Economics vs Psychology, why the two are apples and oranges

[Riddick]

(in response to an old post I meant to respond to from Propertarian in the eliminated politics forum)

On the difference between economics and psychology.

Economics has a particular view human nature that is constructed by an a priori axiom and further deduced from that axiom are specific laws. The axiom, simply put, is that humans act. From this axiom, an economist can deduce that acts are conscious and purposive towards acheiving desired ends, each action replacing a less satisfactory position with a more satisfactory position (satisfactory of course based on the actors subjective expectation). No amount of new experience or new studies can disprove this axiom or its deductions. For one to even attempt to disprove this axiom or its immediate logical deductions, one would be employing the axiom and therefore committing logical suicide.

Furthermore, a new study showing *why* people act in a *particular* situation (the realm of psychology) does not advance or alter the economic view of man one iota. No amount of psychoanalysis of specific human beings placed in specific situations can build any empirical *laws* about man's nature, such as an economic study of man can and has (laws of utility, laws of supply and demand, laws of price, etc etc).

[ QUOTE ]
"Psychology can establish nothing more than the occurrence of an historical incident" -Ludwig Von Mises

[/ QUOTE ]

I'll be happy to take your questions.

[Propertarian]

[ QUOTE ]
On the difference between Austrian economics and psychology.

[/ QUOTE ] Austrian economics is vaccuous, and scarcely anybody defends it or uses it in the academy anymore, because of (among other things) this.

All other forms of economics, and hence over 99% of economists, rely on human psychology (although it may be social or Evolutionary psych, or the laughable 'economic man' postulate of human psychology too often used by traditional neoclassical economists as opposed to the kind taught in 'psychology' courses) in some form or another in order to avoid being empty.

[ QUOTE ]
an economist can deduce that acts are conscious and purposive towards acheiving desired ends, each action replacing a less satisfactory position with a more satisfactory position (satisfactory of course based on the actors subjective expectation).

[/ QUOTE ] 1) Not all action is intstrumental towards acieving certain ends; and most action is partly non-instrumental. For example, I vote to re-affirm and constitute myself as a good citizen and a leftist; not because that vote changes anything (it clearly doesn't, no election is decided by one vote) or helps me achieve some puprpose, end,, or outcome. There is no 'end' to be achieved; the action is performed because of its intrinsic correctness. Your law is not a law. Nor are all actions conscious either, of course. Since these things are not true, of course you cannot in fact 'deduce' them from the axiom that humans act. But everybody realizes that already.

But even if it were true, how important would 'revealed preferences' be?

Not very. de Jouvenel on revealed preferences: ...[if books were printed in a language I could not read], "possibly I would turn to comic strips; this would triumphantly reinforce the proof that 'people pefer' comic strips. Revealed preferences in fact reveal ignorance , the lack of intellectual and aesthetic formation."

quoted in Brandon Robinson, "Psychological Assumptions, Conceptions of Value,, and Economic Theory (unpublished paper, 1972; emphasis in original).

[ QUOTE ]
empirical *laws* about man's nature

[/ QUOTE ] What are 'laws'? Why is that important? Necessary?

I want to know about man in France or Germany or Russia, and about individuals in that area, which is both more and less than 'man'.

[hmkpoker]

[ QUOTE ]
All other forms of economics, and hence over 99% of economists, rely on human psychology (although it may be social or Evolutionary psych, or the laughable 'economic man' postulate of human psychology too often used by traditional neoclassical economists as opposed to the kind taught in 'psychology' courses) in some form or another in order to avoid being empty.

[/ QUOTE ]

As a psych major, I feel very comfortable saying that the Austrian axiom of human action is OVERWHELMINGLY supported within the psychological community. Nearly every course I had from 101 on mentioned at some point that all conscious human action is geared toward achieving a better state of personal affairs based on limited information. It is both axiomatically true, and constantly reaffirmed by experiments.

Can the desired objectives vary from person to person? Yes. Can people make errors in their judgement? Yes. Can people make mistake? Of course. But nevertheless, the actor is always acting upon information which is exclusive to his own psyche, is acting toward goals favorable exclusively by his mind, and will always choose the most favorable (as favor is defined by active preference) circumstance based on the available information and his time preference.

