Re: [Pen-l] Shemano on consumer behavior

["Max B. Sawicky" <sawicky@xxxxxxxxxxx>]

Nobody asked me, but the introduction of new thinking about consumption 
from economists
into policy is still in its infancy.  Best counter-example is the new 
book by Thaler and Sunstein,
"Nudge."  The influence of new behavioral (micro)economics on Obama 
policy is grossly overhyped,
but there is a little something there.  I haven't read Nudge yet but my 
impression is that what's
involved are very low-key interventions in behavior to get desirable 
outcomes, such as the
overhyped default opt-in for employer paid pensions.  (Somebody, not 
necessarily Obama,
will be proposing a default enrollment in a high deductible health plan 
as a -- bogus -- way to reduce
health care spending.)

As I think I mentioned before, the NBE takes the standard rationalist 
utility f( )s as the frame of
reference, behavioral departures from which are "anomalies."  But the 
good old U( ) is still the
standard for optimal outcomes in benevolent planner models, which are 
the prelude to neo-classical
types claiming that the market simulates the benevolent planner.  Even 
if it doesn't, the NBEs seem
to me to be working from the same problematic social efficiency blueprint.





>     But let me ask Jim Devine if he;'ll defend mainstream economics by 
> arguing that at the level of top economists, they no longer believe that 
> consumption is independent behavior and the fact that the leading 
> textbooks still stress that it is is not a reflection on what economists 
> secretly believe and secretly counsel the politicians.
>
> Gene Coyle
>
>
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