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A quick rule of thumb is that when someone seems to be acting like a jerk, an economist will defend the behavior as being the essence of morality, but when someone seems to be doing something nice, an economist will raise the bar and argue that he’s not being nice at all.

Like Pee Wee Herman, act like a jerk
And get on the dance floor let your body work

I wanted to follow up on a remark from a few years ago about the two modes of pop-economics reasoning:

You take some fact (or stylized fact) about the world, and then you either (1) use people-are-rational-and-who-are-we-to-judge-others reasoning to explain why some weird-looking behavior is in fact rational, or (2) use technocratic reasoning to argue that some seemingly reasonable behavior is, in fact, inefficient.

The context, as reported by Felix Salmon, was a Chicago restaurant whose owner, Grant Achatz, was selling tickets “at a fixed price and are then free to be resold at an enormous markup on the secondary market.” Economists Justin Wolfers and Betsey Stevenson objected. They wanted Achatz to increase his prices. By keeping prices low, he was, apparently, violating the principles of democracy: “‘It’s democratic in theory, but not in practice,’ said Wolfers . . . Bloomberg’s Mark Whitehouse concludes that Next should ‘consider selling tickets to the highest bidder and giving the extra money to charity.'”

I summarized as follows:

In this case, Wolfers and Whitehouse are going through some contortions to argue (2). In a different mood, however, they might go for (1). I don’t fully understand the rules for when people go with argument 1 and when they go with 2, but a quick rule of thumb is that when someone seems to be acting like a jerk, an economist will defend the behavior as being the essence of morality, but when someone seems to be doing something nice, an economist will raise the bar and argue that he’s not being nice at all.

I’m guessing that if Grant Achatz were to implement the very same pricing policy but talk about how he’s doing it solely out of greed, that a bunch of economists would show up and explain how this was actually the most moral and democratic option.

In comments, Alex wrote:

(1) and (2) are typically distinguished in economics textbooks as examples of positive and normative reasoning, respectively. The former aims at describing the observed behavior in terms of a specific model (e.g. rationality), seemingly without any attempt at subjective judgement. The latter takes the former as given and applies a subjective social welfare function to the outcomes in order to judge, whether the result could be improved upon with, say, different institutional arrangement or a policy intervention.

To which I replied:

Yup, and the usual rule seems to be to use positive reasoning when someone seems to be acting like a jerk, and normative reasoning when someone seems to be doing something nice. This seems odd to me. Why assume that, just because someone is acting like a jerk, that he is acting so efficiently that his decisions can’t be improved, only understood? And why assume that, just because someone seems to be doing something nice, that “unintended consequences” etc. ensure he’s not doing a good job of it. To me, this is contrarianism run wild. I’m not saying that Wolfers is a knee-jerk contrarian; rather I’m guessing that he’s following default behaviors without thinking much about it.

This is an awkward topic to write about. I’m not saying I think economists are mean people; they just seem to have a default mode of thought which is a little perverse.

In the traditional view of Freudian psychiatrists, which no behavior can be taken at face value, and it takes a Freudian analyst to decode the true meaning. Similarly, in the world of pop economics, or neoclassical economics, any behavior that might seem good, or generous (for example, not maxing out your prices at a popular restaurant) is seen to be damaging of the public good—“unintended consequences” and all that—, while any behavior that might seem mean, or selfish, is actually for the greater good.

Let’s unpack this in five directions, from the perspective of the philosophy of science, the sociology of scientific professions, politics, the logic of rhetoric, and the logic of statistics.

From the standpoint of the philosophy of science, pop economics or neoclassical economics is, like Freudian theory, unfalsifiable. Any behavior can be explained as rational (motivating economists’ mode 1 above) or as being open to improvement (motivating economists’ mode 2 of reasoning). Economists can play two roles: (1) to reassure people that the current practices are just fine and to use economic theory to explain the hidden benefits arising from seemingly irrational or unkind decisions; or (2) to improve people’s lives through rational and cold but effective reasoning (the famous “thinking like an economist”). For flexible Freudians, just about any behavior can be explained by just about any childhood trauma; and for modern economists, just about any behavior can be interpreted as a rational adaptation—or not. In either case, specific applications of the method can be falsified—after all, Freudians and neoclassical economists alike are free to make empirically testable predictions—but the larger edifice is unfalsifiable, as any erroneous prediction can simply be explained as an inappropriate application of the theory.

From a sociological perspective, the flexibility of pop-economics reasoning, like the flexibility of Freudian theory, can be seen as a plus, in that it implies a need for trained specialists, priests who can know which childhood trauma to use as an explanation, or who can decide whether to use economics’s explanation 1 or 2. Again, recall economists’ claims that they think in a different, more piercing, way than other scholars, an attitude that is reminiscent of old-school Freudians’ claim to look squarely at the cold truths of human nature that others can’t handle.

The political angle is more challenging. Neoclassical economics is sometimes labeled as conservative, in that explanation 1 (the everything-is-really-ok story) can be used to justify existing social and economic structures; on the other hand, such arguments can also be used to justify existing structures with support on the left. And, for that matter, economist Justin Wolfers, quoted above, is I believe a political liberal in the U.S. context. So it’s hard for me to put this discussion on the left or the right; maybe best just to say that pop-econ reasoning is flexible enough to go in either political direction, or even both at once.

When it comes to analyzing the logic of economic reasoning, I keep thinking about Albert Hirschman’s book, The Rhetoric of Reaction. I feel that the ability to bounce back and forth between arguments 1 and 2 is part of what gives pop economics, or microeconomics more generally, some of its liveliness and power. If you only apply argument 1—explaining away all of human behavior, however ridiculous, as rational and desirable, then you’re kinda talking yourself out of a job: as an economist, you become a mere explainer, not a problem solver. On the other hand, if you only apply argument 2—studying how to approach optimal behavior in situation after situation—then you become a mere technician. By having the flexibility of which argument to use in any given setting, you can be unpredictable. Unpredictability is a source of power and can also make you more interesting.

Finally, I can give a statistical rationale for the rule of thumb given in the title of this post. It’s Bayesian reasoning; that is, partial pooling. If you look at the population distribution of all the things that people do, some of these actions have positive effects, some have negative effects, and most effects are small. So if you receive a noisy signal that someone did something positive, the appropriate response is to partially pool toward zero and to think of reasons why this apparently good deed was, on net, not so wonderful at all. Conversely, when you hear about something that sounds bad, you can partially pool toward zero from the other direction.

