What do you say about people who define “rationality” as a myopic focus on the self and its desires, and who regard the well being of others as an “externality”in the drama of life? What do you say of people who can’t tell the difference between price and value, and who think that when a kid sits on a couch and plays video games and feeds his face with junk food, and then needs medications for obesity and attention deficit, the result is a “virtuous circle” of consumption that betokens prosperity and “growth”?
If you are such a person — ie an economist of the conventional sort — then you call this Nobel-worthy brilliance. You heap accolades upon a Gary Becker, the economist at the University of Chicago who wrote a book analyzing interactions within a family in terms of this self-seeking model. (“Ten dollars tonight dear? Fifteen?”) If you are a member of the news media, then you quote such lights as oracles of great authority.
Others might suspect something short of a full psycho-emotional deck. To meet many in the profession is to be encouraged in this suspicion. They tend to be facile minds who are better at regression analysis than at grasping the ambiguities of the human heart. Now comes evidence from an unlikely quarter — the emerging field of “neuro-economics,” which seeks to understand behavior in market settings through study of the neural apparatus. The desire to reduce human behavior to neural blips is revealing of the profession in and of itself; and the reduction has turned on the reducers in an even more revealing way.
According to a study published last month in the journal Psychological Science, “people with certain kinds of brain damage may make better investment decisions,” as the Wall Street Journal put it. “By linking brain science to investment behavior,” the Journal continued, “researchers concluded that people with impaired ability to experience emotions could actually make better financial decisions than other people under certain circumstances.”
Impaired ability to experience emotions. Does that sound a bit like an economic expert you have seen on TV? Like the version of life of life portrayed in the economics texts?
Wall Street is the part of the economy that comes closest to the textbook model. It reduces people to isolated integers of monetary acquisition. As investors we don’t have to face the people who comprise the corporations we invest in, nor the people whose lives they affect. We don’t have to face the damage these corporations might do in their pursuit of gain. It is a reptilian world of quantitative abstraction; and thus the people who do best there are mirrors of the model in the texts. Now we find, probably to no ones great surprise, that these folks are lacking a few megs in the emotional intelligence department.
The Journal reporter doesn’t seem to grasp what is staring her in the face. The lesson she draws, following the authors of the study, is that the rest of us can learn from this research to become better investors. We can learn to shut down emotionally and play the game better. She quotes an executive at Morgan Stanley who enthused, “This branch of inquiry and economic investigation is really fortifying and buttressing our understanding of investor behavior.”
But to what end? So that we all can be better reptiles, or so that we can start to correct the system failures that encourage this kind of behavior to begin with, and the theoretical model that justifies these failures? An economy that represses the affective side of human nature is one that is programmed to produce the pathologies with which ours is replete. It is programmed to cannibalize the natural and social commons in the name of personal monetary gain. When people don’t give a shuck about anyone else, what else is going to happen?
The commons is the part of life that can activate the “we “side of human nature, in contrast to the market’s relentless “me.” It is the Economy of which “the economy” is just a part. This is why the more the market grows the more it needs this counter-balancing force. If neuro-economics helps to show this, in spite of both itself and the economics that produced it — — well, as my 3-year-old Josh likes to say, when cajoling me into some activity, “It…will.. be…fun.”