NPR's Planet Money: Amartya Sen and the not so invisible hand

Check it out on NPR:

Adam Davidson and Alex Blumberg chat with Amartya Sen, a Nobel Prize Laureate in Economics, about his new book, The Idea of Justice, and its critique of the theory of social justice. Sen spends time in his book, and on the podcast, talking about what he sees as common misinterpretations of Adam Smith's oft-cited but perhaps more complex embrace of an absolute free market.

Here's the link.

PS: The first part of the podcast is about the late economist Paul Samuelson.  The part on Sen starts at around 11:00.

Anthros & Econs: Crossing the chasm

The more I read about political economy and economic anthropology, the more I have wondered about the discipline of economics. What, exactly, are those economists up to, how do they approach their field of study, and why? I have read a good amount about modern economics, and how it differs from anthropology, but I haven't really read all that much from economists themselves (especially about method and theory). Sure, I read Krugman's blog, and I follow sites like Calculated Risk, Economist's View (Mark Thoma), and Economics and Ethics. One of my favorite econ blogs was written by the late Alison Snow Jones (aka "Maxine Udall"). She had a real talent for writing about and exploring the implications of economics in a very personal and fascinating way.* Still, I wonder why there isn't more of a conversation between anthropologists and economists. Especially considering our overlapping interests.  So why is there such a chasm between the two disciplines?  Is it because our ways of thinking about and analyzing human nature are soooooo different that there is no room for dialog, or what?

The history of economic thought

Loomnie posted this interesting interview of Bruce Caldwell, an econ professor at Duke University who is working on putting history back into economics.  Here's a short description of the interview:

Who is going to teach fields like economic methodology and the history of economic thought if these fields aren’t taught to current graduate students? Bruce Caldwell is filling this hole in the graduate curriculum. The Hayek scholar is ramping-up the Center for the History of Political Economy at Duke University to educate a generation of future professors – a generation that is well-versed in the history of economic thought, and that communicates with other social sciences and the humanities. These are the seeds of new economic thinking.

Loomnie says that he finds this idea "really, really interesting" and I agree.  I wonder if there is any engagement with economic anthropology here--or if that would be a possibility.  In one part of the video Caldwell says that he really appreciates the different perspectives that other humanities and social sciences bring to studies of the history of economic thought.  I know that anthropologists have tried to engage with economists in the past, but that hasn't panned out all that well.  It would be interesting, despite all of the differences, to see more discussions between the econs and the anthros.

Making tourist destinations: To Serve Society?

Places all around the world are being transformed, restructured, and reinvented to appeal to the international tourism market. Developers, politicians, bankers, investors, hoteliers, and entrepreneurs contribute to reformulating places according to the wants, needs, expectations, desires, and hopes of a global mass of travelers who have the time (and money) to hop scotch around the planet in search of experiences.  The question, though, is this: Who benefits from all these changes?  Do these new tourist places really only benefit powerful politicians, developers, and investors? Or do they serve society* in some larger sense?

Karl Polanyi, in a much lauded book that is getting its fair share of attention these days of economic malaise, argued that the economy should, ideally, serve the interests of society.  Proponents of the self-regulating market basically argued the reverse: that society should in effect be structured according to the supposedly rational logic of the market.  These same sentiments continue to be promulgated by economists, politicians, and pundits today--these are the proponents of the "free market" who seek to fix the economy by cutting it free from the mores of government, rules, and regulations.  Such an arrangement, for Polanyi, was particularly troubling: "Ultimately, that is why the control of the economic system by the market is of overwhelming to the whole organization of society: it means no less than the running of a society as an adjunct to the market.  Instead of economy being embedded in social relations, social relations are embedded in economic systems" (2001:60).

Maxine Udall: POWER

Here is one of my favorite all-time quotes from Maxine Udall (aka Alison Snow Jones):

"Regular readers know that one recurring theme in this blog is that concentrated economic and political power in the private sector is as much a "problem" as an ineffective, inefficient guvment especially one that has been deprived of the funds needed to regulate a complex capitalist society based on commercial exchange and characterized in some sectors (like health and finance) by several types of market failure."

Economics and inequality

Mark Thoma asks: Why does Inequality Matter?

Maxine Udall: Ethics and Economists

Maxine Udall reports that a group of economists have sent a letter to the presidents of the American Economic Association (AEA), urging the adoption of a code of ethics. This includes an emphasis on the need to disclose conflicts of interest "that can arise between economists’ roles as economic experts and as paid consultants, principals or agents for private firms." Udall writes,

Economics is unusual among the social science professions in that it lacks professional ethical codes or guidelines. In addition to the American Sociological Association, the American Anthropology Association has a code of ethics. Similarly, the American Psychology Association and the American Statistical Association both have guidelines for ethics. These codes and guidelines vary in several ways: some demand that professional members simply reveal potential conflicts; others demand that they do whatever they can to avoid or end such conflicts.

