Re: [Pen-l] The Audacity of Data

[Eugene Coyle <eugenecoyle@xxxxxxx>]

Max, 

I was thinking of their solid marriage to neo-classical economics -- just tweaking it with a little behavioral adjustments.  The following quote is what scares me -- what put the kibosh on the Notre Dame econ department, to all of our loss:

Like their intellectual godfather Thaler, the Obama wonks aren't particularly interested in tearing down existing paradigms, just adjusting and extending them when they become outdated. (Thaler urges his students to master the same traditional, mathematical models their colleagues do if they want to be taken seriously.)

It is true that to be "taken seriously"  you need to demonstrate that you won't think much about the theory, but when is CHANGE going to happen?

Gene

Pragmatism and automatic 401k enrollment with voluntary opt-out is scary?
You need to start every morning with some Wheaties.


Eugene Coyle wrote:

Scary stuff.  These economists sound like De Long, just a bit further right.

Gene Coyle

On Feb 28, 2008, at 7:46 PM, ravi wrote:

<http://www.tnr.com/politics/story.html?id=4d40a39e-8f57-4054-bd99-94bc9d19be1a>

As it happens, Thaler is revered by the leading wonks on Barack Obama's presidential campaign. Though he has no formal role, Thaler presides as a kind of in-house intellectual guru, consulting regularly with Obama's top economic adviser, a fellow University of Chicago professor named Austan Goolsbee. "My main role has been to harass Austan, who has an office down the hall from mine, " Thaler recently told me. "I give him as much grief as possible." You can find subtle evidence of this influence across numerous Obama proposals. For example, one key behavioral finding is that people often fail to set aside money for retirement even when their employers offer generous 401(k) plans. If, on the other hand, you automatically enroll workers in 401(k)s but allow them to opt out, most stick with it. Obama's savings plan exploits this so-called "status quo" bias.

And, yet, it's not just the details of Obama's policies that suggest a behavioral approach. In some respects, the sensibility behind the behaviorist critique of economics is one shared by all the Obama wonks, whether they're domestic policy nerds or grizzled foreign policy hands. Despite Obama's reputation for grandiose rhetoric and utopian hope-mongering, the Obamanauts aren't radicals--far from it. They're pragmatists--people who, when an existing paradigm clashes with reality, opt to tweak that paradigm rather than replace it wholesale. As Thaler puts it, "Physics with friction is not as beautiful. But you need it to get rockets off the ground." It might as well be the motto for Obama's entire policy shop.

<snip happens>

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