Paper or plastic? Steak or salmon? Stay or go? Every day, we make thousands of decisions, most minor, some major. But how does your brain make the choice? In this hour, we’ll take a look at the science of decision making. Can your genes influence split second decisions? And how do your emotions influence the way you decide?
Tagged with “economics:topic=behavioral” (6)
Acclaimed economist Robert Shiller challenges the economic wisdom that got us into the current financial mess, and puts forward a bold new vision to transform economics and restore prosperity. The global financial crisis has made it clear that powerful psychological forces are imperilling the wealth of nations today. From blind faith in ever-rising housing prices to plummeting confidence in capital markets, ‘animal spirits’ are driving financial events worldwide.
Shiller reasserts the necessity of an active government role in economic policymaking by recovering the idea of ‘animal spirits’, a term John Maynard Keynes used to describe the gloom and despondence that led to the Great Depression and the changing psychology that accompanied recovery. Managing these animal spirits argues Shiller, requires the steady hand of government - simply allowing markets to work won’t do it.
In rebuilding the case for a more robust, behaviourally informed Keynesianism, Shiller looks at the most pervasive effects of animal spirits in today’s economic life - confidence, fear, bad faith, corruption, and a concern for fairness - showing how Reaganomics, Thatcherism, and the rational expectations revolution failed to account for them.
Richard Thaler of the University of Chicago Graduate School of Business defends the idea of libertarian paternalism—how government might use the insights of behavioral economics to help citizens make better choices. Host Russ Roberts accepts the premise that individuals make imperfect choices but challenges Thaler on the likelihood that government, in practice, will improve matters. Along the way they discuss the design of Sweden’s social security system, organ donations and whether professors at Cornell University are more or less like you and me.
When we’re in love, we do some crazy things. And that’s OK. But when we merge lanes on the highway, sign up for a credit card, or just order a book, we’re as irrational as a teenager who’s got a crush.
Find out why we’re mad in money matters, why we’re suckers for designer aspirin, are willing to believe in the paranormal, and anything but logical in traffic. It’s Skeptical Sunday, but be rational - don’t take our word for it! Guests:
* Tom Vanderbilt - Author of Traffic: Why We Drive the Way We Do (and What it Says About Us) * Dan Ariely - Professor of Behavioral Economics at Duke University, and author of Predictably Irrational: The Hidden Forces that Shape Our Decisions * James Underdown - Executive Director of the Center for Inquiry, Los Angeles * Phil Plait - Author of badastronomy.com * Michael Shermer - Founder of "Skeptic Magazine" and author, most recently, of The Mind of the Market: Compassionate Apes, Competitive Humans, and Other Tales from Evolutionary Economics
Nassim Taleb talks about the challenges of coping with uncertainty, predicting events, and understanding history. This wide-ranging conversation looks at investment, health, history and other areas where data play a key role. Taleb, the author of Fooled By Randomness and The Black Swan, imagines two countries, Mediocristan and Extremistan where the ability to understand the past and predict the future is radically different. In Mediocristan, events are generated by a underlying random process that is normally distributed. These events are often physical and observable and they tend to cluster around the middle. Most people are near the average height and no adult is more than nine feet tall. But in Extremistan, the right-hand tail of events is thick and long and the outlier, the seemingly wildly unlikely event is more common than our experience with Mediocristan would indicate. Bill Gates is more than a little wealthier than the average. The civil war in Lebabon or the events of 9/11 were more worse than just a typical bad day in the Beirut or New York City. Taleb’s contention is that we often bring our intuition from Mediocristan for the events of Extremistan, leading us to error. The result is a tendency to be blind-sided by the unexpected.
Clay Shirky, author of Here Comes Everybody: The Power of Organizing Without Organizations, talks about the economics of organizations with EconTalk host Russ Roberts. The conversation centers on Shirky’s book. Topics include Coase on the theory of the firm, the power of sharing information on the internet, the economics of altruism, and the creation of Wikipedia. EconTalk, 10.20.08