A belated reply to Bill:
William Dickens wrote:
>
> >Sure, some important real world applications exist. But why is that
> >interesting? I would think that the interesting question is: what's the
> >*expected value* of the loss, averaging over situations of all
> >importance levels?
>
> So would you argue that the interesting question about government policies is
>whether averaging over all of them net welfare effects are positive? Wouldn't you
>want to know something about particular policies with an eye towards identifying
>which ones are better or worse. Even if you thought that on average they were bad you
>probably couldn't convince most people that they shouldn't be considered on a case by
>case basis.
Your point seems reasonable, but I don't think it's the one that more
triumphalist cognitive psychologists (and the economists they've
influenced) are making. You're talking policy; they're talking human
nature.
At least on my reading, a lot of cognitive psychologists want to say
more than "People occasionally reason imperfectly, and policy might
improve on that." Rather, they are saying "We now know that human
judgment is quite poor, and economic models that presume otherwise are
kind of stupid." Of course, it depends on who you read, but I think
this triumphalist message appears in Nisbett and Ross, Kahneman and
Tversky, Thaler, Rabin, and others. These guys rarely stray into
policy, but they clearly think their work is cosmically important.
> Similarly, if you can identify even one situation in which judgement can be shown to
>fail and design an intervention to minimize the cost of that failure isn't that
>interesting? -- Bill Dickens
This is almost orthogonal to my original point, but not quite. It
wouldn't be interesting if the expected cost of bad judgment was
$100/year, would it? So even taking a policy perspective, expected
value of error matters.
--
Prof. Bryan Caplan [EMAIL PROTECTED]
http://www.gmu.edu/departments/economics/bcaplan
"We may be dissatisfied with television for two quite different
reasons: because our set does not work, or because we dislike
the program we are receiving. Similarly, we may be dissatisfied
with ourselves for two quite different reasons: because our body
does not work (bodily illness), or because we dislike our
conduct (mental illness)."
--Thomas Szasz, *The Untamed Tongue*
