NationStates Jolt Archive

This may be to special interest to all the Libertarians out there, but everyone else could also be intrigued.

The Chicago School of Economics (started by Milton Friedman) can be summed up best with two words:
Government Stinks!

They come to various conclusions, which I can discuss with anyone who feels like it, but I'll concentrate on one of their premises for the purposes of this thread.

Economics is essentially the science of choice? Yes.
Life is Choice? Yes.
Therefore Economics is the science of life.

Which means this:
Psychology? Rubbish. People make choices, so use Economics.
Criminology? Rubbish. Most criminals make a choice, so we use Economics.
Sociology? Rubbish. People make choices, so we use what? That's right: Economics.

The same goes for all Social Sciences then. What do you think?

The same goes for all Social Sciences then. What do you think?

I think you've been hitting the books a little too hard. Try taking a break for awhile.

Economics is essentially the science of choice?No, not every choice is an economic choice. Economics can not explain how people think, why people think the way they do, and while it can explain many human actions, actions governed by the thoughts and feelings of a person may not be related to economics.

No, not every choice is an economic choice.
Make an example and I show you that you make a choice based on Economics.

And yes, I've studying too hard. :p

Economics is essentially the science of choice? Yes.
Life is Choice? Yes.
Therefore Economics is the science of life.

Last time I checked, that was the definition of a logical fallacy.

Make an example and I show you that you make a choice based on Economics.

And yes, I've studying too hard. :p
A man chooses to wear a baseball cap that has his favorite basketball team on it.

He chooses it because it is his favorite team. How would that be economics?

Last time I checked, that was the definition of a logical fallacy.
It's obviously not what they actually said, but I just thought I might simplify it a bit.
Point is that they think they can boil down every social science to economics.

A man chooses to wear a baseball cap that has his favorite basketball team on it.

He chooses it because it is his favorite team. How would that be economics?
The act of choosing to wear the hat is economics.
He'd gain some utility from wearing the hat, and he pays some cost for it. He'll wear the hat until the cost exceeds the benefit.

Why this particular hat is so attractive to him is of no importance to Chicago Economists, the particular tastes of agents are assumed to be exogenous.

Well, whether they think it is important or not, their science still can not accurately predict what team will be on the hat. Therefore it can not explain the choice, and is not the science of choices.

Well, whether they think it is important or not, their science still can not accurately predict what team will be on the hat. Therefore it can not explain the choice, and is not the science of choices.
You are talking about non-material concepts. It's not about predicting what team that man likes, it's about predicting what hat he will wear.
Knowing that the man likes one team, that influences the utility he gains - but it doesn't guarantee that this man will wear this hat.
That's where Economics (http://en.wikipedia.org/wiki/Economics) comes in to predict the choice.
It is the science of allocating scarce resources, ie choice.

Society is also impacted by societal concepts that can not be accurately described by economics. I would say that certain cultures are more prone to certain economic behaviors. The US is more prone to book cooking and such at higher levels than other government. Certainly you can explain why someone would make that choice but I do not think that you can describe all of the psychological factors that led to that choice in a sufficient manner.

No, not every choice is an economic choice. Economics can not explain how people think, why people think the way they do, and while it can explain many human actions, actions governed by the thoughts and feelings of a person may not be related to economics.


But luxury can and luxury is based on economics. Alot of thoughts and feelings are luxuries.

Make an example and I show you that you make a choice based on Economics.

And yes, I've studying too hard. :p
deciding whether to swallow the spit in my mouth from the left or right side first.

No, I am saying that it is about predicting what team the man likes. I chose to put it in the context of wearing a baseball cap because that is a situation in which knowing what team the man prefers would be useful in determining the outcome.

If the definition of Economics is that broad, then could not the definitions of Psychology, Criminology, and Sociology be broken down in to their most basic parts as well? It could be possible that Economics is just a branch of one of those three.

