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Archive for August 31st, 2009

Via Mark Thoma, Miller-McCune has a nice writeup of some research done by psychologists and published in Psychological Science. The results of their study explain the seeming “irrationality” of people who stayed behind in New Orleans during and after Hurricane Katrina (this might be of interest to Sean and his recent Big Easy blogging at Economies in Cultural Perspective). I think these results actually shed some light on shortcomings of even behavioral economics. First, some excerpts:

According to new study by a group of psychologists, to think of it as an active decision betrays a particular model of human agency, an individual-centered one held by mainstream American culture, in which people both have resources and generally enjoy a high degree of personal efficacy…

The psychologists framed the study around a distinction between two models of human agency — the disjoint and the conjoint — in order to understand what happened in New Orleans and why.

The disjoint model is built on assumptions of independence. It assumes that individuals have opportunities, make choices to influence their environment and that their choices are a reflection of their goals and preferences. This is the model that dominates mainstream American discourse and culture, and the model of agency held by many of the people who did leave.

The conjoint model, on the other hand, is built on assumptions of interdependence. Here, human agency is primarily about adapting one’s self to the world (rather than trying to change the environment), often through faith and spirituality, and decisions are more community-oriented. Though the conjoint model might seem more familiar to many middle-class observers as an East Asian philosophy, the authors argue that these attitudes are also prevalent in working-class Americans.

That’s because many working-class folks lack the resources to engage in individualistic, independent behaviors. And this particular lived experience leads them to adapt by developing a sense of personal agency in which they make the most of their lives, given the challenges they face in exerting meaningful control over their environment. This is something that is often very difficult for outsiders to get.

I find the conjoint/disjoint distinction very interesting, and it adds a meaningful dimension to our thinking about human behavior. As the authors recognize, it has ramifications for social science as well:

“All of the social sciences are using one and the same model of the person,” Markus said. “And that’s a particular model that comes out of the middle-class American context in particular. It’s the rational actor of economics, the reasonable person of the law.

“But as far as it goes,” Markus added, “it’s really right for about 5 percent of the world’s population. When it comes down to it, when we say ‘people,’ we’re talking only about North American, middle-class people with a reasonably high level of education and resources. … This model is an historical and philosophical product, but it’s not the way people naturally are. There are other ways to be an agent that deserve study.”

So social science is dominated by a paradigm that explains five percent of humans’ behavior. Can behavioral economics do better? Psychological studies like this seem to indicate yes. However, my guess would be that even this fairly nuanced view of human behavior (the ‘joint’ model), a fair amount of behavioral will remain unexplained. How deep can behavioral economics dig, even aided by high quality psychological studies like this one? At some point, we may have to admit that human behavior is actually unpredictably irrational, as we find other dimensions of irrationality and even interactions smog those dimensions.

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