This is a pretty interesting turn of events--especially considering the number of economists out there giving advice and opinions on a daily basis. I wonder how this will turn out...and I wonder how different economists will react to this idea.

Inefficient Assumptions

Maxine Udall is my favorite economics writer these days, hands down. Her latest post talks about one subject that often confounds me: how can so many people assume that government is the main source of all economic problems? How do so many economists explain away our current economic issues as the result of government intervention, while dismissing the culpability of the private sector.

In some circles, while the government is the source of all evil, the private sector, led by that wonderfully benevolent invisible hand, is almost angelic. I have a really difficult time with analytical frameworks that result in automatic responses, period. For example, some neo-marxists will tell you, almost invariably, that the source of all of our problems is capitalism. Never mind the various contexts in which capitalism exists, or the various forms that it takes, or the multitude of ways in which capitalism plays out (positive and negative)--the problem, in the eyes of some, is always "capitalism". Ok, great. For me this kind of thinking is insufficient. And it's cut from the same cloth as the free-market ideologists who always frame "the state" or "government" as the main culprit in almost any economic disaster.

Udall consistently argues, instead, that the true problem that we need to address is the concentration of power--no matter where it exists (government or private sector). Rather than focusing on the same old ideological responses, maybe we should consider how power, corruption, and coercion can infiltrate many different economic and political systems. Read this:

Regular readers know that one recurring theme in this blog is that concentrated economic and political power in the private sector is as much a "problem" as an ineffective, inefficient guvment especially one that has been deprived of the funds needed to regulate a complex capitalist society based on commercial exchange and characterized in some sectors (like health and finance) by several types of market failure. Regular readers also know that as someone who grew up in a private sector family business, I expect private sector employees and their managers to behave better than caricatures of mindless guvmint bureaucrats that populate cautionary tales about totalitarian guvmints.

Read the rest here. Udall's discussions over on her site illustrate quite well why economics is a social science. The "market" is not some magical, predictable force that has a mind of its own--it's populated and shaped by humans with a varying degree of ethical constraints, desires, and motivations. That means that any economic analysis is going to have to take account of political factors, one way or another. Some economic and social theorists attribute certain predictable traits to particular systems or institutions--"capitalism" and "socialism" being two of the main terms that often get completely reduced to useless ideological caricatures. And while the anti-capitalists and the anti-socialists keep yelling at one another from their respective sides, power continues to accumulate and be deployed in ways that cut across these ridiculously simple divisions.

Maxine Udall: Beach Houses and Health Care

I think that Maxine Udall is my favorite economics blogger. Every time I check her site there is another great post that gets me thinking about economics, and then how that relates to anthropology and all of the issues that I focus on. Here is a key quote from a new post about those wonderful folks who equate health care with every other good and service (like a nice beach house):

It's more likely that someone somewhere said that "free markets" make everyone better off, but didn't bother to explain that markets fail for a variety of reasons that are rampant in health care. Believers in beach house-health care equivalence are really just trying to make everyone better off. Someone somewhere said that people at the top are more productive and therefore deserve more. Believers in beach house-health care equivalence are often at the top, they know in their hearts that they are way more productive, so it's obvious that this is true and fair. Someone somewhere told them about moral hazard and unanticipated side-effects. As a result, believers in beach house-health care equivalence have developed a morbid terror that someone somewhere will free ride or, worse, distort resources away from the beach houses that would otherwise be built.

Read the rest here.

Another reaction to the MARXISTS

Here's the thing: I understand the fact that people all have their particular political and ideological positions. I get that. But what I don't understand is why people react so strongly to information when they THINK it's coming from their supposed ideological enemies. To me, it makes sense to look at critiques from all sides of the spectrum, regardless of what political, social, academic, or ideological position it comes from. When it comes to economics, this kind of thing is really common. And one of the catch words that will strike indignant fear in the minds of many a "free-market capitalist" is "MARX."

So, just to keep everyone up to speed. On July first I wrote about the animated video in which David Harvey talks about the "Crisis of Capitalism." That video was all over the place, and I think I saw a version of it on all of my favorite sites--Savage Minds, Sociological Images, and Maxine Udall (girl economist). In fact, Maxine wrote about the video on July 11, and I wrote about what she wrote about it--if that makes sense. Here is that post.

And here we go again:

Here is a critique of "the radical sociologist David Harvey" by some guy named Lee Doren. Doren works for the Competitive Enterprise Institute, which is geared toward protecting "Free Markets and Limited Government." It says so right on the about page. If you want to know more about Doren, check out his bio.

