Why Economics Should Return to its Roots

Economics explains how people interact within markets to accomplish certain goals. People; not robots. And people are creatures with desires, animalistic urges that guide them into making conscious, but often unconscious, decisions. That sets them apart from robots, which act solely upon formal rules (If A, then B, etc.). But this difference between humans and robots shouldn’t have to be a problem, right? Not if economics takes into account the fact that humans are biological creatures, who (might) have got a free will; an observation which makes their actions undetermined and therefore unable to be captured in terms of laws.

It seems fair to say that we all want to increase our utility – in the broadest sense of the word. But do we always know why we want to increase our utility? Don’t we never ‘just want’ to go out, ‘just want’ to buy a new television, ‘just want’ to go on holiday? Yes we do: it seems that, sometimes, we just happen to want things: we don’t know why, we don’t have explicit motives for our desires. And if we – the people having the desires – don’t even know why we do things, how on earth could economists know, let alone capture these actions in laws? That’s only possible if you make assumptions: very limiting assumptions.

Rational choice theory is a framework used within economics to better understand social and economic behavior by means of formal modeling. But if this sense of understanding – that is possible only through formalizing humans’ behavior – is only possible by treating humans like robots, what then, on a conceptual level, is the difference between economics and artificial intelligence? Besides that the latter really works with robots and the former seems to assume to work with robots? Robots whose actions are fully predictable and explainable by a set of parameters: speed, vision, greediness etc. Or its formal economic counterpart: humans whose actions are manipulable by changing interest rates, government expenditures, taxes and other parameters that are part of the large economic machine we are all a part of. Assuming a mindless creature, following formal rules, makes it possible to capture his intentions in a formal corset. Everything should be dealt with in a formal manner: even uncertainty should be put in mathematical terms. Anything to make sure that we don’t miss out on any of the creature’s shenanigans. Even the ones that are grounded in the deep domains of irrationality.

But maybe it’s time to wake up and ask ourselves the question: have we come to forget what that we’re dealing with humans here? That the economy is not a steam engine, robot or any other mindless entity whose actions are fully explainable – let alone predictable. Have we forgotten that economics is a ‘social’ science, a science dealing with products of the human mind, related more to psychology than to mathematics?

It’s understandable that economics wants to position itself as being a ‘genuine’ science, a science that is able to objectively describe the way the world works. A science that wants to show that it is capable of capturing its findings in laws. But why should economics be dependent upon these kind of formalities in order for it to be a science? Isn’t it time for economics to stop being insecure? To realize that it’s beautiful the way it is. Why does it behave like an 18-year old girl, whining and crying about the girls who she thinks are prettier than her? Stop it economics! You’re pretty: be happy with what you are.

But this leads us to the real question: what is economics? Economics is – much like politics – a system created by the interaction between us human beings. A system that – although less explicitly than politics – is founded on the notion of morality: our ideas about what’s right and wrong. It’s no surprise that figures such as Adam Smith and Friedrich Hayek have been so influential in economics. They understood what economics was really about: economics is in the basis a philosophy of what it means to be a human being, and the fundamental rights that each one of us should have. This ethics is the starting point of their economic systems. And that’s a tradition current economists should try to continue: interweaving morality and money. Keeping an eye on the moral fundamentals underlying markets and coming up with original ideas about how to improve these markets on a moral level. So there’s plenty of work left to do for the genuine economist.

But what do you think?

How to Justify Consequentialism Without Pointing at the Consequences?

What makes an action good or bad? People adhering to deontological ethics judge the morality of their actions based on whether their actions follow certain rules. ‘You should not kill’, ‘You should not steal’ and ‘You should not lie’ are examples of such rules. On the other end there are people who say that ‘ the ends justify the means’, and that the rightness or wrongness of an action is ultimately based on the outcomes of the action. ‘You may lie if the damage caused to the person you lie to is negligible in comparison to the utility you gain/the dis-utility you prevent from happening’ could be an example. The latter position is an instance of a the broader position of consequentialism

So: what position to choose? Should you base your conduct on absolute rules, or should you weigh the expected outcomes of actions in order to decide what action is the right one to take? One could say that it is reasonable to judge each case on its own merits. That it does not make sense to hold on to the rule ‘You should not lie’, because in some cases lying might be ‘better’ – in whatever sense defined – for both you and the person you lie too. For example: suppose your father is lying on his deathbed. You have just heard that your sister – the apple of your dad’s eye – got cancer. Given that you know that your dad cares an awful lot about your sister, and that telling about your sister’s situation is likely to worsen his health, it might in fact be bad – in terms outcomes – to tell him about your sister’s situation. Furthermore, given your own happiness, it might be better not to say anything (saving you the painful outcome of seeing your dad suffer from the news). Hence one could reasonably say that there are instances, such as this example, that falsify an absolute rule of conduct – ‘You should not lie,’ in this case. That implies that deontological ethics is not necessarily – or not always – the best stance to adopt.

That brings us to consequentialism: might this be a more reasonable position to adopt? In order to reasonably claim so, one should at least come up with a reasonable answer to the following question: how can you base your conduct on the outcomes of your actions if you don’t know what the consequences of your actions will be? We can – after all – not look into the future, hence we cannot know what the consequences of our actions will be. You could – for example – think that your girlfriend would not mind it if you’d post a photo of you and another girl on your social media (‘because she is so reasonable’), but it might turn out that, contrary to your expectation, she does. You can of course have expectations, but are expectations sufficient to ground moral conduct? After all, each case is unique – each case has innumerable factors that influence the outcome of one’s action. Hence even coming up with a reasonable expectation might – a priori – be impossible.

A more fundamental problem with consequentialism might be the premise on which the doctrine is based: something along the lines of ‘An action is good if its outcomes are good’. It seems that this rule – which forms the foundation of the consequentialist position – is, by definition, deontological in nature. But what then justifies this rule? If the reason would be that adopting this rule is good because it leads to the best outcomes, then we are justifying consequentialism with consequentialism, which seems intolerable. On the other hand, if we take this rule to be applied without looking at its expected outcomes, then we are deriving consequentialism – at least in part – from deontological ethics, which could cast doubt on whether one is actually applying consequentialism instead of deontological ethics.

I find this a difficult issue. What do you think?

P.S. For the sake of the length of this article, I left out pragmatic ethics. This seems to be a middle ground between deontological ethics and consequentialism that could be reasonable.

Why People with OCD Give Into their ‘Irrationalities’

I have got OCD. That is to say: I have intrusive thoughts flying into my head, which create anxiety, sparking in me the urge to perform certain actions (‘compulsions’), that relieve me of the anxiety. What kind of thoughts am I talking about? Well, it’s hard to explain. Fore example: whenever I touch something, let’s say a book, I have to have a certain ‘image’ in mind – usually of someone I look up to. Also, I have to do the ‘touch-don’t touch’ ritual a certain number of times. Not any number of course! No, only the numbers that ‘are right’. This is not an exact science, but the numbers are always even (unless it’s one, which is always good!), but not any even number will do…Makes sense right?

Is this weird? Absolutely. Would I die if I wouldn’t give into the urges? Absolutely not. Why then do I do it? Am I stupid? Or to put it differently: is it irrational to give into these urges?

Book
My first response would be: ‘Yes, this is very irrational.’ I perform certain actions which don’t add any value to my life. It is not like baking a cake, washing your car or taking a shower: activities that actually provide you with some sort of tangible effect. But it is even worse that: because besides the fact that my compulsions don’t add any value, they actually take (an awful long) time and energy. So actually it is very stupid to give into the urges. So why then do I do it? Am I stupid?

Well, it is actually very easy to explain…to those who smoke. If you are a smoker, you, after let’s say two hours of not-smoking, feel the urge to smoke. If you don’t give into that urge, you will get nervous, irritable, you cannot focus, and more. You know that smoking doesn’t add any value to your life; hell no, it’s even bad for you! Yet, even though you know this, you give into your urge to smoke, and take a cigarette. Why? Because in the short term, it’s the best thing to do. One more cigarette won’t harm you that much, while not taking the cigarette does harm you significantly – you get nervous, irritable, and you cannot put your mind to those issues you want to focus on, etc.

It’s the same with OCD. Let’s say I touch a book and put it away. Then I feel the urge to do this with a ‘good image’ in mind. Not giving into the urge makes me feel like there is a lock on my brain, like my cognitive capacities are severely limited, like I cannot think clearly (sounds familiar smokers?). This feeling is so unpleasant, that – even though I know it won’t add any value in the long term (if will even detract value due to the time and energy it takes) – I do the compulsion to get rid of the unpleasantness.

Furthermore, just like smoking, OCD is addictive. You either don’t do it, or you do it big time. For if you give into the urge, the urge will become stronger, and it will be harder to resist. But in case you don’t give in, the urge will get less and less. But in order not to give in, you have to resist the unpleasantness of the moment, and – as I explained above – that always seems the sup-optimal option.

Rational
But back to the question I asked at the start: is it irrational to give into the urges? Especially given that I know it won’t add any value to my  life? I say – and I have been ridiculed for this by my psychiatrist – it is not irrational. Because at each point in time, not giving into the urge leaves me with a bad feeling: an unpleasant feeling, a restriction on my thinking, that I don’t want. This feeling can literally last for hours, or even an entire day. Giving into the urge clears me of this bad feeling. And – even though the activity takes time and effort – that takes much less time and energy than that the negative feeling makes me feel bad. The only problem is that I know that, within now and a couple of seconds after having given into the urge, the next urge will be there, to which I will have to give in again…

Welcome inside of the mind of someone with OCD.

What do you think: is it utterly irrational to give in to the urges? Or would you say that – given the short term relief of the negative feeling – it is actually a rational thing to do?

Quantity versus Quality: Which One to Choose?

Quantity versus quality; an everlasting trade-off. The “system” in which this tradeoff is most prevalent is our economic system. You are more or less forced to specialize yourself because no-one wants a mediocre plumber who also happens to be a mediocre tennis coach, blogger and husband. No; we want the best plumber; the best tennis coach and the best blogger. But what if you want to do it all? What if you want to be a plumber, tennis coach etc…..What then? Then you have to make a decision; you want to do it all “a little” or you want to do one thing “good”. But is this a fair dichotomy? Is it really true that when you are engaged in more than one hobby, profession or relationship, you cannot be good in a particular “instance” of these “categories”? Can’t there be a sense of complementarity? A sense of “1 + 1 = 3”? Maybe…let’s take a look at why this could be the case.

What if being a plumber, philosopher and husband would make you better in each one of these “fields”; that is, better in each one of these fields than you would be if you wouldn’t be involved in these three activities “at the same time”? Could that be so? Well, for the philosopher and husband it might be rather easy to see the “benefits” of also being a plumber: it will make you more social, it will give you an idea of “how a day in the life of an ordinary man” would look like and it could make you more respectful towards others fulfilling likewise jobs. But what about the plumber? Would he be better of by being a philosopher as well? Well that “depends” – although I hate this word – on how you define “plumber”. Is “plumber” merely the profession of the man, or is the “plumber” the man itself? If it were the latter, it should be clear why the plumber would benefit from studying philosophy: it would (very likely) make him a more “reasonable” person; more respectful towards the ideas of others. But regarding the former; would he also become better at doing his plumbing job? Well, it doesn’t make him any worse at doing it, right? But that’s not a fair response. However, the real question should be: would he have become a better plumber by “more plumbing” or instead of reading Plato? Well, maybe at first he will be “better off” plumbing more; that is, until the “marginal utility” in “plumbing more” would become less than the “marginal utility” of reading philosophy; which is something that – given “the law of diminishing marginal utility” – will inevitably happen.

But this example of “the plumber” can also be applied to other matters in life; after all, it doesn’t make sense to keep on focusing on one specific area if there are still so many other areas to discover while knowing that gaining in these other areas is easier – see the “learning curve” – than gaining in only one area. Thus, in order to become a person with a high “overall utility” – which is the utility indicating “how good of a person you are” – you have to expand your “intellectual” – and other – horizons.

The “fun” thing is that this logic of “learning curves” and “diminishing marginal utilities” can be applied to pretty much every activity in life. An example? Well, I could have decided – as I did when I started this blog – to write one “very decent” article per day. However, I felt I could contribute more “utility” by “tapping into my creative source” and just let it flow out of me, like diarrhea from a sick person. And if that means that the articles would become a little shorter; who cares?

So; quantity or quality? Which one to pick?

To Kill or Not to Kill, That’s the Question

Imagine the following situation: you are walking your morning walk along the primary school in your neighborhood. You walk past the playground, where children are playing until the bell rings and school starts. And then suddenly, out of the blue, a man enters the playground: he is wearing a machine gun. A loaded machine gun, to be exact. He aims his gun at one the children and yells: ‘The children of today will be the corpses of tomorrow. This is God’s revenge for the tormenting betrayal of the West.’ And while he is pointing his gun at a little girl, you recognize that he has dropped his handgun. You pick up the handgun, and see that it is loaded. In the corner of your eye, you see a child peeing its paints, while sounds of crying and terror fill your ears. You aim the gun at the man and think to yourself: Shall I kill him? Or not?

Because what should you do? There are two competing philosophical positions that might assist you in making this decision. But before knowing which position to choose, you should answer to following question: should you strive to maximize the overall level of ‘happiness’, irrespective of the act you have to undertake (killing someone in this case), or should you stick to absolute moral values, regardless of what the immediate consequences of doing so might be? This is the decision between utilitarianism and absolute ethics.

Utilitarianism claims that all actions that increase the overall level of good in the world, the level of good caused by an action minus the level of suffering caused by this is action, is a good action. You can see what, according to this view, you should do in the example: kill that guy. After all, the suffering he will cause the children is (presumably) much more than the suffering he will incur by being killed. It’s a tradeoff: one human life versus many more. Nothing more, and nothing less.

However, is this how we usually perform moral actions? By just checking whether our actions will maximize the overall level of good? That’s not what we usually associate with acting morally, right? You help your friend because you feel like you want to help him, not because it increases the overall level of utility, do you? Or are we indeed nothing more than walking and talking calculators; adding and subtracting gains and losses in a split second? And if so, how can we be sure about the number we include in our calculation? Imagine that the guy in our example isn’t intending to kill any child. We might assume that he is going to kill children, but are sure about that? He might have just been drunk and confused, but not planning to do any physical harm. So in this case we wouldn’t increase the of overall level of utility by killing him, right? My point is: you don’t know what the consequences of someone’s actions will be, until you have have witnessed them. So how are you going to take this into account?

The competing view is derived from Kant’s moral philosophy, in which the notion of the Categorical Imperative plays a crucial role. According to this Categorical Imperative, you should “act only according to that maxim whereby you can and, at the same time, will that it should become a universal law”. This law has nothing to do with increasing the overall level of good in the world; you should ask yourself what the world would look like if everyone would perform the action that you were considering to do (like killing someone), and you would have to check whether this is a world you could live and whether this is a world you want to live in. If your action doesn’t meet these requirements, it’s an immoral action and you shouldn’t perform it.

So, what if we would apply the Categorical Imperative to our case of the (potential) child murderer? What if everyone of us would kill someone who they expect is going to kill people? Would that be a world we could and want to live in? Well, it might not be a world we want to live in. After all, as we’ve just seen, we don’t know for sure whether the man will indeed kill the children; and if would be a little harsh to kill someone because of our inadequate projections, would it? But, more importantly, acting according to the aforementioned maxim (“kill someone who you expect is going to kill people”) doesn’t seem to b a world we could live in. After all, if you are planning on killing someone, the man with the gun in this example, you should be killed also, right? But who’s going to do that? And shouldn’t that person be killed either? An infinite regress will result. So you see: it is impossible to make this law into a universal law; a law that everyone of us should (always) stick to.

Ethics is not so easy. So, what do you think?

Honesty and Friendship: A Good Combination?

Should you always be honest with your friends?

Should you always be honest with your friends?

I have to make a confession: I am not always completely honest with the people I talk to. And not only with random people I meet at birthday parties; even with my very own friends. But let’s be truly honest: that’s not shocking, is it? Not because I am such a jerk, but because no-one is always completely honest with his friends, right? A more interesting question would be: should you always be honest with your friends? Being honest might hurt your friend’s feelings, so maybe you should rather lie and keep you and your friend happy, than telling him the ‘painful’ truth, right? Or would that prevent you in some way from bonding – with your friend – on a deeper level? A ‘friend’ level? Or maybe the entire dichotomy – between kindness on the one hand and honesty one the other – is just completely wrong: who says that honesty and kindness cannot go hand in hand? After all, isn’t being honest always a kind gesture, even though the content of this gesture might not always be flattering? Let’s take a look at that.

I am sure you know the dilemma: should you tell your friend the not-so-positive truth or should you lie in order not to cause a stir? Of course you should tell him, you might think. After all, what is the value of friendship without honesty? Isn’t that where friends are for, to be honest with each other, no matter what? No matter how tough the message might be, someone should tell you the truth. And this someone should be your friend, right? But then, after having thought through the consequences of being honest, you might start to think differently: ‘I don’t want to be rude to him. Maybe he’ll think that I am not respecting him. Maybe he’ll avoid me in the future. Maybe I will lose him as a friend.’

We human beings are afraid to be honest. We are afraid that people – including our friends – might not want to hear us say negative things about them, even though these negative things might be said with the best intentions. Friendships are valuable to us; so valuable, that we don’t want to risk losing them. But what if you had to choose between (1) your friends being always honest with you (but not necessarily positive) or (2) your friends always being positive (but not necessarily honest with you)? And, more importantly, what category of friends would you consider to be ‘better’ friends? Not the first category, right? Not those superficial and cowardly creatures. No. A true friend should be willing to tell you the truth, no matter what. That is what true friendship consists of.

But that implies that you should also accept the comments of your friend. That you should be grateful for him having the courage to tell you what he thinks. You would have to show him that he is a true friend to you and that he is valued for being honest with you. Don’t criticize your friend’s comments. See them as a sign of true friendship. And, on the other side, interpret flattery for what it really is: a mask to hide feelings of insecurity and neediness.

To end on a personal note: I believe that you should always be able to tell your friends the truth. And if it turns out that they cannot handle the truth, then you probably weren’t true friends in the first place, right? On the other hand, we all want to be happy and sometimes hearing the truth might make us sad. After all, how happy would we be if everyone around us, including our friends, would constantly share their negative – but true – conceptions of us? Nonetheless, we must grow up and dare to face the storm of well-intended criticism. Because you will never be able to improve if you don’t know what you’re doing wrong.

But what do you think?