In ‘Misbehaving,’ an Economics Professor Isn’t Afraid to Attack His Own
The economics profession that Mr. Thaler entered in the early 1970s was deeply invested in proving that it was more than a mere social science. But economic outcomes are the result of human decision-making. To achieve the same mathematical precision of hard sciences, economists made a radically simplifying assumption that people are “optimizers” whose behavior is as predictable as the speed of physical body falling through space.
.. Professor Thaler’s narrative ultimately demonstrates that by trying to set itself as somehow above other social sciences, the “rationalist” school of economics actually ended up contributing far less than it could have. The group’s intellectual denial led to not just sloppy social science, but sloppy philosophy.
.. When businesses use cost-benefit analysis, for instance, they are applying a moral philosophy known as utilitarianism, popularized by John Stuart Mill in the 19th century.
.. Compared against alternative moral philosophies, like those of Kant or Aristotle, Mill has relatively few contemporary adherents in professional philosophical circles. But utilitarianism does have the virtue of lending itself to mathematical calculation. By giving the contentious philosophy a benign bureaucratic name like “cost