Doren, who is clearly not impressed with THE MARXIST...er, I mean David Harvey, takes issue with the basic argument that Harvey puts forth. I mean, what sense could some marxist make anyway? Basically, Doren argues that nobody has to listen to a critique that comes from "marxian theory," because, it was like, well, disproved and nobody takes it seriously. That's Doren's opening salvo, and it's a beauty. Why look at information when Milton Friedman said it was nonsense? Wasn't old Milt always right? In other news, let's review a quote about this video by the ECONOMIST Maxine Udall (I already linked to this above):

"This video is an excellent description of the problem."

But there is no reason to listen or pay attention, because Lee Doren said so. Anyway, Doren argues that he will disprove Harvey's ideas using "objective census data." It's all very scientific and dramatic. He even throws in some wonderful personal views along the way.

The real meat of the clash between these two minds begins at about 4:35 in the video. Harvey argues that the immense power of finance capital is the root of the whole problem. How did this come to be? Harvey argues that there has been a period of "wage repression" since the 1970s, in which wages have "remained stagnant" for an extended period. The stagnant wages created a problem with effective demand, and this, Harvey argues, is what opened the flood gate for massive credit debt (and the wonderful housing market of 2008).

Doren stands his ground here. He claims that Harvey has "based his entire theory on the fact that wages have been stagnant." And this is where Doren starts to get a little too excited, awaiting his chance to appeal to some good old fashioned objective statistical data. Doren exclaims, "if wages aren't stagnant his entire theory falls over like a house of cards." And then he takes off on an incredibly high tech journey* to the online US Census data, where he craftily finds his way to the page that lists all of the information about income.

And the crux of Doren's amazing argument is that if you look at the data on per capita income, the results are shocking. In 1967 Americans had a per capita income of $13,888. In 2008, the per capita income almost doubled, reaching $26,964!!! And David Harvey said that wages remained stagnant? That silly marxist! Doren does acknowledge that household incomes remained stagnant over that time period, but argues that individual income is where the truth of the matter lies. Why? Because, the average household size dropped during that time (2.89 in 1975 to 2.57 in 2008), and Thomas Sowell said that people only use household income when they're trying to make a situation look bad. Sowell does make some reasonable points about the limits of statistical data, and he does make a good point about some of the issues with household data and stats. Duly noted. But Doren uses Sowell to sidestep one very critical issue: income inequality.

Yes, per capita income went up from 1967 to 2008. But what is per capita income? It's an average. It's the total personal income divided by the total population. It is a number that tells you how much each citizen WOULD get IF all income was evenly distributed. Great. So what's wrong with using per capita income to critique David Harvey's analysis? Well, the per capita stat tells us nothing about who realized the gains in overall income during these years. And this is why per capita income can be a misleading statistic--the numbers can easily be skewed if there is any outlying data. For that reason, median income is a much better stat to look at. If you look at the same US Census site, you will see that the median income in 1974 was $21,008. By 1994--twenty years later--that amount rose to $22, 904 (that's only a 9% change). In 2008 it was $26,513. So what does that tell us? It tells us that while the overall income increased during this time period, those increases were not spread out evenly among the population. This is where stats can be misused or misunderstood quite easily. Overall, Doren's argument is both intellectually lazy and shortsighted. He should have taken the time to look more closely at the rest of the stats, but I think that he was so exasperated by Harvey's professed marxist analysis that he lost his nerve. Or maybe I am being too generous. The point: don't just overreact and criticize information based upon your personal political beliefs.

In the end, Harvey's argument was that wages remained stagnant, and they have--for a large portion of the population. Up through the mid 1990s they were REALLY stagnant before there were some increases. From that point, Harvey then proceeds to explain how credit debt became a major issue, and so on. But these are all details. Doren was overzealous on numerous counts, one of them being the idea that he could simply discount everything that Harvey is talking about with ONE STATISTICAL FIGURE. Doren was wrong about that, and he missed the whole point of actually having an open, critical debate about our current economic system. In my view, this isn't about ideology. It's about remaining open to ideas, and it's about finding ways to understand the world around us. Ultimately, it's about finding ways to improve upon our situation--at least I hope so. And that's why it's imperative to assess as much information as we can, and to be open to all kinds of ideas and perspectives, despite what we all THINK we know.

That's the end of my rant for the day.


*Sarcasm noted.

UPDATE: Here is a relevant little quote from Janet Yellen, president and CEO of the Federal Reserve Bank of San Francisco. It's from November 6, 2006:

"As Figure 1 shows, from 1973 to 2005, real hourly wages of those in the 90th percentile—where most people have college or advanced degrees—rose by 30 percent or more. As I will discuss later, among this top 10 percent, the growth was heavily concentrated at the very tip of the top, that is, the top 1 percent. This includes the people who earn the very highest salaries in the U.S. economy, like sports and entertainment stars, investment bankers and venture capitalists, corporate attorneys, and CEOs. In contrast, at the 50th percentile and below—where many people have at most a high school diploma—real wages rose by only 5 to 10 percent."