To say that everything is economics is like saying that everything is sociology or psychology or even math or physics or biology or chemistry. Sure you can make a case for it but in the end you get all tangled up and have to create a separate field to describe it all.

deciding whether to swallow the spit in my mouth from the left or right side first.
:p :p :p

deciding whether to swallow the spit in my mouth from the left or right side first.
Good one.
But it comes down to the same principle. You get a certain benefit from swallowing the spit on your right side (or left) first, albeit not very great.
Similarly, there is a cost associated with it, not very great either.
You weigh the costs and the benefits, and are likely to come up almost indifferent. But maybe you tongue is already in the right position, or you have some predisposition towards one side.
And if you are completely indifferent, then you'd be making a random decision. That's possible too, although it doesn't happen very often.

Society is also impacted by societal concepts that can not be accurately described by economics. I would say that certain cultures are more prone to certain economic behaviors. The US is more prone to book cooking and such at higher levels than other government. Certainly you can explain why someone would make that choice but I do not think that you can describe all of the psychological factors that led to that choice in a sufficient manner.
And Becker or Friedman might say:
If you take a Chinese person, and put them in the exact same situation as the American, then they'd use the exact same way to reach a conclusion.
Costs & Benefits.

Although even Chicago acknowledges that Psychology can sometimes be good, like with crimes of passion.

You know what? Everything is chemistry. The interactions of the molecules create advanced concepts such as sentience. Therefore by discovering how these molecules interact we can discover how the brain works and therefore how life works. The decision to spit is based on chemicals working in the brain and therefore is a function of chemistry.

Is it not true that successful economic systems have modeled/augmented themselves(knowingly or not) after naturally occuring biological systems like the economics of evolution? Or mechanical effenciency I believe has some similar formulae, or so I heard.

No, I am saying that it is about predicting what team the man likes. I chose to put it in the context of wearing a baseball cap because that is a situation in which knowing what team the man prefers would be useful in determining the outcome.
If you want, we could use Economics too in order to predict what team the man will like.
Do a bit of inferential statistics and you can isolate the factors that lead to a person making a decision on that and you can predict future decisions regarding it.

But these Economists keep it simple: They say that whatever decision you make, you weigh up costs and benefits, demand & supply.
Be it marriage (and it's been done, there is a demand equation for female spouses out there), crime, polygamy etc
You can always use economic principles to identify why things are the way they are.

If the definition of Economics is that broad, then could not the definitions of Psychology, Criminology, and Sociology be broken down in to their most basic parts as well? It could be possible that Economics is just a branch of one of those three.
Explain.
Economics is that broad, and always has been. But I would think that if you tried to break down psychology or criminology or sociology into its most basic parts, you'd end up with people making choices.

You know what? Everything is chemistry. The interactions of the molecules create advanced concepts such as sentience. Therefore by discovering how these molecules interact we can discover how the brain works and therefore how life works. The decision to spit is based on chemicals working in the brain and therefore is a function of chemistry.
True.
Note however that they are talking only about Social Sciences.

Society is also impacted by societal concepts that can not be accurately described by economics. I would say that certain cultures are more prone to certain economic behaviors. The US is more prone to book cooking and such at higher levels than other government. Certainly you can explain why someone would make that choice but I do not think that you can describe all of the psychological factors that led to that choice in a sufficient manner.

Not true, the United states system is just alot better then other countries at detecting and reacting to book cooking.

And Becker or Friedman might say:
If you take a Chinese person, and put them in the exact same situation as the American, then they'd use the exact same way to reach a conclusion.
Costs & Benefits.

Although even Chicago acknowledges that Psychology can sometimes be good, like with crimes of passion.
Well all you describe there is a decision. I believe that most other fields have ways to deal with this as well. Psychologists would say that the chinese guy chose what he did because of his communist background combined with problems with his mother. A psychologist might even look at this in the same deterministic way that you do. Couldn't the man's behavior also be psychology?

A sociologist would probably talk about how the same decisions were made by other similar people in the same situation and also blame it on his background of being a 23 year old Chinese male with 2 living parents and no other siblings and categorize.

A mathematician would add numerical values or even variables to the decision and put it all into the decision making equations(assuming that this is known) and say that mathematically the man could not have done anything else.

The physicist would state that the chinese dude was acting the way he did due to the behaviors of certain particles. The process was caused by electrical messages that hit the cells in a certain way to cause the positively charged parts of the cells to interact in a certain way that ended up with that decision being made.