Just look at the crowd. Say, “I meant to do that.”


  1. Re: Like Pee Wee Herman, act like a jerk
    And get on the dance floor let your body work

    Like Pee Wee Herman, don’t act like a jerk

    Cuz for a Pee-weenie Roast we be prolific in the DMV

  2. Matt says:

    This is both a little true and a little unfair. It’s unfair because(1) and (2) are, like Alex said, entirely separate and not mutually exclusive. You can and plenty of economists often do, argue that a behavior is both individually rational and bad. That’s exactly what “market failures” are. Arguably, a majority of econ policy literature is concerned with this particular scenario.

    But, I think it’s also kinda true because you also often see certain economists using free-market outcomes as their metric for what’s acceptable. For example statements like “Women aren’t underrepresented in movies, that’s just the free market at work” combine (1) and (2) arguing both that the behavior is rational and that it is morally acceptable because it is rational.

    Final aside: econ rational is not normal people rational. People can make utterly insane decisions which, if they do so in a consistent way, are economically rational.

  3. Andrew, I find both this post and the previous one extremely confusing. You seem to have a basic misunderstanding of what economists mean by positive and normative. When Wolfers and Whitehouse argue that a fixed price below the market-clearing price creates excess demand for the product and, if secondary markets exist, increases the opportunity cost of dining, they are acting as economists, making positive statements about cause and effect. When they or the Bloomberg writer or anyone says, “The restaurant owner should let the price fluctuate and donate the funds to charity,” they are acting as human beings, making normative, ethical claims about what people should and shouldn’t do. Economics is about tracing out the implications of choice, institutions, social interaction, etc. and takes no position about what is good or bad. Welfare economics does (often poorly) make statements about overall efficiency, social welfare, etc. but takes no position on whether people “should” want to maximize efficiency or social welfare. Such normative questions are beyond the scope of economics, conventionally understood.

    Economists are no different in this regard from engineers, biologists, or statisticians. If a statistician says, “x percent of children living in homes with a swimming pool drown each year,” this does not imply a particular position on whether swimming pools should be banned although, as a person and citizen, the statistician may have a strong opinion on this.

    • James Anthony (pseudonym) says:

      “Economists are no different in this regard from engineers, biologists, or statisticians. If a statistician says, “x percent of children living in homes with a swimming pool drown each year,” this does not imply a particular position on whether swimming pools should be banned although, as a person and citizen, the statistician may have a strong opinion on this.”

      I know next to nothing about Economics, but this is the impression I have as well. I don’t think it’s fair to conflate an authority’s *professional* outlook over the efficiency (or whatever) of the case in question, with their *genuine* inner beliefs. As Andrew said, if Economists simply went with (1) then their job would be pointless – but not because Economists are honour-bound to simply “be jerks” but because they’re scientists and want to go deeper than simply hand waving.

      I don’t know if that’s what’s happening here – I didn’t read the article in quoted article, it could be a load of rubbish for all I know – but the broad implication that Economists are jerks because they identify and analyse problems in economics (however detached from morality) is, again, unfair in my opinion. It would be like asking statisticians to just accept everything is random so who cares.

      • Andrew says:


        You write, “the broad implication that Economists are jerks because they identify and analyse problems in economics (however detached from morality) is, again, unfair in my opinion.”

        Just to be clear: in my above post, I specifically wrote that “I’m not saying I think economists are mean people; they just seem to have a default mode of thought which is a little perverse.”

        My concern is that economists seem to have a habit of (1) providing justification for jerkish behavior, and (2) automatically questioning nice behavior. It often seems to me that if you were to take the exact same behavior, in one case framing it as anti-social and in the other case framing it as pro-social, that economists by default would cheer in the former case and boo in the latter.

        This bugs me. But I don’t think it implies that economists are jerks. Justifying jerkish behavior is not the same as “being a jerk.”

        • James Anthony (pseudonym) says:

          Yeah, I agree that I was putting words in your mouth there, so sorry about that. I still think you’re being a tad harsh but, like I said, I don’t know anything about Economics so I can’t really argue.

        • Andrew, if you’re just offering some casual, sociological empiricism, that’s fine. But I think the explanation is very simple. Economists tend to be contrarians. That’s because economics teaches one to look for hidden patterns, unrealized motivations, and surprising mechanisms — for alternative explanations to commonly held beliefs. The basic idea that an “unplanned” market system can actually generate order and harmony — as Bastiat put it, that “Paris gets fed” — is for most people completely counterintuitive. The claim popularized by Adam Smith that self-interested behavior generates beneficial social outcomes strikes most people as bizarre. Hence when an economist sees “irrational” behavior, she is likely to ask, “is there something else going on here?” What appears to be jerkish behavior may actually serve a social purpose. What looks like altruism may actually be masking self-interested behavior. Hence economists have a reputation for justifying bad behavior and being skeptical of good behavior. It’s not a preference or attitude but a well-honed talent for probing beneath the surface.

          • Martha (Smith) says:

            “economics teaches one to look for hidden patterns, unrealized motivations, and surprising mechanisms — for alternative explanations to commonly held beliefs.”

            This does make economists sound like Freudians.

          • David P says:

            I’ve read through all the comments, and I think this one (Peter Klein, 5:54 pm) is basically on target. Economists do have a disciplinary bias toward explaining that “good” is not necessarily good and “bad” is not necessarily bad, which leads to the asymmetry Andrew has observed. Some (many) economists forget that over-focus on this aspect can lead to a twisted perspective on the world.

          • Dave says:

            I agree with Peter. I’ll also expand on his contrarian point by noting that “pop economics” by definition tends to be what we see from economists who are publishing books that seek a large mainstream audience or writing regular columns/blog posts intended for a broad audience and almost constantly in need of new material. In other words, the specific literature discussed here by Andrew is almost guaranteed to show a heightened view of economists’ contrarian tendencies for much the same reason that “man bites dog” stories receive more media coverage: it’s a viewpoint that piques interest and generates more book sales / page views / fame.