I have yet to hear of a psychologist that disputed this. Even the few humanist/libertarian believers who didn't take the deterministic approach still believed in a fundamental lawfulness of consicous behavior. Otherwise, there would be no science.

[ QUOTE ]
For example, I vote to re-affirm and constitute myself as a good citizen and a leftist; not because that vote changes anything (it clearly doesn't, no election is decided by one vote) or helps me achieve some puprpose, end,, or outcome.

[/ QUOTE ]

I masturbate for dopamine and serotonin release, not because it helps me achieve some purpose, end, or outcome.

You claim that your reaffirmation as a leftist has no value? It doesn't mean something to you, or make you feel better about yourself? If so, why do you bother? If not, your point is moot.

[ QUOTE ]
There is no 'end' to be achieved; the action is performed because of its intrinsic correctness.

[/ QUOTE ]

Think about how guilty you'd feel if you didn't vote.

[ QUOTE ]
[ QUOTE ]
empirical *laws* about man's nature

[/ QUOTE ]

What are 'laws'? Why is that important? Necessary?

[/ QUOTE ]

Well, let's consider what we, as economists/politicians are trying to accomplish: we are trying to construct a system of social norms that, when implemented (through whatever means) into a particular medium (society) will yield the best possible outcome (the most favorable society).

If you were trying to design the best possible roller coaster, wouldn't you want to know about the laws of gravity and interia? If you were trying to make money in poker, wouldn't you want to know what hand beats what?

[Propertarian]

[ QUOTE ]
You claim that your reaffirmation as a leftist has no value? It doesn't mean something to you, or make you feel better about yourself? If so, why do you bother? If not, your point is moot.

[/ QUOTE ] What do you mean 'value' (he said nothing about value in the OP)? I really fail to see how this undermines my point.

The most effective way of explaining behavior like voting as well as altruistic action such as voluntering for a dangerous mission in war is to give up the instrumental conception of action; this explains WHY somebody is doing something on a less superficial, less vague, and more specific level.

[ QUOTE ]
--------------------------------------------------------------------------------

There is no 'end' to be achieved; the action is performed because of its intrinsic correctness.


--------------------------------------------------------------------------------



Think about how guilty you'd feel if you didn't vote.

[/ QUOTE ] For example, this comment. It explains nothing. Explaining voting in the way that I did is far more fruitful. The austrian theory doesn't explain why I feel guilty if I don't vote. It doesn't explain why I don't feel guilty for refraining from other activities. It can't predict anything. Fundementally speaking, I'm not doing it to avoid guilt anyway. That is a side effect; not the cause of my actions.

So while Riddick's comments made the Austrian theory implausible, your defence of his comments has rendered it useless.

[ QUOTE ]
Well, let's consider what we, as economists/politicians are trying to accomplish: we are trying to construct a system of social norms that, when implemented (through whatever means) into a particular medium (society) will yield the best possible outcome (the most favorable society).

If you were trying to design the best possible roller coaster, wouldn't you want to know about the laws of gravity and interia? If you were trying to make money in poker, wouldn't you want to know what hand beats what?

[/ QUOTE ] You answered the second, but not the third or the first, question.

[Propertarian]

[ QUOTE ]
As a psych major, I feel very comfortable saying that the Austrian axiom of human action is OVERWHELMINGLY supported within the psychological community

[/ QUOTE ] It depends on how that 'axiom' is described/defined. Some have described it in a way that makes it a vaccuous tautology; it may be correct, but since it doesn't rule out any other theory of human action that anybody believes in and has little predictive or explanatory value, it is unimportant.

Others have explained it in a way that excludes the things I was talking about, as well as evolutionary motivitation and action as a response to social norms. Which means it is implausible.

Like so many simple solutions, then, it is either a tautology or it is implausible. And, that is why, like I mentioned, that essentially nobody in economics uses the Austrian method.

On a related note, one of the reasons that neoclassical economists have continued to use the 'rational man' theory of action is that it actually would have explanatory and predictive power if it were true, unlike the Austrian view.

[hmkpoker]

[ QUOTE ]
It depends on how that 'axiom' is described/defined. Some have described it in a way that makes it a vaccuous tautology; it may be correct, but since it doesn't rule out any other theory of human action that anybody believes in and has little predictive or explanatory value, it is unimportant.