And here is the figure that she is referring to:


UPDATE II (7/24/10): Here is another little bit of information that disproves what Mr Doren is trying to argue. On table B-47 of the President's Economic Report (which Doren cited in his video), the average hourly earnings went from $8.21 in 1967 to $7.87 in 1987 to $8.33 in 2007. In fact, for 21 years starting in 1980, wages were BELOW the 1967 $8.21 mark (all in 1982 dollars).

David Coates on Immigration Politics

Debates about immigration seem to crop up during times of financial and political crisis. This is not a new trend here in the United States--just take a look back into history for your answer. Often, when the economy takes a turn for the disastrous, people turn the blame toward migrants, whether or not there is actually any valid reason for doing so. This is also known, simply, as scapegoating.

The political economist David Coates writes:

Immigration by foreign-born workers, and unemployment among native-born ones, may go together in modern America, but the relationship between them is neither simple nor directly causal. On the contrary, three things at least are very clear in the data on contemporary trends in employment and wages – at least very clear to those not subsumed in Arizona-type hysteria. (1) Immigration, legal or otherwise, is not the main cause of the current recession. (2) The overall impact of immigration on employment, productivity and income in the contemporary US economy is broadly positive; and (3) the very forces triggering migration from the global “south” are the same ones creating unemployment and falling wages in the global “north”.

There are some interesting points to be made here, especially since many pundits and politicians are hanging on to the idea that immigration is one of the main problems of the US economy. Is it really? One of the most interesting points that Coates brings up is the idea that the same "forces" that are pushing people to migrate away from places like Mexico are also creating unemployment in places like the United States.

Coates' post is absolutely worth a read. The rest is here.

*I found Coates via Maxine Udall, who writes that he is on of her "favorite political economists."

A Reaction to THE MARXISTS

Not too long ago I posted this animated video which features David Harvey's explanation of "The Crisis of Capitalism." It's well done, and does a good job of summing up some incredibly complex issues in a really interesting way.

Anyway, economist Maxine Udall has posted her reaction to this video on her site. Here is my favorite part:

"I pretty much hate it when Marxists make sense. All those years growing up among the bourgeoisie have ruined me, I fear. But I tend to pay attention to them because they're very good at noticing that there is a problem. This video is an excellent description of the problem. I was relieved that no (Marxist) solution was offered so that I could entirely agree that more informed, broader, more open discourse is needed as well as new perspectives."

I like Udall's site. She has all kinds of greats posts with tons of insight into contemporary economics. But I think her reaction to Harvey's ideas (he's the marxist, you know) is a little odd. I am not quite sure why it matters where explanations or critiques come from. Does it matter? Should it matter? In the comments section, The Barefoot Bum writes:

"I'm a revolutionary communist, and I don't ever "hate it" when liberal capitalists such as yourself make sense, even concerning the flaws of revolutionary communism. I'm grateful for the insight, and if you really are correct, it's dumb to spend a single instant getting over some "hatred" and incorporating and responding to legitimate criticism."

I agree, even though I don't place myself in any particular ideological camp. From my perspective there is no need for everyone to retreat to their respective political or ideological corners in order to address and critique contemporary problems. Should we only listen to views from "our" own camp? Or should we be open to different perspectives? Should "capitalists" be irritated when "marxists" are on point? Should "marxists" cringe when "liberal economists" have something to add to a discussion? Is this about political ideologies, or about finding ways to address some of these issues? Sometimes it seems that we will never get past the starting gate, and what holds us all back the most is nothing more than an ideological blind spot.

Maxine Udall: Rethinking Economics

Another great post over at Maxine Udall's site. There are some pretty good discussions around the blogosphere about the direction(s) of the discipline of economics...and part of this discussion revolves around methodology. This is something that I admittedly do not know much about; I really do not have a solid grasp of the actual methods of economists, although I am reasonably well-versed in their general theoretical tendencies.* Here's the ending of Udall's post:

"New eyes, untrained and unbiased by indoctrination into the hard core of economic theory and its accompanying heuristics and corollaries, may well be exactly what economics needs to become a true and more useful science."

Now go read the beginning and the middle.

*From what I have read, it seems pretty clear that economics and anthropology are quite opposed in many senses. These differences often revolve around ideas about human nature--is there such a thing as a universal human nature? Do certain economic principles apply in all times and all places? Or is human behavior highly contextual and historical? Do humans make "economic" decisions that have to be understood and analyzed within particular situations?

