David Brooks was interviewed on National Public Radio this week, not for the usual political commentary, but to discuss his new book, The Social Animal, which in fact does look worth checking out. When asked by Robert Siegel what sparked his interest in probing the human mind, he responded:
Mr. BROOKS: Failure. I covered a bunch of policy failures, so in – and when the Soviet Union fell, we sent all these economists into Russia, when what they really lacked was social trust. We invaded Iraq totally oblivious to the psychological trauma and the cultural realities of Iraq. We had financial regulatory policies based on the idea that bankers were sort of rational creatures who would make smart decisions.
And I’ve covered education for 20 years, and we’ve reorganized all the boxes to very little effect. And the reality of education is that people learn from people they love. But if you mention the word love at a congressional hearing, they look at you like you’re Oprah.
And so all these policy failures were more or less based on a false view of human nature: that we’re cold, rationalistic individuals who respond to incentives. And so while all these failures based on this bad view of human nature were over in one side of my life, all these scientists, philosophers and others were developing a more accurate view of human nature, which is that emotion is more important than reason, that we’re not individuals, we’re deeply interconnected. And most importantly, that most of our thinking happens below the level of awareness.
This cold, rationalistic, atomistic agent is exactly the agent that inhabits economic models and plays game theory. It is because this is the type of agent that can be modeled neatly using the techniques borrowed from physics and engineering. In order to theorize about a more useful economic agent, the neoclassical economists standard tools of dynamic optimization and dynamic programming would have to be thrown out the window; economists are most unwilling to throw their entire toolkit out the window, for fear of being reduced to level of other, “soft” and “non-rigorous” social sciences.
Brooks also makes an interesting point about how this research has changed his view of markets:
And it’s made me much more suspicious, actually, of the free market, because we have to have – you know, the free market produces a lot of wealth, but it’s embedded. It’s embedded in a series of understandings. And if you don’t have those relationships, then people can’t thrive in that free market.
Do they have an ability to control their impulses? Do they have an ability to work in groups?
Groups are much smarter than individuals. And the groups that do well, it’s not shaped by how smart the people are in the group, it’s shaped by how well they signal each other. Do they take turns when they’re having a conversation? And so, even when you see something like the free market, you don’t see like Ayn Rand rationale individuals. You see groups and competing groups and collaborating groups deeply intertwined with one another.
It is becoming increasingly clear that a more useful economic theory will be one that is holistic, rather than atomistic, and more humbly interdisciplinary, rather than disdainful of other fields of study.