            Expanding a bit on the underlying rationale of economists, there also some almost universally shared basic views in the field that help explain this sort of writing and, IMO, generally make sense. For one, there’s the reality that any scarce resource will be rationed across demand by some mechanism: if it’s not rationed by price, then it’s rationed by some other method. So economists, as a group, tend to push back against the idea that a low price should be taken to mean that rationing isn’t occurring: it still is, it’s just according to some method other than price. The other point is that economists tend to focus on looking at second and third order effects as well as just the immediately seen impact of a given policy or action: opportunity costs and long-term impact. A classic example is Frederic Bastiat’s parable of the broken window, with its message of the need to think about “that which is unseen as well as that which is seen.”

            Building on this framework, economists – no matter where they lie on the political spectrum – have a pretty broad consensus in favor of taking a transparent approach of using the price system as at least the “first cut” to allocate resources. If there’s a desire after that first cut is to provide aid to some particular group of people, then go about it transparently by using tax dollars to provide direct subsidies. The costs are transparent, and it minimizes the unintended or unforeseen consequences of complicated kludges such as not allowing signals from the price mechanism to flow through the supply-side of the market for a good or service. Rent control is a great example. There’s a near consensus among economists favoring straightforward housing subsidies over rent control, because rent control has a host of impacts beyond just the initial thought of “it will keep rents lower for people right now.” In both theory and practice, it tends to limit the incentive to build new housing and also tends to favor long-time residents (who may not necessarily be low-income) over newer residents. (The latter occurs in great part because it readily becomes apparent that various exceptions or other kludges are needed to counteract the negative impacts on housing supply from rent control.)

            What I’ve laid out above is a framework that’s best applied to public policy and not private decisions, so I have some sympathy for Andrew’s argument that it doesn’t apply very well to Achatz’s decision as a private business owner. If he wants to allocate tickets to his restaurant based on who’s first in line (or however exactly he does it), and then allow some percentage of those buyers to reap a windfall by selling those tickets in the secondary market, then that’s his business. It’s just the latest example of the age old phenomenon of ticket scalping. We have in fact seen over the years that high-demand bands with a stated desire to keep prices reasonable for fans need to use a variety of mechanisms (e.g., limits on the number of tickets purchased, stopping purchases by bots used by professional resellers, preferred sales to fan club members) to make sure that their pricing doesn’t result, in an extreme case, of just transferring to professional resellers all of the difference between face ticket price and market-clearing price.

          • Dave says:

            One other thought on Peter’s point.

            We also see a fair amount of behavioral economics these days in writing by “pop economists”, or others writing “pop economics”, and the thrust of that writing is often contrarianism toward standard economic theory. For example, find methods of decision-making commonly used by people either in the real world or psychology lab experiments, and then explain how what’s observed (e.g., the endowment effect) doesn’t fit with the standard economic models of how people make decisions. At the extreme, one might see popular commentators listing such examples and then leaping to the conclusion that standard economic theory is completely wrong about how people make decisions (I’m pretty sure that I’ve never seen a behavioral economist make that strong of a claim. They phrase their findings more in terms of exceptions or limitations.)

            There’s not, however, any real market or publicity for an economist who analyzes statistics and makes the point that the market for gasoline (or airfare, or hotels, or apples, etc., etc., etc.) directionally follows supply and demand just like we’d expect.

    • Andrew says:


      See the title of the above post. What seems perverse to me is that, when someone does something that seems like they’re acting like a jerk, economists will rush to justify the behavior; but when someone does something that seems kinda nice, economists will rush to explain why this behavior is not nice at all.

      In the example discussed above, the restaurant owner seems to be trying to do something nice, so of course the economists swoop in to explain why this behavior is not nice at all. But I’m guessing if it were the same or very similar behavior, but it was considered as mean, the economists would be telling us how surprisingly rational it is.

      • Please see the comment above on James’s post (should have placed it here, sorry).

      • Andrew, sounds like the statisticians can also fall into rush to justify behavior. Probably true of very field.

        • Andrew says:


          Yes, for sure. In the above post, I’ve noted a peculiarity I’ve seen in many arguments by economists.

          Statisticians have their own issues. One thing that annoys me about statisticians is the way they will focus on the error term rather than the deterministic part of the model. I think the deterministic part is almost always the most important, but statisticians (including, often, myself) obsess on the probability distribution of the error term.

          • Andrew,

            I see. To me, how one views ‘error term’ or ‘deterministic’ part of the model, depends on how you are inclined to visualize & quality of diagnostic talent [and when] cultivated by whatever means. Maybe I recall something like that from listening to Feyerabend. Otherwise I don’t know whether I’m right or not. But it sounds good at least. LOL

  4. I agree unpredictability is an asset. I like the term Surprising too. Because simply being unpredictable may not generate that much interest.

  5. Jonathan (another one) says:

    The basic justification of “jerkish behavior” is there in the beginning: Adam Smith
    Every individual… neither intends to promote the public interest, nor knows how much he is promoting it… he intends only his own security; and by directing that industry in such a manner as its produce may be of the greatest value, he intends only his own gain, and he is in this, as in many other cases, led by an invisible hand to promote an end which was no part of his intention.
    [The rich] consume little more than the poor, and in spite of their natural selfishness and rapacity…they divide with the poor the produce of all their improvements. They are led by an invisible hand to make nearly the same distribution of the necessaries of life, which would have been made, had the earth been divided into equal portions among all its inhabitants, and thus without intending it, without knowing it, advance the interest of the society, and afford means to the multiplication of the species.

    But what about the other side of the pop-economics equation? There it is somewhat more difficult. I would say that depending on people to behave jerkishly is the more sensible path, since one can always cloak malevolent behavior is high principle. Follow the incentives:
    Thus, one more quote from Smith:
    Public services are never better performed than when their reward comes in consequence of their being performed, and is proportioned to the diligence employed in performing them.

  6. Jag Bhalla says:

    Very useful analysis. Given the great (and growing) influence economist-style reasoning has… we must diagnose and understand its weaknesses

    This short post expands on Andrew’s fruitful Freudian analogy
    “Another Freud-like habit of economists is to project their love of incentive optimization onto others.”
    +…How “all-else-equal” misleads
    +…Seduced into “rigor distortis”

  7. Ken Carlson says:

    Maybe publication bias has something to do with this. Only The Onion runs headlines like “Guy buys gas from cheapest station: Economist says that good idea”

    • Mark Paskowitz says:

      Exactly my thought. If “common sense” says someone is acting like a jerk, and the economist agrees, there’s really nothing to contribute. Similarly if someone is being nice. It’s not that economists are reflexively contrarian, it’s just that their interesting contribution comes when economic reasoning contradicts common sense.