I have written about this subject a few times on some earlier posts. What I am not sure about is to what extent economics are even interested in what anthropologists are doing. Who knows? So yes, I tend to disagree with many ideas that I see presented by economists, but I also realize that not all economists think alike. While there are some pretty strong differences between anthropology and economics, I still think that there is something to be gained from a little conversation between the two.

The Economics of Immigration: Robert Shapiro

I came across this post via Mark Thoma's blog. Pretty relevant stuff these days:

Waves of new immigrants often spark economic anxiety and cultural discomfort, as well as occasional violence and wide-net crackdowns, on the Arizona model. Even here, a nation comprised almost entirely of immigrants and their descendents, we’ve seen these reactions not only in recent times but also a century ago, when waves of poor immigrants from Europe arrived here. With a hundred years’ distance, however, we can now see that those early waves of immigration were generally associated not with economic dislocation and national decline, but with extraordinary economic boom times and America’s emergence as the world’s leading economy. And for much the same reasons as a century ago, recent evidence indicates that the economic effects of the current waves of immigration are also largely positive.

Read the rest here.

Amartya Sen on "The Uses and Abuses of Adam Smith"

This might be interesting for any of the economically-oriented anthropologists out there (or anyone else):

Hat tip to Maxine Udall.

"The Economist Manifesto" by Amartya Sen

I just came across this via Mark Thoma's site Economist's View:

The economist manifesto, by Amartya Sen, Commentary, New Statesman: The 18th-century philosopher Adam Smith wasn’t the free-market fundamentalist he is thought to have been. It’s time we realized the relevance of his ideas to today’s financial crisis.

The Theory of Moral Sentiments, Adam Smith's first book, was published in early 1759. Smith, then a young professor at the University of Glasgow, had some understandable anxiety about the public reception of the book, which was based on his quite progressive lectures. On 12 April, Smith heard from his friend David Hume in London about how the book was doing. If Smith was, Hume told him, prepared for "the worst", then he must now be given "the melancholy news" that unfortunately "the public seem disposed to applaud [your book] extremely". ... After its immediate success, Moral Sentiments went into something of an eclipse from the beginning of the 19th century... The neglect of Moral Sentiments, which lasted through the 19th and 20th centuries, has had ... rather unfortunate effects...

Read the rest here or click on the link above for Sen's full article at the New Statesman.

Model Behaviors

Near the end of her ethnography Contesting the Commons, Carolyn Lesorogol discusses some of the limitations of ethnography. She argues that while ethnographic research can obtain fine-grained and highly contextual information, “its very specificity makes it difficult to generalize, within or beyond a community” (Lesorogol 2008: 199). This shortcoming is often seen as a severe limitation for the applicability of ethnographic research to wider social problems and comparisons. How can larger theoretical conclusions be made from ethnography if there is no way to compare different sets of data? “To draw more general conclusions about behavior,” writes Lesorogol, “we require methods that enable us to control for local differences, as far as possible, in order to detect underlying patterns of behavior” (Lesorogol 2008: 199). Lesorogol’s answer to this problem: experimental economics. At least, that's one avenue she travels down.

In order to find a way to compare the behaviors of different groups of people, Lesorogol conducts field experiments using local participants in northern Kenya. She uses money as an incentive to gauge economic behaviors among individuals from the communities of Siambu and Mbarington (Lesorogol 2008: 198). The tests consisted of a series of “games” that were patterned after the MacArthur Foundation research that was conducted in “fifteen small-scale communities across the globe” (Lesorogol 2008: 201). The underlying assumption that Lesorogol (and the MacArthur researchers) make is that the behaviors exhibited in these experimental games are somehow transferable to other social and economic behaviors. This assumption is not clearly explained or justified.

Using similar methodologies and assumptions on another project, Henrich and McElreath (who worked on the MacArthur project and also conducted experimental economic games), write: “we think that the decisions in our model bear some resemblance—in terms of the framing of gains and losses—to the actual cropping decisions that farmers make” (Heinrich and McElreath 2002: 179). Neither Lesorogol nor Heinrich and McElreath explain why it makes sense to assume that context specific behaviors exhibited during these “games” should actually tell us anything about wider economic decision making practices. In a critical essay about Henrich’s use of experimental economics in a similar case, anthropologist Michael Chibnik writes, “The evidence that experimental play often mirrors interaction patterns in daily life is soft by the rigorous standards that the project contributors extol” (Chibnik 2005: 204). Chibnik concludes his essay by stating that the study “tells readers a lot about the reasons for cross-cultural variations” in how people engage in experimental economics games—and not much else (Chibnik 2005: 207).

