Alfred Marshall v. homo economicus

If intra-family altruism counts as an economic motive, why not other forms?

Ethical forces are among those of which the economist has to take account. Attempts have indeed been made to construct an abstract science with regard to the actions of an “economic man,” who is under no ethical influences and who pursues pecuniary gain warily and energetically, but mechanically and selfishly. But they have not been successful, nor even thoroughly carried out. For they have never really treated the economic man as perfectly selfish; no one could be relied on better to endure toil and sacrifice with the unselfish  desire to make provision for his family; and his normal motives have always been tacitly assumed to include the family affections. But if they include these, why should they not include all other altruistic motives …?

— Principles of Economics, Preface to the First Edition (1890), par. 3.

It’s remarkable how much a discipline can forget in the short span of 120 years.

Author: Mark Kleiman

Professor of Public Policy at the NYU Marron Institute for Urban Management and editor of the Journal of Drug Policy Analysis. Teaches about the methods of policy analysis about drug abuse control and crime control policy, working out the implications of two principles: that swift and certain sanctions don't have to be severe to be effective, and that well-designed threats usually don't have to be carried out. Books: Drugs and Drug Policy: What Everyone Needs to Know (with Jonathan Caulkins and Angela Hawken) When Brute Force Fails: How to Have Less Crime and Less Punishment (Princeton, 2009; named one of the "books of the year" by The Economist Against Excess: Drug Policy for Results (Basic, 1993) Marijuana: Costs of Abuse, Costs of Control (Greenwood, 1989) UCLA Homepage Curriculum Vitae Contact: Markarkleiman-at-gmail.com

12 thoughts on “Alfred Marshall v. homo economicus”

  1. Or even the past 20 years, back when economist Robert H. Frank published “Passions Within Reason” in 1988. The commitment problem is something that Frank gets, but for some reason other economists remain oblivious to it.

  2. Economics has been rotten for so long. Why do people keep acting surprised that it’s terrible?

  3. Why has economics ever been allowed assume it knows why people do anything? It seems that only in recent years as it has begun to not assume as much, it has discovered how little it indeed knows.

  4. Clearly Mark is remarkably smarter than so many economists because he reads things and what?

  5. Why has economics ever been allowed assume it knows why people do anything?

    Oh, I don’t know. When you look at r^2s like .2 and the results are described by the author as ‘robust’, you know that you can ignore the author and know it explains a little bit of the variance.

  6. David says:

    “Clearly Mark is remarkably smarter than so many economists because he reads things and what?”

    I think that you’re coming in in the middle of a theme (repeatedly expressed by Paul Krugman and Brad DeLong), that the Chicago School has forgotten generations of economics.

  7. Math is a language. Theoretical microeconomics is a branch of mathematics. Like 2-D or 3-D Euclidean Geometry the language of economics describes the observed world inaccurately and incompletely. Theories do not have to be perfect to be useful, any more than maps have to be wet where they indicate rivers or rough where they indicate mountains. Sometimes refinements to a theory improve the accuracy of predictions. Sometimes they so complicate the theory that they degrade prediction. Sometimes the enhanced accuracy is not worth the added cost of data collection or computation. Economic theorists do not deny that different individuals have different values, including tastes in people (which kind and how much). Professor Kleiman confects a spurious difficulty.

  8. When economics can account for the black market, I might start to have a tiny bit of interest in it.

    Yes, there is a black market in the United States. Stolen items do not just disappear. No economist that I have read and remembered ever addressed the pure capitalism of the black market.

    Supply and demand are totally matched. Prices are negotiated with the buyer trying to get the lowest price and the seller trying to get the highest price. There is no paperwork, lawyers or taxes involved, period.

    As people fall through what is laughingly call the “safety net,” more people will go black. Once you’ve lived in the black market, it is hard to pull out. It is just so efficient and cheap.

    If the workers don’t get hired soon, there will be one hell of a lot more people that will never pay taxes again.

  9. (Useless): “No economist that I have read and remembered ever addressed the pure capitalism of the black market.
    Yound and Marcoulier
    American Economic Review
    “The Black Hole of Graft: The Corrupt State and the Informal Economy”.

  10. “It’s remarkable how much a discipline can forget in the short span of 120 years.”

    You will NEVER understand what is going on in modern American economics if you refuse to see the parallels to the reformation. Where we are now, once economics entered its theological stage in the 1970s, is no different in essence from Calvinism & pre-destination, including the necessity to get rid of everything that imbued Catholicism with humanity, be it saints, stained glass, or christmas. This infamous (and undoubtedly apocryphal) internet meme shows the difference.
    http://www.animaltalk.us/do-all-dogs-go-to-heaven/
    It’s not all in favor of Catholicism of course. There was real abuse of power going on, maintained by refusal to allow modern language versions of the bible…

    There seems to be an essential pattern to these things; and IMHO the place of economics in modern America is absolutely best understood by studying what happened in European religion, and why, from around 1450 to 1650.

  11. “Math is a language. Theoretical microeconomics is a branch of mathematics. Like 2-D or 3-D Euclidean Geometry the language of economics describes the observed world inaccurately and incompletely. Theories do not have to be perfect to be useful, any more than maps have to be wet where they indicate rivers or rough where they indicate mountains.”

    Come on Malcolm, you’re being willfully obtuse.
    The issue is NOT that economics (micro or otherwise) is utilizing 3-D Euclidean geometry to describe the world; it is that it is using complex projective geometry because “that is so much more elegant”, and is refusing to concede that, no matter how beautiful it may be, complex projective geometry is not a particularly good model for the real world.

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