    • Andrew [not Gelman] says:

      Yes, and I can only assume that economists have written a great deal about the incentives and disincentives around taking the contrarian view (potential for fame vs sounding like an idiot).

  8. Ram says:

    It’s important to distinguish between individual rationality and institutional efficiency. In a single economic model, a given institutional configuration can be demonstrated to be inefficient, while a given pattern of behavior that emerges under the configuration can be demonstrated to be rational, even if it is superficially pathological. Indeed, this is just what you would expect–the inefficiency of the configuration arises from the perverse incentives it engenders. In other cases, you have an efficient configuration, but still have behavior that is superficially pathological. This is just a case where you can’t judge the overall appropriateness of the system by your common sense evaluation of the individual. It is possible to construct both sorts of models, and both can be illuminating in different ways, particularly by showing that various inferences people are inclined to make without thinking don’t necessarily go through. Whether they are of empirical relevance of course requires more than writing down a model in which such and such happens.

    However I agree with your point about the discourse, which is that it’s common to hear economists emphasize that apparently bad behavior may be part of a larger, efficient structure, and that apparently good behavior may be part of a larger, inefficient structure. The value of this is educational, I think, in that it shakes people of the certainty of common sense on these points. But of course you have to decide between models telling you competing things, and the only way to do that is to appeal to data. It might be better if economists emphasized that things MIGHT not be as good or bad as they appear, rather than insisting that they actually are not. I think some economists are better about this than others.

  9. Jonathan says:

    I think about this in terms of directionality in a manifold space. That is, economists tend to define an idealized location in space which they then orient technically towards. Only an economist would argue that the loss of hundreds of thousands of US car industry jobs is ‘good’ because the economist can pick a location in space in which the overall ‘good’ is measured to fit what the economist wants. If you imagine a space – a simple square suffices – then they pick a far corner and aim toward that, so the destruction of lives – particularly in places in the middle of the country where they rarely go – occurs somewhere in the square, with all the potential threads, what you’d think of perhaps more as probability lines, resolving before you reach that far corner where it’s all hunky-dory. This allows them to play games with ‘in the long run, we’re all dead’ because they set the dimension of ‘end of run’ and, if that doesn’t work, then they expand the parameters of ‘we’ so they look at a population in which sufficient ‘good’ occurs. Let’s be blunt, the best thing for ‘economics’ has been the success of Asia because that allows them to set a population n which includes some billions of people whose lives are materially enriched by processes which materially dis-enrich a set of Americans who can then be considered as an economic form of cannon fodder whose descendants might one day rise from the muck they’ve been cast into.

    One problem with economics is that it rarely speaks about these spatial choices – though to be fair, disciplines in general, including statistics and compsci itself are still very early in the conceptualization of programming and thus the running of processes – which can be probabilitistic, stochastic, etc. – through spaces. (In that regard, I recommend thinking about ‘new’ tools like Swift Playgrounds, which bring a spatial sense to programming. The actual gist behind the Playground ‘space’ is that you can literally visualize programming as spatial endeavor, and it’s a clear step toward manipulation of spatial elements beyond the concept of API so the mathematical objects ‘fit’ toward a spatially defined result.) But economics hides the pea, like in cups and balls: you hear an argument that this is correct without the actual assumptions about why this is correct and the details of how that might happen and what dependencies are assumed. I think of a lot of economics as random shots in the dark in which the model prepared for that paper – which is nearly always some ad hoc model – is taken as having an effect, is taken as measuring some dependencies, without ever discussing the fragility of the model. This is of course a flaw in regression generally, that it compresses multi-dimensional space into some flat x-y-ish system as though the dimensions of the points represented a) are stable at the remove and b) represent a relationship apart from noise which not only isn’t fragile but which somehow generates the same or very similar results even if it is relatively fragile. I’m using fragility as a proxy for noise because I think it better captures the idea that correlations in regression are often, well, fragile, either because they don’t include material elements or the snapshots of the included (or excluded) elements aren’t stable or representative or because they’re mapping something which, because of the raft of uncertainties, just kind of sort of happens to look a bit like this if you tilt your head and squint.

    i distinguish the economics variety of directional difficulties from the statistical variety as follows: statistics is hampered by its reliance on demonstrating rejection (or acceptance) of a specified (one hopes) result, which induces naturally concepts of probable outcomes and the threads that may or may not achieve those outcomes. The difference is sort of that economics makes the square a certain size to accommodate the desired corner endpoint while statistics tends to find the path through the square to the endpoint. The former generates a degree of dishonesty about why you pick that sized square. The latter generates a degree of dishonesty about the materiality or even relevance of the paths through whatever sized square. The terminology you so often use about statistics – garden of forking paths, file drawer, p-hacking – are all about bad or even outright fraudulent identification of links from one spot in space to the spot at the far corner (where you assume all the threads come together, if only for that moment, if only at that level).

    Economics is generally a higher level fraud, one which pretends to an objectivity of identifying the far point. It’s always amazed me how similar economics is across time – and I don’t mean that as a compliment: the same arguments made to extinguish life in the USSR or in Red China are made to justify the loss of American jobs and wealth. It’s all for the good at the far corner of the square. Old industries, old investments in old ways of doing things are creatively destroyed and that destruction generates greater prosperity. Though that prosperity is at a remove from where the destruction happens, it is presumed all reach the far corner in some fashion because that’s where we measure ‘good’. You don’t need to use the ‘creative destruction’ term: it can just be part of the process by which comparative advantage operates. The concept behind forced collectivization was that it was necessary to move the peasants from their ancient, serf-like connection to the land – see And Quiet Flows the Don when Grigori opens his shirt to let his blood flow into the ground as he dies – not to punish them but to free them over time. As much as we revile the Cultural Revolution, we have to admit that in some ways it worked – and I know survivors – because it did break the hold of ancient Chinese culture in ways that let the modern Chinese revolution occur.