A chemist would claim that chemical messages had done this and stated that chemicals affect our actions such as hormones and the like.

A biologist would claim that the animal had to do it because of evolutionary pathways that have evolved overtime. The nature of his decision was due to evolution determining that individuals that reacted in that way become the most successful.

A philosopher would state that the man had freedom of choice and that this freedom lead him to do this act.

A religious person would say that it is God's will that the chinese guy did this(depending on the nature of the religion, some are deterministic)

Any study of the workings of the universe could probably make the same claim to being where all of the secrets of the universe are derived from(except maybe biology because it is defined by its narrow subject of study)

Any study of the workings of the universe could probably make the same claim to being where all of the secrets of the universe are derived from(except maybe biology because it is defined by its narrow subject of study)
How could they though? Unless you discount freedom of choice completely, there is no argument.

And just on the side: I don't necessarily agree with Chicago. I think they have a point though.

Not true, the United states system is just alot better then other countries at detecting and reacting to book cooking.
I am not sure, http://biz.yahoo.com/special/psycho05_4.html
This part of the article actually says that psychopathic corporate officers are not being as well addressed in our culture as they are in other societies.

If you want, we could use Economics too in order to predict what team the man will like.
Do a bit of inferential statistics and you can isolate the factors that lead to a person making a decision on that and you can predict future decisions regarding it.

But these Economists keep it simple: They say that whatever decision you make, you weigh up costs and benefits, demand & supply.
Be it marriage (and it's been done, there is a demand equation for female spouses out there), crime, polygamy etc
You can always use economic principles to identify why things are the way they are. How would you figure out which variables that have surfaced throughout the man's life would impact him the most and the least? Different situations can create many different responses in people. Even if the importance of a particular event is investigated, the research required to figure this out would certainly unearth another event that would have to be investigated as well. This cycle would continue forever and the value of the event would never be found.Explain.
Economics is that broad, and always has been. But I would think that if you tried to break down psychology or criminology or sociology into its most basic parts, you'd end up with people making choices.I would have to know more about these topics to ellaborate. It was just something that I tossed out for consideration.

How could they though? Unless you discount freedom of choice completely, there is no argument.

And just on the side: I don't necessarily agree with Chicago. I think they have a point though.
Well, you either have to discount the freedom of will or you can not really predict anything. It is like someone doing something then you trying to logically justify that claim. Besides, all of those work unless you are trying to say that there is an unaccountable human spirit in control of our actions. Considering that we are going off of the view of a science(sciences tend to be very secular) the argument for or against free will to some extent does not exist because it is not proven to exist. I am not sure if there is any science that claims that human beings are any different than rocks other than in terms of complexity and the arrangement of atoms.

I do not really like Chicago either.

Explain.
Economics is that broad, and always has been. But I would think that if you tried to break down psychology or criminology or sociology into its most basic parts, you'd end up with people making choices.
Could it not be that economics is just part of psychology? Psychology looks at the mind and why it makes those decisions. Economics could be described as psychological interactions between people and their environment.

How would you figure out which variables that have surfaced throughout the man's life would impact him the most and the least?
Actually, if you run a regression analysis (http://en.wikipedia.org/wiki/Regression_analysis) you could simply choose factors that may have something to do with it, and then test for significance.
It's a rather neat tool that.

Could it not be that economics is just part of psychology? Psychology looks at the mind and why it makes those decisions. Economics could be described as psychological interactions between people and their environment.
I wouldn't think so. Economics really has little to do with Psychology as such, and it also investigates decision-making by larger entities that couldn't easily be captured by Psychology.

All this talk here about economic being a sub-section of other social sciences. I feel Gary Becker saw it most appropriatly when he realized that other social sciences give economics the variables to put into their superior framework. Economics is the decision making building block of the social sciences and other social sciences simply fill in the gaps.

All this talk here about economic being a sub-section of other social sciences. I feel Gary Becker saw it most appropriatly when he realized that other social sciences give economics the variables to put into their superior framework. Economics is the decision making building block of the social sciences and other social sciences simply fill in the gaps.
That's kind of what I mean.

I dont think the cost/utility notion is all that robust. In the first instance people can only reckon with cost and utility as they percieve it, but what leads people to perceive something as cost and or utility to a particular degree? Economics seems to me to assume that everyone is rational and reasoned all the time...I'm not buying that theory for starters.

