Monday, May 18, 2015

Behavioural Economics Historical Reference Works #BEHistorical

The purpose of this post is to start a discussion online and in the research centre about historical works (say pre-1950) that are most worthwhile to read for people interested in contemporary behavioural science and behavioural economics debates. The remit is probably too broad to be wholly coherent but if it leads to some good suggestions for reading that people had not considered before then it is worth doing. Works from centuries or millenia before often have a way of having a recurring influence on modern fields not least evidenced by the recent renewed interest in Aristotle and Greek concepts of well-being in the modern literature. Would be good to get suggestions from people in the comments, by email, in person or on the #BEHistorical hashtag on twitter.

Aristotle's Nichomachean Ethics is clearly a key reference work from antiquity. Will add more on this at a later stage.

Nico Machiavelli's The Prince contains a wealth of insights into influence in the context of complex governance issues.

Adam Smith's The Theory of Moral Sentiments. See also this article on Adam Smith's pedigree as a behavioural economist. A more general tour of the Scottish Enlightenment's role in the development of disciplines such as Economics would be interesting for a future post and/or walking tour. David Hume's Treatise on Human Nature contains a wealth of ideas that are relevant to modern academic debates on decision making, valuation, causality and so on. Thanks to @cathyby on twitter for repeated reminders on the importance of Francis Hutcheson and also the recommendation to include Bernard De Mandeville. The latter's Fable of The Bees is cited across many areas of Economics.

Pretty much anything from JS Mill in particular On LibertyThe Principles of Political Economy and Utilitarianism. Obviously also Bentham.

Emile Durkheim is a forerunner of many literatures relevant to readers here. A very useful UChicago webpage on his work here.

Simmel's Philosophy of Money is often  cited as a historical reference in modern papers on economic psychology. It deals with a staggering array of questions on the philosophy and implications of using money as the medium of exchange.

Schumpeter's History of Economic Analysis would be one of my desert island books. I once ran an informal book club over several sessions on this work. Contains a wealth of information on the many interesting characters that populated debates on issues such as the correct notion of utility over the centuries.

From Schumpeter, the importance of the German Cameralist movement becomes apparent in particular Johann Justi. Many elements of modern thinking about the state improving the health and welfare of citizens in an economic framework come from this movement. Thanks to Charles Larkin for pointing out to me the importance of Wilhelm Roscher in the development of German historical and institutional thought. The development of Christian social economic thinking through the late 1800s and 1900s is an area that contains a huge degree of historical relevance in terms of debates about the role of state intervention. The theological context is obviously not present in modern BE debates but that does not reduce the significance of these works. The development of various forms of European social economic thinking throughout the 20th century sets a vital historical context for understanding how many European countries established their social democracies and in the works that formed the intellectual backdrop of this there are many debates about the freedom and dignity of the individual set against the wider public welfare and profit and innovation in a capitalist system.

Edgeworth's Mathematical Psychics is a classic work and is eerily relevant to modern debates about decision-making despite being published in 1881.

Lewin "Economics and Psychology: Lessons for Our Own Day From the Early Twentieth Century" documents the interaction between the development of neo-classical marginalist economics and the development of psychology as a separate discipline. See also Bruni and Sugden's 2007 EJ article argues for the historical importance of Pareto in severing the link between economics and psychology.
This article explores parallels between the debate prompted by Pareto's reformulation of choice theory at the beginning of the twentieth century and current controversies about the status of behavioural economics. Before Pareto's reformulation, neoclassical economics was based on theoretical and experimental psychology, as behavioural economics now is. Current ‘discovered preference’ defences of rational-choice theory echo arguments made by Pareto. Both treat economics as a separate science of rational choice, independent of psychology. Both confront two fundamental problems: to find a defensible definition of the domain of economics, and to justify the assumption that preferences are consistent and stable.
William James' The Principles of Psychology is often regarded as the first psychology textbook. Again, time-permitting, a later post on contemporaries of James such as Wundt and Fechner would yield a number of relevant works.

Freud's distrust of empirical analysis puts him at odds with a lot of modern methodological thinking. But his books are surely worth reading for any thinking person and the concepts he grappled with have obvious resonance with behavioural economics models of human behaviour.

Frank H, Knight's classic "Risk, Uncertainty and Profit" provides ideas on the role of uncertainty in economics that continue to be highly relevant.

Keynes' General Theory is a tough read in places but often reads very like what is beginning to be called behavioural macro.

Karl Polanyi's "The Great Transformation" is a key work across several interdisciplinary disciplines in Economics. It contains a vast range of insights into the development of market societies and the psychological, cultural, and other aspects of market behaviour.

The work of Maurice Allais was written exclusively in French and not widely translated making it all the more remarkable he was awarded the Nobel Prize in 1988. A study of Allais would require a lot of time, patience and linguistic ability but he is clearly an important figure in the history of economic thought relevant to behavioural economics. Paul Samuelson famously stated that “Had Allais's earliest writings been in English, a generation of economic theory would have taken a different course.

As much a warning about excess as anything else, Watson (1913) "Psychology as the Behaviorist Views it" is the classic statement of the behaviourist view of psychology.

Veblen's "Theory of the Leisure class" is a classic work on many aspects of consumption and leisure that is still quite regularly cited.

Camerer/Loewenstein's summary of behavioural economics has some great historical examples.

Post-war it would be good to talk further about the debates surrounding the development of general equilibrium theory in Economics and the clash between behaviourism and the cognitive revolution in Psychology. Clearly in that period emerges the main building blocks of what was to become behavioural economics. 

No comments: