Tyler Cowen: belief

Transcript context

…How much of economics is a study of the systems that human beings use to allocate scarce resources and how much is just something you’d expect to be true of aliens, AIs? It’s interesting when you read the history of economic thought, how often they make mention of human nature specifically like Keynes is talking about. People have high discount rates. Right? Yeah. But what are your thoughts here? My former colleague Gordon Tullock wrote a very interesting book on the economics of ant societies and animal societies and very often they obey human-like principles, or more accurately, humans obey non-human, animal-like principles. So I suspect it’s fairly universal and depends less on quote unquote human nature than we sometimes like to suggest. Maybe that is a bit of a knock on some behavioral economics, the logic of the system. Armin Alchian wrote on this. Gary Becker wrote on this. There were some debates on this in the early 1960s, and that the automatic principles of profit and loss and selection at a firmwide level really matter. And it’s responsible for a lot of economics being true. I think that’s correct. Actually, that raises an interesting question of within firms, the sort of input they’re getting from the outside world or ground truth data, is profit loss, bankruptcy. It’s like very condensed information. And from this they had to make the determination of who to fire, who to hire, who to promote, what project to pursue. How do we make sense of how firms disaggregate this very condensed information?…

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