Startling Admissions
There's a lot to annoy me in "Mind Games," a piece by John Cassidy in the New Yorker (sorry if the link stops working, I'm not sure it will last). I can't stay mad at any piece that includes this quotation, though [this is Cassidy quoting David Laibson, the Harvard economist]:
"I was planning to give up smoking, but I couldn't resist another cigarette. I was planning to be faithful to my wife, but I found myself in an adulterous relationship. I was planning to save for retirement, but I spent all my earnings. Understanding this tendency stands at the heart of a lot of big policy debates."
Yes, I suppose that is central to a lot of policy debates, but put that aside for a minute. Laibson casually admits that he can't stop smoking, he's an adulterer, and he hasn't saved enough for retirement. That's a hell of a thing to say to a New Yorker writer who probably just wants a few pithy comments on neuro-economics. Earlier Laibson bad-mouths macroeconomics for no good reason, but that's small potatoes compared to admitting adultery on the pages of the New Yorker.
"I was planning to give up smoking, but I couldn't resist another cigarette. I was planning to be faithful to my wife, but I found myself in an adulterous relationship. I was planning to save for retirement, but I spent all my earnings. Understanding this tendency stands at the heart of a lot of big policy debates."
Yes, I suppose that is central to a lot of policy debates, but put that aside for a minute. Laibson casually admits that he can't stop smoking, he's an adulterer, and he hasn't saved enough for retirement. That's a hell of a thing to say to a New Yorker writer who probably just wants a few pithy comments on neuro-economics. Earlier Laibson bad-mouths macroeconomics for no good reason, but that's small potatoes compared to admitting adultery on the pages of the New Yorker.
posted by James | 3:08 AM
2 Comments:
Um, I just read that same article today (I'm a subscriber). I thought that quote was strange, too, but my reading of it was that he was just giving examples of common irrationalities. Weren't those just hypotheticals?
And as I understand it, the behavorial economists are right — it's just that it's difficult to incorporate those findings into mathematical models.
We know investors are exceedingly irrational; I wouldn't have a job at a hedge fund if that wasn't the case.
Post a Comment
<< Home