    When you read the NYT, you essentially read versions of ‘you need to break eggs to make an omelet’. You can make arguments in any direction at all. Take a simple one: immigration. Per today’s version – literally – the availability of the US as a destination is essential. There are billions in the world and some tiny percentage comes to the US. Is the optimal system – speaking in some modeling sense – one that rewards luck and who you’re related to? I read today that the availability of the US is essential for Muslims, which seems to argue that the nearly 2 billion Muslims not living in the US are in dire straits, which seems entirely racist to me. When people come in from Mexico, we focus on the actual people but not on the policies enacted in Mexico – officially and unofficially – in which large numbers of people have been forced (in varying degrees) out of rural areas, some flooding cities, others coming here, so do our relatively ‘open-ish’ borders enabled policies that have crushed millions of lives, fed violence, etc.? I call this the Guy Crouchback Effect, after Evelyn Waugh’s stand-in hero who tries to do good in the name of all the right things. In those novels, they’re trying to set up a resistance movement in Yugoslavia during WWII – noble effort, of course – and the result is that lots of good people die who’d rather have lived except for the efforts of well-motivated do-gooders. It’s the opposite of what I call the Anielewicz Effect, which is when Mordecai Anielewicz (and others) got the Jews to fight back in the Warsaw Ghetto because they were all going to be killed anyway. I believe one of the last entries in his diary was At least I got them to fight. Much of economics, much of politics is the blinders of the Guy Crouchback Effect enabling various forms of the law of unforeseen consequences – even though they were forseeable if you took off the blinders. No matter what, economists find a reason to say that ‘you’ need to lose because others winning is better when we reach that far corner of the square I say is the important square.

    Sorry to pontificate here, but the argument that economists are unhinged from morality is more that economics is by its formulations unhinged from morality and that thus economists turn from side to side, direction to direction, depending on what that person happens to think is best for others. Economics is inherently directionless. Statistics is inherently directional. You do a very good job of describing its delusions.

    • J R says:

      Genuinely amazing rant

    • Dave says:

      “Only an economist would argue that the loss of hundreds of thousands of US car industry jobs is ‘good’ because the economist can pick a location in space in which the overall ‘good’ is measured to fit what the economist wants.”

      I disagree, because there’s a clear counter to your argument: why should you, or me, or anyone else be obligated to pay more for a car (or have to purchase a lower quality car) just so that a certain subset of people can remain employed in the auto industry?

      And, to your phrase about “picking a point in space”, why should the distribution of jobs in industries at any given point in time be taken as some static point that should show little if any change? Because the clear rejoinder to your worldview is that, if we’ve had that sort of thinking in the 19th century and had implemented policies in the U.S. to make that the case, then we’d still have the majority of the workforce employed in low-productivity agriculture with an undeniably far lower standard of living than people have today.

  10. Charlie says:

    Is this armchair theorizing falsifiable?

    • Andrew says:


      This theorizing can be falsifiable. In their general forms, many economic theories are tautological, but the theories can be made more specific and can lead to specific, falsifiable predictions.

  11. jd says:

    Glad someone’s sayin’ it. I’ve really come to eyeroll at all the TED and Hidden Brain Churchgoers who are always on the look out for some heuristic bias and trying to econosplain to me how the world works.

    • Anonymous says:

      “…for some heuristic bias”

      Perhaps that will be another bias soon to be discovered, investigated, and talked about.

      The “heuristic bias” (also known as the “bias bias”):

      When you quickly try to explain the behavior and/or reasoning by others through means of a certain specific “bias”, hereby not really engaging anymore in rational, objective, and critical discourse and/or reasoning about said behavior and/or reasoning by others.

  12. david says:

    Andrew’s post is difficult to follow. A (classical) Chicago economist confronted with the Grant behavior would ask why isn’t it in Grant’s interest to raise price? In fact Becker has a paper on why don’t restaurants raise price when there is excess demand.

    • Dave says:

      I assume that you’re referring to this paper from 1991 – . He makes the point that for something like an “in-demand” restaurant, this puzzle is more understandable if the quantity demanded by a typical customer is positively related to the quantity demanded by other consumers. In effect, the difficulty of getting a table can be taken as a signal that a table at the restaurant is very much worth getting. He makes the point that it fits with helping understand why consumer demand is often fickle (or faddish) and why it’s easier for an established restaurant to go from being “in” to “out” than from being “out” to “in”.

  13. Ian says:

    Economists might be performing a useful public service of acting as a damping function on populist mob morality.

  14. I offer a different view. The reason this happens so much is that Economists either can’t predict stuff, or for the things they can predict there are special interests they have to fight who are exploiting the loopholes, and having been shunted aside from any actual policy relevance by those special interests, they spend their time doing “gotchas” on stuff most people ultimately find innocuous so that they aren’t subject to constant ridicule or push-back.

    As evidence for this let me provide the following facts:

    1) Nearly universally economists agree that rent control is a terrible idea that causes serious societal harm, and yet, we still have tons of it all around.

    2) Milton Friedman’s “Helicopter money” concept is pretty straightforward as a way to deal with contraction in money supply, and yet we still do trillions in quantitative easing in which one kind of financial asset is exchanged for another, without ever becoming money that can actually be spent by individuals (but bringing a lot of financial power to elites at financial institutions).

    3) The Universal Basic Income has been argued since at least the mid 1900’s as the most efficient form of welfare because it lets each individual spend money on whatever goods are actually useful for their individual situation, and yet we still have project housing, and medicaid, and SNAP/food aid, and soforth.

    4) sugar tariffs and HFCS

    5) Ethanol in gasoline

    6) Renting public lands for cattle ranching at 1/10th the market rate

    7) Massive explosion of education expenses concurrently with dramatic increases in student loans and tightening of the requirements for bankruptcy, thereby turning universities into some of the most incredibly successful hedge funds ever.


    some of the specifics of what Deaton discusses here for example are perhaps a little controversial, but the big-picture isn’t particularly controversial:

    and yet, it’s not like economists do anything about it in terms of influencing policy. They might like to, but in general I’d say economists have been way way less effective at influencing policy than say doctors, hospital administrators, investment bankers or middle managers at universities… by far.

    So, if all the real game-changing contributions your industry could make to society are shut down by powerful special interests… you go looking to seem relevant in areas where no-one will fight with you, such as whether or not the price of dinner at a fancy restaurant is or isn’t an optimal allocation of resources, or what is up with abortion in populations of poor black people who rarely read academic journals and don’t even know to come with pitchforks and pillory you…

    Economics was quickly emasculated as soon as people realized that they had a tendency to look under the rug and find where all the rich cockroaches tend to hang out lighting cigars with $100 bills.