[/ QUOTE ]

But it does.

It rules out the notion that humans DO NOT ACT toward states that they find personally preferable. If someone were to create a system of social norms that he wanted his subjects to follow, he will not get very desirable results unless he is able to provide some sort of personal incentive to facilitate the drudgery needed to produce the resources for society. This may be through reward (i.e., paying someone to work) or punishment (shooting those who don't provide for society).

And frankly, since people don't really care about providing from the extent of their ability, people don't subscribe to the mantra "from each according to their ability, to each according to their need." People like the getting thing, but don't really care about the giving thing (except in the rare instances that they have a job that they intrinsically enjoy)

Leftist economic structures fail because they are based on human incentives that don't actually exist.

[Riddick]

[ QUOTE ]
Austrian economics is vaccuous

[/ QUOTE ]

Austrian methodology, aside from yeilding a nobel prize in 1974, contributing the framework of theory to renowned (mainstream) academics such as Irving Fisher and John Hicks, and altogether destroying once prized theories such as the "Labor Theory of Value" and Keynes' multiplier - on top of that and much more - has revealed much to the science of economics to say the least.

To call it vacuous, especially coming from one as knowledgeable as you, is obviously not just a petty insult but a much more revealing insecurity.

Praxeology alone, for instance, in deducing that all actions are exchanges, can be (and was) employed in refuting authoritarian socialism altogether, beginning with its system of prices (which are the expressions of exchanges).

Is the action axiom very basic? Why, of course. So is the mathematical axiom "sets exist." But it is from basic foundations that a great wealth of truths are built up. To attempt then to dismiss the entire scope of the theory, such as Austrian Economics, or Mathematical Set Theory (no less all of mathematical theory itself), as vacuous, simply because the beginning axiom appears at first to be vacuous standing by itself, would be altogether ignorant and foolish.

[ QUOTE ]
All other forms of economics, and hence over 99% of economists, rely on human psychology

[/ QUOTE ]

Another appeal to authority. Not surprising.

Once again...

[ QUOTE ]
Psychology analyzes the how and the why of people forming values. It treats the concrete content of ends and values. Economics, on the other hand, rests simply on the assumption of the existence of ends, and then deduces its valid theory from such a general assumption. It therefore has nothing to do with the content of ends or with the internal operations of the mind of the acting man

[/ QUOTE ]

[Riddick]

[ QUOTE ]
Not all action is intstrumental towards acieving certain ends; and most action is partly non-instrumental. For example, I vote to re-affirm and constitute myself as a good citizen and a leftist

[/ QUOTE ]

ORLY?

1) Youve typed and posted this (an action) in hopes (the expectation of replacing your unsatisfactory condition with...) of convincing me of your truth (the satisfactory condition, the end)

2) You vote (your action) to re-affirm and constitute myself (your end). You clearly feel unsatisfied in not re-affirming and constituting yourself as a leftist, and so you seek to replace this unsatisfactory condition with a satisfactory condition, one in which you are re-affirmed and constituted as a leftist.

You've employed the axiom in attempting to refute it. Like I said, hari kari.

Are you confused in thinking that the end must be something hard and physical?

[ QUOTE ]
Nor are all actions conscious either, of course.

[/ QUOTE ]

Of course not. Actions such as knee-jerks or blinking have no conscious purpose, were not chosen by any thought process, and cannot be interpreted meaningfully, and thus do not fall in the science of human action.

[hmkpoker]

[ QUOTE ]
To call it vacuous, especially coming from one as knowledgeable as you, is obviously not just a petty insult but a much more revealing insecurity.

[/ QUOTE ]

I'm waiting for him to refute it by calling it unfalsifiable, since I've already argued against that in this thread.

[Riddick]

[ QUOTE ]
It depends on how that 'axiom' is described/defined. Some have described it in a way that makes it a vaccuous tautology; it may be correct, but since it doesn't rule out any other theory of human action that anybody believes in and has little predictive or explanatory value, it is unimportant.


[/ QUOTE ]

Do you believe that the axiom "sets exist" is a meaningless, unimportant tautology? Yes or no please.