Despite the fact that experimental economics was originally designed as a means for gaining a better understanding of human universals, in practice they often end up eroding and challenging the very universalist foundations upon which they are built. This was the case in Lesorogol’s research, although she argues that her use of experimental economics was intentionally designed to illustrate “how games can enhance understanding of a localized process of institutional change” (2008: 218). Considering Lesorogol’s earlier arguments about the need for cross-cultural and generalizable data, her conclusions and rationalizations about how she actually implemented the games seem like an afterthought. If she was really just looking to elicit context-specific cultural behavior, why use a generalizing method? Why not, as Chibnik argues, use classic ethnographic methods?

Regardless, Lesorogol’s data ends up illustrating the importance of both culture and context. The participants in Lesorogol’s experimental games clearly filtered their understandings of the games through particular cultural frameworks. In some of the games Lesorogol conducted, participants’ understandings of “ownership” strongly influenced their ensuing conduct in those games. As Lesorogol explains, “Even though the wording of the instructions is clear—the money is given to both players—the fact that Player One gains physical possession of the money and is given the right to decide on the split creates a situation of virtual ownership by Player One” (Lesorogol 2008: 217). This calls into question the cross-cultural value of any experimental games—whether conducted by Lesorogol or any one else. Why? Because the assumption that everyone will understand the situations and meanings of the games equally and comparably is just that—an assumption.

As Chibnik writes, “The isolation of a few variables for analytic purposes in experimental research is diametrically opposed to an entrenched tradition of holistic studies in anthropology in which attempts are made to consider the complex interactions of many variables” (2005: 202). Severe methodological and theoretical problems can arise with such economistic methods. One problem is the fact that the very assumptions of models can ultimately shape the data that they are designed to explain. By limiting research to a small set of pre-selected categories, the realities of the social group under study can become so abstracted that they lose any actual real world relevance. The danger with models is that it is all too easy to mistake them for the phenomena under study, as is illustrated by a passage from Henrich and McElreath:

From this perspective, farmers are risk-averse because of the concave shape of their utility curves. In contrast, risk neutral farmers would have straight-line utility curves and always prefer the option with higher expected income/wealth. Risk-prone farmers would have convex utility curves (accelerating upward instead of decelerating downward) and prefer options with more variation, even when the expected income from a high-variance option is less from than a low-variance option (Henrich and McElreath 2002: 172-173).

Are these farmers actually reacting according to a utility curve, or is the curve merely a way of explaining their actions? Is it accurate to describe human behavior in terms of “utility curves”? At what point do these kinds of analytical categories and modes of analysis become completely irrelevant? Should there be any concern for how well these tools actually align with the actual categories that real people use to describe their own behaviors? These questions strike at the heart of the objectivist methodological tendencies that pervade the research of many economists and other mathematically minded social scientists. Of course, the problem goes far beyond the tendency to describe human behavior in these sorts of terms. The deeper issue is when actual human tendencies are conflated with the models that social scientists construct. This is the sort of issue that crops up when economists start talking about the reality of a generalized human "rationality" that adheres to particular cultural and historical ideals.

Divorced from all cultural and historical contexts, economistic models are quite “risk-prone” to reification. The conclusion of Henrich and McElreath’s 2002 paper is a wonderful illustration of the problems and dangers of reification. After a lengthy discussion and analysis of the games they conducted, Henrich and McElreath conclude, “it could very well be that humans have some predisposition toward taking risky monetary gambles” (Heinrich and McElreath 2002: 180). In short, after conducting a series of what were little more than tests that involved gambling, the authors wrap up their paper by making assumptions about human behavior based only upon possibilities that were determined by the researchers themselves. The reasoning behind this conclusion is that since most of the non-western participants were more willing to take risks in the games, there must therefore be some deeper human predisposition toward risky gambling. This evolutionary argument about human cognition and behavior is based upon the idea that Westerners, with a long history of interaction in market systems, have “acquired, via social learning, rules and preferences for dealing with risky monetary situations” (Henrich and McElreath 2002: 180). Obviously, the authors conveniently left Las Vegas (and the housing market in California) out of their model of Western society.

By eliminating or ignoring relevant cultural and historical factors that might explain their results, Henrich and McElreath only find answers that stem from the factors they deem (for whatever reason) relevant for consideration. Like a structuralist argument that assumes binary oppositions in human cognition and results in binary-based explanations, economically oriented models conveniently often result (only) in economic conclusions. This is a problem that Pierre Bourdieu criticized when he wrote, “if one fails to recognize any form of action other than rational action or mechanical reaction, it is impossible to understand the logic of all the actions that are reasonable without being the product of a reasoned design, still less of rational calculation” (Bourdieu 1990: 50). As Wilk and Cliggett argue, for Bourdieu human behavior can only be understood empirically through the observation and analysis of real world situations (2007: 186). What does this mean? It means that cultural, historical, and social factors cannot be dismissed in favor of calculatingly efficient, yet semantically barren, economic models. Efficiency is great and all, but what use is an efficient model that has little to do with empirical reality?