    • Jackson M says:

      Economists have been running the Fed for the better part of the last century, which is sorta important. I take your point about the particular issues you pointed out, but you can read Drezner if you want a taste of the outsize influence economists wield in policy, the particulars you give seem a rather weak rule in terms of which academics have power/influence in government policy.

      • BANKERS have been running the Fed ;-)

        The particulars I give all have extremely strong effects on broad welfare of everyday people. All are associated with lower and middle-class ills, such as diet and health problems, artificially high transportation costs, transfers of wealth from poorer people to richer people, poverty-traps for welfare recipients, and deterioration of the housing market so that we have great depression style tent encampments in LA county and around Seattle for example. Deaton argues all of this kind of stuff led to the opioid crisis…

        To the extent that economists can be *used* by rich special interests to promote policies that *benefit* them, of course, they have outstanding “policy influence” in those areas, but of course it seems more like claiming a sock puppet has influence, when it’s the hand inside that is doing the influencing.

        • jack pq says:

          No. Ben Bernanke and Janet Yellen, to give two random recent examples, are academics. Some Fed leaders are bankers, but many are academics, and even more so in the rank and file.

          Your trolling is tiring. Most economists just want to do good research and find counterintuitive results. Some may work for specific industries or lobbies, both on the left and the right, but they are fairly rare. (If it’s so common, where’s my lucrative special interest consulting contract? :-) ) Sadly, people in power typically use economic research only when it suits them–cherry-picking. So we see that in some cases, policy adopts economic research recommendations, but in other cases it ignores research entirely. But isn’t it better to inform *some* policy decisions than no policy decisions at all?

          • Note that I am not blaming economists here. I honestly agree with you that most economists want to affect policy in helpful ways. I just don’t think they’ve been particularly helpful or effective as a matter of empirical fact.

            It’s not for lack of desire, it’s because special interests oppose anything that hurts their interests and much economic theory goes counter to existing policies that benefit special interests. Even academics like Yellen work within a system built by special interests in banking over decades that constrains their actions and limits the applicability of theory. There was a lot of quantitative easing helping big banks and no helicopter drops after all.

    • Jag Bhalla says:

      What matters is how the theories that economists promote as “laws” are used by others.

      The CEO-MBA class cherry-picks the profitable parts of free market theory, while undermining market doctrines
      2 short posts on this
      Unfaithful Cardinals of Capitalism
      and The Davos Dodge… outsourcing ethics to markets

  15. Ben says:

    Talk about muddled thinking – this was the most poorly written argument I’ve seen.

    • Andrew says:


      If you’d like, start here, as I offer more examples in this earlier post.

      What happens when blogging is often we discuss the same topic over and over from slightly different perspectives and with slightly different examples, and I don’t always put in the effort to explain all the ideas from scratch each time. So if you’re not a regular reader, you can read a post like this and it can be like entering a conversation in the middle. It can be disorienting. At some point I would like to write a self-contained article on the topic of the two modes of economics reasoning, but for now I suggest you start with that post from a few years ago.

  16. a reader says:

    As statisticians who have had to deal with blowback from misuse of hypothesis testing, I thought that in general, we’d be against trying to summarize complex arguments with quick rules of thumb?

    I recognize the irony in that it sounds like I’m creating another rule of thumb, but I do think it is appropriate for this particular discussion.

    • Keith O'Rourke says:

      a reader:

      I think you may be confusing an exercise in abduction (working out hypotheses to get profitable ones) with induction (claiming overall
      experience is consistent with or supports some hypotheses and not other). Statistics and misuse of hypothesis testing is mostly about induction. The two are easy to confuse/conflate and most/many academics do.

      p.s. it only through abduction that we gain knowledge rather than just assess compatibility with assumptions (deduction) or experience (induction).

      • Keith I am an abductor according the late Robert Nozick. But hey I wouldn’t be able to explain how I think so easily. You might be right

        Combinations of all three modes of reasoning are inevitable I think. Intrinsic due to education and learning disposition

      • a reader says:


        I don’t think I’m confusing abduction with induction. I’m merely stating that details matter. Skipping over complex arguments and trying to summarize things with rules of thumbs very often leads to gross mistakes.

        Other researchers took a course in statistics, said to themselves “Okay, statistics tells us if p < 0.05, the effect is real. Got it.". This has driven us statisticians totally crazy and got us all in a big mess. Let's not look at another field and say "Okay, economics says mean people are rational and nice people are lying. Got it.".

  17. Hal Ashburner says:

    “Here’s something you already knew but this blog poster’s take on it will surprise you!”

    Apologies if I’m missing something obvious, is this not just Andrew doing some reasoning based on data affected by survivor bias? I don’t recall many papers written by economists with the broad thesis “I am confirming that your obvious reaction is the correct one and the particular economic theory in which I’m ordained has nothing to add here you haven’t already noticed for yourself.” So let’s imagine 99 economists think this way about a given situation (eg kind person is kind, well that’s nice) and one who does not. Which of the 100 publishes an article or opinion piece about our kind person? Now generalise to all economists including those who did not publish and what can you infer about economists?

    Buzzfeed style headlines, fake news, I don’t really care for them but having had to swallow those pills they do have the rather pleasant side effect of focusing our attention and bringing into the discourse things that have existed for longer than I’ve been alive. Is it merely this biasing the opinions you actually hear? (I am however, all in favour of making cruel fun of the dismal science).

  18. Guive says:

    I don’t want to defend economists too much, but I think the unintended consequences idea is a really good one, and it is overlooked a lot. This doesn’t mean we should take any particular economic theory very seriously, but if economists promote the idea of unintended consequences and cause more people to take the possibility of unintended consequences more seriously, I’m willing to put up with them being a bit annoying.

  19. Brad DeLong says:


    You need to read John de Mandeville’s “The Tale of the Bees”…

  20. bxg says:

    The example doesn’t seem to illustrate the claim very well.

    First, we know how economists today (at least since Becker) generally react to “low” (non-market-clearing) prices for restaurants and concerts and the like – they try to explain them as economically rational behavior. So is setting low prices the sign of a jerk? Because that’s what your theory predicts.