In the first instance people can only reckon with cost and utility as they percieve it, but what leads people to perceive something as cost and or utility to a particular degree?
They might not think of it consciously, but it is what they are doing when they make a decision.

Economics seems to me to assume that everyone is rational and reasoned all the time...I'm not buying that theory for starters.
Not all the time, see crimes of passion.
But most of the time. People are rational, and they try to make the decision that's best for them. That's all there is to it.
They might lack some information to make an even better decision, but they'll always try to do as well as possible.

They might not think of it consciously, but it is what they are doing when they make a decision.
I'm not sure why you think this relates to my comments. Economics cannot explain why person A percieves X to have a utility/cost ratio of a particular amount, while person B (even though their 'relevent' circumstances are identical) percieves X to have a differing utility/cost ratio. Economics cannot even explain why we can/do percieve costs or benefits, therefore it most certainly cannot be said to deal with everything that the social sciences deal with.


Not all the time, see crimes of passion.
I suggest much less of the time than people take into account.

But most of the time. People are rational, and they try to make the decision that's best for them. That's all there is to it.
They might lack some information to make an even better decision, but they'll always try to do as well as possible.
No they wont always try to do as well as possible. A lot of people are arguably self-destructive. A lot of the time people are not measuring utility or cost, they are simply acting, with no consideration of alternative actions, much less the relative ultility/cost ratio of their actions and its alternatives.

I'm not sure why you think this relates to my comments. Economics cannot explain why person A percieves X to have a utility/cost ratio of a particular amount, while person B (even though their 'relevent' circumstances are identical) percieves X to have a differing utility/cost ratio. Economics cannot even explain why we can/do percieve costs or benefits, therefore it most certainly cannot be said to deal with everything that the social sciences deal with.
I guess so. Other Social Sciences create the input, and Economics uses it.
In some cases. I still think that the subconscious can behave in a rational, economising manner as well.

No they wont always try to do as well as possible. A lot of people are arguably self-destructive.
Like Suicide (http://ideas.repec.org/a/ucp/jpolec/v82y1974i1p83-98.html#download)?

I guess so. Other Social Sciences create the input, and Economics uses it.
Actually the social sciences are often in conflict with economic theory...

In some cases. I still think that the subconscious can behave in a rational, economising manner as well.
That's fine and dandy but first you need to establish that there is a sub-concious, and just what manner of thing a sub-concious is before you can establish that it makes 'economising decisions'. The fact is people act all the time without measuring utility and cost, and the actions that occur cannot in any reasonable sense be proven to have been the result of an 'economic decision'. When someone runs out onto the road without thinking about, much less checking for the hazards, (because their mind is otherwise engaged), there is no way in which I would consider that person to have weighed up cost and utility and made a decision, either consciously or sub-consciously.


Like Suicide (http://ideas.repec.org/a/ucp/jpolec/v82y1974i1p83-98.html#download)?[/QUOTE]

When someone runs out onto the road without thinking about, much less checking for the hazards, (because their mind is otherwise engaged), there is no way in which I would consider that person to have weighed up cost and utility and made a decision, either consciously or sub-consciously.
That is a very good point.
The mind can make mistakes it seems, in this case underestimating the cost of running onto the road.
But you're implying that we do things we don't choose to do.

That is a very good point.
The mind can make mistakes it seems, in this case underestimating the cost of running onto the road.
But you're implying that we do things we don't choose to do.
No I wouldnt say that the mind underestimated the cost. If that were the case we would be discussing someone who never checked before wandering onto the road. I know plenty of people who usually do check, they know the costs and realise the lack of utility in not checking before they cross the road, but sometimes (in a state of absentmindedness) they wander out without checking first...

As for implying people do things they did not choose to do, that would depend what you mean by 'choose'. Certainly I am stating that it is not true that all people always weigh up the information they have and determine the cost/utility ratio before deciding to act.

-snip-
You know what?
I'll check that with my lecturer. It'll be interesting what he responds.

You know what?
I'll check that with my lecturer. It'll be interesting what he responds.
Sweet! :D