*This is part II of a larger project that I am working on called "What the hell do economists do and what does this have to do with anthropology?" Expect more, soon. Caveat: this is a work in progress, so feel free to lambaste me for any reason you see fit.


References

Bourdieu, Pierre. 1990. The Logic of Practice. Stanford: Stanford University Press.

Chibnik, Michael. 2005. “Experimental economics in anthropology: A critical assessment. American Ethnologist, Vol 32(2): 198-209.

Henrich, Joseph, and Richard McElreath. 2002. “Are Peasants Risk-Averse Decision Makers?” Current Anthropology Vol. 43 (1): 172-181.

Lesorogol, Carolyn K. 2008. Contesting the Commons. Ann Arbor: University of Michigan Press.

Anthropology/Economics

After working on projects that relate to international tourism and development for my M.A., and starting background work in the same vein for my PhD, I realized that one discipline, above all others, seemed to be directly opposed to a lot of what I was learning: economics.* The reason is, at heart, fairly basic. It’s a matter of assumptions, and it’s a matter of data collection. Anthropologists and economists start from some fundamentally different methodological and philosophical positions about human nature and behavior (if there are such things). Despite the fact that both sciences study human behavior, their proponents often come to some startlingly different conclusions. This paper is a brief exploration of this critical disjuncture.

As Carrier and Miller state, “For much of the twentieth century the social sciences, including anthropology, have seen themselves engaged in a fight with economics in a fight over the academic representation of social relations” (1999: 24). Anthropology fundamentally clashes with economistic views of human nature that make primordial assumptions about the relationship between individual and group behavior. In neoclassical economics, one of the primary assumptions is that the attainment of individual self-interest will result in the betterment of society as a whole. A whole series of anthropological studies, from Malinowski onward, have challenged this central tenet, often to little avail (Carrier and Miller 1999:25). Carrier and Miller write that anthropology has been fighting a “losing battle” in the rhetorical war about human motivation and behavior. Economists, far more than anthropologists, hold primacy when it comes to defining “what is important in the contemporary world” (Carrier and Miller 1999: 24).

Why is this the case? The short answer: economists actually supply models and results that can be utilized for a variety of purposes (Carrier and Miller 1999: 27). They provide answers that are useful (and I mean this in a kind of Foucaultian sense). This is possible because of the some of the underlying foundations of economic thought. One of the primary assumptions is the idea that all humans are, ultimately, rational actors (Wilk and Cliggett 2007: 73). This is the idea that all humans are rational—read logical—agents who seek to “maximize their utility” or (Wilk and Cliggett 2007: 58-59). Also, economists are able to make general models because of the assumption that larger structures are created out of the cumulative actions of individuals. If individuals are assumed to make rational choices, and if they presumably always seek to get the most satisfaction (utility) possible, then a larger model can be constructed that takes these tendencies into account as constants. This is part of what makes human behavior something that can be predicted and modeled by economists. The diversity of humanity is swept away in a philosophical cloud, allowing for generalizations and larger structural models. The real problem with predicting human behavior is the fact that there are so many variables—cultural, historical, and ideological, among others—that would have to be taken into account. Modern economists sidestep this problem through a methodological sleight of hand that has little empirical basis. But it works, mainly because it’s the only game in town.

Anthropologists critique economists on the grounds that they are “much more willing to posit a microscopic realm than they are to investigate and analyse it” (Carrier and Miller 1999: 39). But we have to offer something more than critique, and we have to offer something a little different than just empirically grounded particularities. Anthropologists—and this is the primary argument of Carrier and Miller—have to find a way to connect the realities of their particularistic studies with the larger structures and systems within which real human societies live (Carrier and Miller 1999: 41). One of the key considerations is finding a way to embed “local” processes in a way that does not turn them into mere “a priori assumptions” (Carrier and Miller 1999: 40). Inspired by Mintz, Carrier and Miller argue for analytical “commodity chains” that follow the thread of goods from the household, to regional markets, to larger global markets (Carrier and Miller 1999: 40). This method does seem to hold considerable potential for demystifying commodities and the social relationships in which they are enmeshed (Carrier and Miller 1999: 41).

Another possibility may lie in the roots of practice theory as explicated by Sherry Ortner (1984, 2006) and others. One of the key components of practice theory is that neither the smaller (individual) or larger (macro-structural) levels are given primacy. Systems are not, according to Ortner, “broken into artificial chunks”, since the whole point is an attempt to explain the system as a whole, integrated process (Ortner 1984: 148). In models produced by economists there is a decided split between the individual and macro levels of analysis. While many economists conceive of human behavior as the sum total of actions of a series of precise and rational actors, such models do not take into account the actual differential relationships of individuals to larger structures. In short, there is little room in economics for individuals to actually affect or shape the realities in which they live. While economists do allow for structural constraint—meaning that larger economic systems constrain human choices and behavior (Carrier and Miller: 27)—they leave little room for the contingencies of human agency.