    Back to Wolfers and Stevenson. Their article seems to have disappeared, but it almost surely is not complaining simply about a fancy restaurant setting prices “too low” – that’s entirely commonplace and couldn’t possibly have been newsworthy in the first place.
    Based on the Salmon article, it’s about something more unusual: the restaurant sets prices low (almost normal), claims it’s doing so because of ‘fairness’, but then – and this is abnormal – allows a free resale market. Based on what Salmon writes (and really, nothing else really makes sense), W&S are complaining that the existence of the secondary market undermines the fairness (democratic) rationale. Salmon’s objections to this have some punch, but surely if you can buy and sell reservations it acts and feels (to the restaurant-goer) _more_ like a market-clearing auction process than the more traditional low price (and hard to get reservations) model. Is allowing for a secondary market jerky behavior, or nice? Is making the person who gets a reservation feel a bit as though they’ve won a tradeable financial asset good or bad? “Fairness”-enhancing (as claimed by the restaurant) or not? (Particularly relative to the more normal low-prices-but-not-tradeable model?) How exactly does your story about economists actually apply here?

    • Andrew says:


      You write, “So is setting low prices the sign of a jerk? Because that’s what your theory predicts.”

      No. My theory (if you want to call it that; I’d just call it an impression) is that “when someone seems to be acting like a jerk, an economist will defend the behavior as being the essence of morality.” I’m not claiming the converse, which would be that, when an economist defends behavior, that’s when the behavior is the sign of a jerk.

      I think the vast majority of economic explanations are of morally neutral actions, and, there too, economists seem to choose at will between explanations of mode 1 and explanations of mode 2. But I also think that, when someone’s acting like a jerk, economists loove to use mode 1, and when someone’s acting nice, economists loove to use mode 2.

      • bxg says:

        Ok then, but I stand by a much weaker claim and then question. First, the normal economist discussion of restaurant pricing doesn’t fit your impression (but as you say, doesn’t contradict it). Well, you never said it did; sorry. On the other-hand, a lot of people in this thread seem to accept that having ‘low’ pricies is in the interest of fairness is a good thing, and so if your impression has predictive power it’s not silly to see what it says here (and in this case, seems to get it wrong vis-a-vis most economists).

        So then W&S specifically should illustrate your impression (else what’s the point of bringing it up) – how precisely are they acting nicely? We can assume (and the Salmon article supports) that W&S are discussing the innovation, which is _not_ having lower-than-market-clearing prices. It seems to be allowing hard-to-get reservations – due of course to low prices – and as at many/most super fashionable restaurants – to furthermore be tradeable assets. This innovation seems morally neutral to me, and arguably a moral step backwards from simply having “underpriced” and hard-to-get reservations _if_ your motivation is fairness. I don’t get how this gets classified as nice (other than post-hoc) and if not nice, how does it illustrate your impression?

  21. Donald A. Coffin says:

    Speaking as an economist…

    Seems to me that Achatz was doing what he thought was *right*–making it possible for people d modest means to be able to eat the kind of food he prepares–and that doing what is right can very properly be regarded as a part of his “utility function.” The problem with utility maximization as the basis for decision theory is that *any* behavior can be argued to maximize utility, given an appropriate utility function. So I don’t see his pricing strategy as in any way violating some deep theoretical property either of utility functions or of economics. I do think that the entire discussion quite correctly suggests that some of the decision theory used in economics has what one might call a shaky basis.

  22. Pietro says:

    This is a common marketing trick amply used by rock stars who want 1) make sure that the stands aren’t empty and 2) be perceived as “democratic”.

  23. Erl137 says:

    I’ve heard a related point regarding primatology. Supposedly, primatologists are willing to describe violent primate actions in the vernacular—”fight, hit, kill,” etc. On the other hand, affectionate gestures are described in a latinate and removed sense—”affectionate gestures”, “mutual grooming”, etc.

  24. Carlos Ungil says:

    You were linked to from Matt Levine’s column (“things happen” section):

  25. Fits the theme: (1) Private Vices, Public Virtues vs. (2) Private Virtues, Public Vices

    Of course these are two examples of the counter-intuitive disconnect between the micro and the macro. I believe your point is intended to be more general.

    There is a third way for pop-economics, but it doesn’t seem to sell as well, e.g. Alan Blinder’s Hard Heads, Soft Hearts book

  26. Oh, I see, Freud can explain this.

    Pop-econ has made a fetish of the counter-intuitive.

    This Freudian displacement becomes clear when your taxonomy is framed as a mansplain:

    The hoi polloi: “X is obviously unreasonable/immoral.”
    pop-econ: “Well, actually…”

    The hoi polloi: “X is obviously reasonable/moral”
    pop-econ: “Well, actually…”

  27. Joshua Pritikin says:

    And there is a startup dedicated to improving the economic protocol surrounding ticket sales,

  28. Erik H says:

    Bruno Latour, “Why has critique run out of steam?” Critical Inquiry 30 (winter 2004), pp. 13-14:

    We can summarize, I estimate, 90 percent of the contemporary critical
    scene by the following series of diagrams that fixate the object at only two
    positions, what I have called the fact position and the fairy position—fact
    and fairy are etymologically related but I won’t develop this point here. The
    fairy position is very well known and is used over and over again by many
    social scientists who associate criticism with antifetishism. The role of the
    critic is then to show that what the naı̈ve believers are doing with objects is
    simply a projection of their wishes onto a material entity that does nothing
    at all by itself. Here they have diverted to their petty use the prophetic
    fulmination against idols “they have mouths and speak not, they have ears and
    hear not,” but they use this prophecy to decry the very objects of belief—
    gods, fashion, poetry, sport, desire, you name it—to which naı̈ve believers
    cling with so much intensity. 22 And then the courageous critic, who alone
    remains aware and attentive, who never sleeps, turns those false objects into
    fetishes that are supposed to be nothing but mere empty white screens on
    which is projected the power of society, domination, whatever. The naı̈ve
    believer has received a first salvo (fig. 2).
    But, wait, a second salvo is in the offing, and this time it comes from
    the fact pole. This time it is the poor bloke, again taken aback, whose be-
    havior is now “explained” by the powerful effects of indisputable matters
    of fact: “You, ordinary fetishists, believe you are free but, in reality, you
    are acted on by forces you are not conscious of. Look at them, look, you
    blind idiot” (and here you insert whichever pet facts the social scientists
    fancy to work with, taking them from economic infrastructure, fields of
    discourse, social domination, race, class, and gender, maybe throwing in
    some neurobiology, evolutionary psychology, whatever, provided they act
    as indisputable facts whose origin, fabrication, mode of development are
    left unexamined) (fig. 3).
    Do you see now why it feels so good to be a critical mind? Why critique,
    this most ambiguous pharmakon, has become such a potent euphoric drug?
    You are always right! When naı̈ve believers are clinging forcefully to their
    objects, claiming that they are made to do things because of their gods, their
    poetry, their cherished objects, you can turn all of those attachments into
    so many fetishes and humiliate all the believers by showing that it is nothing
    but their own projection, that you, yes you alone, can see. But as soon as
    naı̈ve believers are thus inflated by some belief in their own importance, in
    their own projective capacity, you strike them by a second uppercut and
    humiliate them again, this time by showing that, whatever they think, their
    behavior is entirely determined by the action of powerful causalities coming
    from objective reality they don’t see, but that you, yes you, the never sleeping
    critic, alone can see.

  29. This post by Robin Hanson (now infamous after yesterday’s Douthat NYT column) is worth reading in the context of the discussion above:

    • Andrew says:


      Interesting. Hanson’s statement reminds me of the quotes from Steven Levitt and Emily Oster we discussed here a few years ago, in my first discussion of economists’ two modes of thinking.

      As some people have pointed out to me, a contrarian (or, as Hanson puts it, “creepy”) attitude can go with mode 1 or mode 2. It’s contrarian to say that seemingly destructive behavior is actually a good thing, and it’s contrarian to say that seemingly nice behavior is actually a bad thing.

      Setting aside the incendiary context (“gentle rape,” “cuckoldry,” etc.), I think Hanson is mistaken in declaring that economics has a special virtue. I think he’s making the same mistake that Levitt and Oster have made, which is to not take other social sciences seriously. Hanson writes that economists are being slammed for “exploring possible concepts and policies, including those that violate world norms.” Give me a break! Social scientists explore possible concepts and policies, including those that violate world norms, all the time!

      I also don’t understand why Hanson says that “many surface indications suggest they [economists] have the best of motives.” I guess it depends on what surface indications you look at! Some surface indications make economists’ motivations look good; others not so much. Remember the movie Inside Job?

      • Andrew, you are surely right that economics is not the only social science that violates these world norms (and that economists aren’t unique in their desire to do good). But I really think economists violates these world norms far more often. At the risk of generalization, I’d say that most of the basic assumptions, core results, and common beliefs of political scientists, sociologists, anthropologists, etc. come across to the average person as intuitive and reasonable. That’s not true in economics — its main ideas are counterintuitive and even upsetting. You can’t fit them on a bumper-sticker or in 140 characters. You have to reason them out and most people have neither the time nor interest to do so. Seriously, try to explain to your grandmother that self-interest and the price mechanism allocates resources more efficiently than a group of wise and well-meaning experts, then try to explain to her that strong ties facilitate social trust, and see which idea she grasps more easily. I’m convinced that the nature of the discipline, rather than the behavioral traits of its participants, explains the phenomenon you’re treating in this series of posts.

        • Andrew says:


          I guess it depends who you’re talking with. Sociologists, anthropologists, etc., are pretty famous for being accepting of alternative lifestyles that your hypothetical grandmother might disapprove of, no? Margaret Mead and all that.

          • Sure. But that’s because of differences in moral intuition, taste and preferences, etc., not because accepting “alternative” views requires some complex chain of reasoning. Try the experiment again with a college freshman who shares the same basic social and cultural worldview of the examiner!

          • Andrew &nd Peter,

            Yup they were more accepting of ‘eclecticism’ I should say. They intersected with my Dad’s generation of scholars. Definitely more free-spirited than some of the current crop of expertise due to the lessening creativity among its ranks.

            That was a time of big ideas too.

    • Thanatos Savehn says:

      This came up on his blog some years ago but perhaps he didn’t get the message: push a fat guy in front of a hypothetical runaway trolley car and you get a discussion; push a fat gal in front of the same trolley car and you get the patented NYTimes/Mean Girls Blanket Party treatment. Maybe one of these days we can debate what inference under uncertainty implies for Robin’s consequentialism.

    • Ben Prytherch says:

      “Those w/ less access to sex plausibly suffer simiarly to those with low income, & might similarly hope to organize to lobby for redistribution along this axis. Strikingly, I see little overlap between those concerned about income & sex inequality.

      Hanson doesn’t seem to be defending this with any other argument than “economists violate norms”. Does every norm violation deserve a pat on the back?

      I guess the fact that he failed to predict the reaction does add credence to the idea that economists are living in a different world than the rest of us.

      • Andrew says:


        One thing that bothers me about Hansen’s approach is that he pretty much refuses to take people’s motivations at face value (to him, everyone’s always just doing things for reasons such as status), except when it’s someone with whom he supports, in which case face value motivations are just fine.

        It’s a you’re-a-bonobo, I’m-Spock sort of reasoning. But my reaction is, Hey, if I’m a bonobo and everyone you’re disagreeing with is a bonobo, how do we know that you’re not a bonobo too?

        The above-linked post also has the disturbing aspect that Hanson seems to be equating actual violence (for example, that Toronto van attack), to hypothetical violence (people who support income redistribution encouraging people to watch Les Miserables??).

  30. Thanatos, I’been thinking of writing an updated version of Mean Girls based on my own experiences. Thanks for raising it. I think one sad result of the last 30/40 years is the harpiesm/harpoweeniesm of American culture. It so many antecedents. I noticed it in the early 90’s while in New Jersey. More broadly issuing within families, including spouses & oyfriends/girlfriends, buddies, etc. I began to pay attention to this cultural phenomenon. I did want end up like that. I even noticed this trait in my father, who had been wounded by his disappointments in career and marriage. I wowed that I would not allow myself to sink to this culture. I also saw this proclivity in some friends. Thereby keeping a little more distance from the chatter of the day. I am suggesting that we have engaged in this emotional blackmail culture. Robert Hughes, art critic, referred to it as the Complaint Culture. Consequently we pay more attention to everyone’s flaws rather than their positive sides.

  31. Correction; I did NOT want to end up a harpie is what I meant. I am typing or sending the return entry too fast. Sorry about that.

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