd expect it's more of a deist set-up and I can't imagine I'd live my life any differently if I had incontrovertible evidence of it.

Thomas Sewell writes:

In practice, I tend to use belief and knowledge quite differently, so perhaps some of this is just a need to literally come to terms with what people mean?

Belief: The preponderance of the evidence I'm aware of indicates something is true, but there is plenty of room for further evidence to change my opinion on the matter.

Knowledge: I have enough evidence, or high enough quality evidence, that I am very sure something is true and am comfortable using it as a standard for judging other evidence I come across.

So for example, I believe Palau exists, along with the about 18k people who live there. I have no way of actually knowing, having never been there, but the best available evidence I have access to indicates it does. However, I am aware Palau could have sunk into the ocean 2 minutes ago from a previously unknown seismic shift/volcano/whatever, and I just haven't gotten the news yet as I am writing this, or it's really just a big joke on adults (ala Santa Claus or the moon landing conspiracy theories) for some reason, or a wikipedia conspiracy that the geography textbooks go along with, or something like that.

On the other hand, while you don't really know who is writing this comment, I do. Short of some serious brainwashing in a mental institution where you ruin my faculties, or enough passage of time that I discard the memories, you'll never truly convince me that my knowledge of writing this comment is incorrect.

If I just believe something, rather than know it, then I'm going to act differently in terms of how much reliance I place on it, which will show up in my revealed preferences and actual actions, among other things.

Doing a quick Google search after writing this for "believe vs know", this distinction between the terms seems to be a relatively common one. This is a good example.

LD Bottorff writes:

I suspect that if you had a survey, a large portion of Americans believe that using petroleum-based fuels will lead to a catastrophic level of warming. However, they certainly don't act that way, based on the number of cars I see wasting gas at the drive-through.

Scott Sumner writes:

Thaddeus, That's right.

LD, Perhaps they are selfish?

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