So what about agency? What does that even mean--choice? The ability to determine one's fate? The kind of agency that Ortner calls for is one that is understood within specific cultural and historical realities (Ortner 2006: 57). This differs dramatically from the homogenized and idealized view of human nature that many economists project onto their mathematized subjects. But ideas about agency still leave a lot of questions unanswered, even if they do challenge certain economistic conceptions about human behavior. If anthropology tells us anything, it tells us that human behavior, while fundamentally linked by certain biological capacities, is equally diverse in its multiform cultural expressions. This means that human behavior is not something that is completely determined by culture OR biology--history, contexts, and situations matter. But how much do these factors matter?

Many economists argue, ultimately, that individual human actions and choices only affect larger realities in the aggregate and uniform sense. Such conceptions fundamentally obscure the fluidity and acute unpredictability of human behavior. The critical goal is finding a way of looking at micro-macro relationships that accounts for both structural constraints and the potentialities of agency without leaning too heavily toward one end of the scale or another. The goal is to avoid simplification at any level, while still allowing for the unexpected. If anthropologists can actively account for local contingencies while still taking larger structures into consideration, maybe that's a start. The goal is to attempt to understand the ways in which the cumulative—and varied—choices, decisions, and actions of individuals coalesce to shape those abstract and seemingly impenetrable larger structures in ways that mathematical modeling could never predict. Maybe prediction is beside the point anyway. Such an understanding might not quite be as pragmatically useful for the goals of certain international development agencies, but maybe, in the end, that's the whole point.

*This is a rough version of some things that I have been looking into of late. Economics, rational actors, decision making--and how anthropology can or cannot tackle these issues. I am more interested in political anthropology than anything--but I have been working to gain a better understanding of the intersections between economics and anthropology for some obvious reasons. Part of this is because the economists are much more vocal, and part of this is because anthropology and econ seem so diametrically opposed. At the same time, I don't want to just pretend that the discipline of economics is completely one-sided, and I don't want to set up a straw-man version of what they are doing in order to argue against it. That may be a little bit of the case above, so I need to spend some more time looking into what modern economists do and how they go about doing it.


References

Carrier, James G., and Daniel Miller. 1999. “From Private Virtue to Public Vice.” In Anthropological Theory Today. Cambridge: Polity Press.

Ortner, Sherry. 2006. Anthropology and Social Theory. Durham: Duke University Press.
---1984 “Theory in Anthropology since the Sixties.” Studies in Society and History. Vol 26(1): 126-166.

Wilk, Richard R., and Lisa C. Cliggett. 2007. Economies and Cultures. Boulder: Westview Press.

The Decision Makers

Why do humans do the things they do? And how can anthropologists explain these behaviors? Are humans rational actors? Or are our decisions culturally determined? Somewhere in between?

You see, this is what I get to talk about all week in grad school land. Sounds fun, doesn't it?

The readings of the week in my Economic Anthropology seminar focus on rational choice and decision making. A couple of the articles talk about something called "experimental economics," which is basically an attempt at finding human behavioral universals through field experiments. Although I understand the underlying intentions, I am not convinced by the results of these tests, which basically "test" human decision making through a series of games. My main problem: how can the information from these "experiments" be extrapolated to other behaviors? Why should we (or anyone else) assume that the tests tell us about human behavior writ large?

What do tests actually test? What do these kinds of experiments actually tell us? I tend to think that they tell us how people respond to test/experiment situations, and not much else. Now, that can be interesting--I suppose--on some levels, but I think it's pretty questionable when researchers start assuming that these kinds of results automatically apply to other behaviors. Maybe they do. Maybe they don't.*

*Note: this post will not qualify me for the public anthropology of the year blog. I know. This is more of an internal issue.

Maxine Udall: Should economists be sued?

This is a great post from Maxine Udall about the discipline of Economics and some of the theoretical foundations that it has been founded upon. One sample:

Now add to this the promotion and tenure policies at even second rate economics departments that require and only reward publication in journals that favor morally vacant, mathematically rigorous, theoretically obtuse existence proofs that more often than not bear no relation to reality as we know it. One is then left with an economics literature that few people, including some who have majored in economics as undergrads, can truly understand, either in its content or in its relevance to the important moral and economic issues that confront us today.

You should definitely take the time to read the rest...especially if you're interested in the question of whether or not human behavior is something that can be boiled down to a mathematical equation.

via Economist's View