Nobel Board Foolishly Awards Micromanaging Fake ‘Libertarian’ Its Economics Prize
Richard Thaler might be very smart, but his contribution to economics was largely, as he put it himself, to ‘make a career stealing ideas from psychologists.’
First, Thaler and others stole their ideas from the wrong psychologists. Like many other academic disciplines, psychology was invaded by liberals and socialists in the 1960s and today is dominated by people who self-identify as liberals or far-left. Researchers such as Edward Deci and Richard Ryan and popularizers such as Daniel Pink, Dan Ariely, and Alfie Kohn cherry-picked the data to claim psychological research showed competition, rewards, and freedom of choice—the foundations of capitalism and a free society—are unhealthy or counterproductive. One result of this conquest is today’s “participation trophy” and “snowflake” culture.
Thaler and Sunstein relied on these liberal activists pretending to be psychologists for much of their “evidence” showing how people are “predictably irrational.” In fact, other scholars did not replicate the findings of these activists, and their conclusions were explicitly debunked by some researchers who tried, such as Judy Cameron and David Pierce. Had they read this literature more thoroughly, Thaler and Sunstein may never have come up with the “nudge” idea.
The second problem with behavioral economics arises when its proponents claim their findings undermine or contradict the “assumption of rationality” that “provides the foundations for economic theories, predictions, and recommendations” (quoting Dan Ariely, another psychologist who pretends to be an economist). This is wrong because economists do not assume perfect rationality, only that people seek to maximize value as they see it and that markets reward rational behavior.
It’s not a subtle difference—economists from Adam Smith to Gary Becker made it—but it is often ignored today by writers in the field. Economists have produced a huge volume of research using price and profitability data to document their real “assumptions.” Work based on these “assumptions” is replicable and produces tremendous benefits to consumers and investors every day.
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Richard Thaler might be very smart, but his contribution to economics was largely, as he put it himself, to ‘make a career stealing ideas from psychologists.’
First, Thaler and others stole their ideas from the wrong psychologists. Like many other academic disciplines, psychology was invaded by liberals and socialists in the 1960s and today is dominated by people who self-identify as liberals or far-left. Researchers such as Edward Deci and Richard Ryan and popularizers such as Daniel Pink, Dan Ariely, and Alfie Kohn cherry-picked the data to claim psychological research showed competition, rewards, and freedom of choice—the foundations of capitalism and a free society—are unhealthy or counterproductive. One result of this conquest is today’s “participation trophy” and “snowflake” culture.
Thaler and Sunstein relied on these liberal activists pretending to be psychologists for much of their “evidence” showing how people are “predictably irrational.” In fact, other scholars did not replicate the findings of these activists, and their conclusions were explicitly debunked by some researchers who tried, such as Judy Cameron and David Pierce. Had they read this literature more thoroughly, Thaler and Sunstein may never have come up with the “nudge” idea.
The second problem with behavioral economics arises when its proponents claim their findings undermine or contradict the “assumption of rationality” that “provides the foundations for economic theories, predictions, and recommendations” (quoting Dan Ariely, another psychologist who pretends to be an economist). This is wrong because economists do not assume perfect rationality, only that people seek to maximize value as they see it and that markets reward rational behavior.
It’s not a subtle difference—economists from Adam Smith to Gary Becker made it—but it is often ignored today by writers in the field. Economists have produced a huge volume of research using price and profitability data to document their real “assumptions.” Work based on these “assumptions” is replicable and produces tremendous benefits to consumers and investors every day.
5 .... 4 ... 3 .. 2 . 1 0