Monday, July 10, 2017

Andrew Gelman — Why they aren’t behavioral economists: Three sociologists give their take on “mental accounting”

The other thing—and this is important—is that the perspectives coming from these three academic disciplines are not competing; they’re complementary. It’s important that money in different bank accounts is liquid—or, to be more precise, it can be liquid for those people who choose to let it be so. It’s important that people often seem to behave as if there are walls between the accounts, restricting their transactions and “freezing” the money, as it were. And it’s important to understand the social context of these behaviors.
Analogously, in section 5.2 of our paper on rational-choice models of voting, Edlin, Kaplan, and I discuss how the rational model is complementary with a psychological understanding of voters. It’s my impression that Bandelj, Wherry, and Zelizer are in agreement with me on this general point, that patterns of human behavior can be usefully understood in different theoretical frameworks. There’s no “right” or “wrong” framework (although one can come to correct or incorrect conclusions within any framework), rather, each framework gives us a way of thinking about the behavior, and entry points into studying it further.
I talk more about frameworks, and how they differ from theories, here.*
Statistical Modeling, Causal Inference, and Social Science
Why they aren’t behavioral economists: Three sociologists give their take on “mental accounting”
Andrew Gelman | Professor of Statistics and Political Science and Director of the Applied Statistics Center, Columbia University
* Philosopher of science Karl Popper and others have criticized such theories as being nonscientific because they are non-refutable, but I prefer to think of them as frameworks for doing science. As such, Freudianism or Marxism or rational choice or racism are not theories that make falsifiable predictions but rather approaches to scientific inquiry. Taking some poetic license, one might make an analogy where these frameworks are operating systems, while scientific theories are programs. That’s why I wrote that I can’t say that Wade is wrong, just that I don’t find his stories convincing.…
I respect the effort to push such theories as far as they can go, but I find them generally less convincing as they move farther from their home base. Similarly with economists’ models: they can make a lot of sense for prices in a fluid market, they can work OK to model negotiation, they seem like a joke when they start trying to model addiction, suicide, etc.
All-encompassing frameworks are different from scientific theories. Both are valuable — frameworks motivate theories and help us interpret scientific results — but I also think it’s important to be clear on the distinction.

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