Thursday, April 27, 2006

Important to Correct Errors Once You Become Aware of Them

I commented on the views of Professor Colin Camerer on 24 April and return to them because, having contacted him, he offers a not altogether satisfactory explanation, making allowances for an extremely busy scholar taking any time to deal with correspondence from unknown persons on what probably appears to be a trivial issue besides the main thrust of his work on behavioural economics. However, it is Professor Camerer who brings Adam Smith into his argument, though his argument does not need Smith’s presence, particularly as Smith said exactly the opposite to what he attributes to him. And as such he could turn Smith onto the critics of behavioural economics.

What is true, is that modern economists hold to a view of ‘economic man’ as characterised by Professor Camerer and that this perspective is convenient for mathematical manipulation and mostly is ‘wishful thinking’. People are not wooden-chess pieces who move about under the direction of equations. Smith asserted that humans adhere to motions of their own and not of those who assume they direct them. Smith was a behaviourist, and on that much we agree without reservation. 'Moral Sentiments' and 'Wealth of Nations' are closely argued studies of how people behave in practice. They have the same perspective and do not contradict each other.

According to Carolyn Meinel, who interviewed Professor Colin F. Camerer for her article in Science & Theology: 24 April: “Smith’s book The Theory of Moral Sentiments, published in 1759, was “bursting with insights about human psychology, many of which presage current developments in behavioral economics.” Again I agree with Camerer’s statement. So what is the problem?

It is the next sentence in which he says: “However, economists ended up taking their cues from Smith’s later views.”

And that is the problem. Smith’s so-called ‘later views’ were no different than his ‘earlier views’. The so-called ‘later views’ of Smith were the uninformed views of others in the 19th century who started down the road that led to the cul-de-sac of modelling human nature into a sub-branch of applied maths, where no human being exist. Smith, an accomplished mathematics student, never went down that road and never had any notions of ‘economic man’.

Now this is not just the maverick view of myself. It is shared by others who have taken the trouble to read his books, something I am not sure that many members of the economics profession have managed to do. It is not clear that Professor Colin Camerer has read ‘Wealth of Nations’ closely enough to be so definite in the views attributed to him by Carolyn Meinel.

One of the recent contributors to this discussion is Professor Samuel Fleischacker, University of Illinois, Chicago in his ‘On Adam Smith’s Wealthy of nations: a philosophical companion’, 2004. He discusses the explicit issues raised by Colin Camerer and the paragraph is worth including here as a contribution to the refutation of Camerer’s error (or that of his co-authors , Ashraf and Loewenstein) which they repeat, unnecessarily, in pursuit of their correct case for behavioural economics:

So we have several arguments even in Hutcheson, who has never been accused of favouring self-love over benevolence, for grating self-love a central role in the economic realm. This should begin to undermine any presumption that Smith gave self-interest a new or controversial prominence in WN. That presumption should be further weakened when we note that Smith’s readers did not attend to the role of self-interest in WN until long after it was published. As far as I can determine, none of WN’s first readers, whether in England and Scotland or in Germany, France, of the United States, mentioned this feature of the book, either to praise or condemn it, nor did they see any sharp break between TMS and WN. TMS was well known, throughout Europe and in the United States, and it was Smith’s reputation for the earlier book that garnered initial attention for WN. One would have expected a gap between the two books, if gap there is, to appear particularly sharply to Smith’s readership at this point in his reception. Yet is was only much later, in the nineteenth century, when most readers knew WN well but were at best dimly aware of TMS, that people began to suggest that the two books have different pictures of human nature. This is good circumstantial reason to suspect that the supposed gap between TMS and WN lies solely in the eyes of those who misinterpret one or both of the books. Turning to the text of WN confirms that suspicion.’

It seems to me that if Colin Camerer, Ashraf and Loewenstein were to read why Smith was not responsible for ‘economic man’ and what has been done with it, namely that modern economists do not have the venerable authority for Adam Smith for what they claim, then the support for research into behavioural economics based on human nature would be much stronger

[Read: S. Fleischacker, 2004. ‘On Adam Smith’s Wealthy of Nations: a philosophical companion’, Princeton University Press, NJ, pp 86-7].

Also: Carolyn Meinel’s reports in Science & Theology at: and]


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