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Blog // Thoughts
October 29, 2008

Why Theologians Could Learn From Economists – Or, A Call For Behavioural Theology

David Brooks is at his best when he focusses on the intersection of economics and culture, as in today’s NYT piece “The Behavioural Revolution.” There he discusses the way economists have tended to focus on rational self-interested decision-making and underplayed the importance of the way we perceive reality (or the problem of hermeneutics). He then […]

David Brooks is at his best when he focusses on the intersection of economics and culture, as in today’s NYT piece “The Behavioural Revolution.” There he discusses the way economists have tended to focus on rational self-interested decision-making and underplayed the importance of the way we perceive reality (or the problem of hermeneutics). He then goes onto to explain how behavioural economists have, in recent years, been focussing more on our perceptual biases and the ways these distort our decision-making.

“Perceiving a situation seems, at first glimpse, like a remarkably simple operation. You just look and see what’s around. But the operation that seems most simple is actually the most complex, it’s just that most of the action takes place below the level of awareness. Looking at and perceiving the world is an active process of meaning-making that shapes and biases the rest of the decision-making chain.

Economists and psychologists have been exploring our perceptual biases for four decades now, with the work of Amos Tversky and Daniel Kahneman, and also with work by people like Richard Thaler, Robert Shiller, John Bargh and Dan Ariely.

My sense is that this financial crisis is going to amount to a coming-out party for behavioural economists and others who are bringing sophisticated psychology to the realm of public policy. At least these folks have plausible explanations for why so many people could have been so gigantically wrong about the risks they were taking.”

Brooks goes on to mention Nassim Nicholas Taleb, whom I’m quoted favourably a few times already on this blog. Taleb repeatedly makes the point that we are not just sometimes blind to our biases and prejudices but that, more tragically, we choose to blind ourselves by selecting data, ignoring trends that don’t fit and generally tending to assume our good fortune is based more in our own hard work (or uniqueness) than luck or circumstance.

To this end I think Brooks is right in concluding that,

“This meltdown is not just a financial event, but also a cultural one. It’s a big, whopping reminder that the human mind is continually trying to perceive things that aren’t true, and not perceiving them takes enormous effort.”

What draws me to behavioural economics is the way it cuts through ideology to the fundamental economic problem (or Greenspan’s error) – why don’t people behave like rational and (long-term) self-interested agents? Why are they greedy (in the short-term) and self-destructive (in the long-term)?

In a way, this is like Alice and the rabbit-hole – how far are we prepared to go? There’s a real potential for a kind of behavioural theology as well, for a theology that starts we the problem of perception, the problem of shaping our view of reality in ways that undermines (from the onset) our potential for spiritual flourishing.

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Responses
Matt Stone 14 years ago

Interesting thoughts. I think what we are already beginning to see is that economics is as much about business confidence as everything else, and that business confidence has everything to do with psychology. A behavioural theology … any more thoughts on what that might look like?

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