Bill Mitchell — Falling enrolments in mainstream economics programs is a desirable outcome

If you have had the misfortune to study economics formally at university then you will recall sitting through endless and tedious lectures where the instructor asserted some superior knowledge about psychology and human behaviour. If you had combined the economics study with studies in psychology and sociology, you would have soon realised that what was being taught in your economics course was total nonsense. There was an article in the Fairfax press recently (August 6, 2017) – Crisis in high school economics a threat to national wellbeing – ruing the declining enrolments in secondary school economics programs. The point is that these courses are typically more damaging than useful and the contention of the journalist that we are reducing the quality of the economic debate as a result of less people studying economics is problematic. The typical economics program is simple indoctrination into a set of neoliberal principles that allow poor policy to continue despite it delivering disastrous outcomes. There is a crying need for more economic and financial literacy, but that requires an entirely different approach to be adopted rather than jamming more kids into the existing courses and having them come out dangerously brain dead....

Bill Mitchell – billy blog
Falling enrolments in mainstream economics programs is a desirable outcome
Bill Mitchell | Professor in Economics and Director of the Centre of Full Employment and Equity (CofFEE), at University of Newcastle, NSW, Australia

Chris Dillow — Choice in economics

Are rational choice theory and utility maximization unwarranted assumptions in that they contradict evidence?

Stumbling and Mumbling
Choice in economics
Chris Dillow | Investors Chronicle

Jon Hellevig — The Scientific Essence of Economy – Capitalism and Socialism versus a Democratic Competitive Market Economy

Must-read if you are into foundations of economic and political theory. Useful even if you are not, since Jon Hellevig debunks a lot of the myths about capitalism, neoliberalism, liberalism, socialism and communism in advancing his argument for a democratic competitive economy.

Keeper.

Awara Blog
The Scientific Essence of Economy – Capitalism and Socialism versus a Democratic Competitive Market Economy
Jon Hellevig

John Richard Cookson — 5 Ways the GOP Can Win Votes—No Candidates Necessary!

Behavioral psych, specifically psychological priming. Of course, it applies to the Dems, too, but some of these tactics are particularly suitable for the GOP.

What is particularly interesting is the way it shows how humans are may have less freedom of choice than they suppose and that persuasion techniques are powerful, as Scott Adams has been saying all along.

The National Interest
5 Ways the GOP Can Win Votes—No Candidates Necessary!
John Richard Cookson

David M. Rothschild — Understanding How Polls Affect Voters

Confirming past studies, we find strong evidence of an overall bandwagon effect; people become more supportive of policies that have more general support. We further find that both social acceptance and social learning drive the bandwagon effect. However, the effect of social learning is significantly and substantially stronger than that of social acceptance. Thus, the main reason that people conform to majority opinion in the political domain is that they believe there is information about the quality of the candidates or policies to be learned from mass support. We find no evidence for the third mechanism -- that people conform because they want to reduce cognitive dissonance related to not supporting a candidate that will likely win or policy that will likely be implemented.

The idea of the bandwagon effect seems disheartening for democracy if conformity pressures silence minority opinions. However, this research has given us a reason for optimism; people seem to be conforming not only because they see normative value in being part of the majority but also because they believe that there is information in collective opinion. Citizens want to be informed and the collective wisdom of their fellow citizens is just one source of information on which they have learned to rely.

PredictWise
Understanding How Polls Affect Voters
David M. Rothschild | PhD in Applied Economics at the University of Pennsylvania’s Wharton School, Economist with MicroSoft Research-NYC, and a fellow at the Applied Statistics Center at Columbia.

Jared DeFife — The Fascinating Differences Between The Conservative and Liberal Personality

Evidence suggests that differences between liberals and conservatives begin to emerge at an early age.

AlterNet
The Fascinating Differences Between The Conservative and Liberal Personality
Jared DeFife
Originally published in Psychotherapy Networker

Mark Stein — A culture of mania: a psychoanalytic view of the incubation of the 2008

Abstract
In this theoretically informed study I explore the broader cultural changes that created the conditions for the credit crisis of 2008. Drawing on psychoanalysis and its application to organizational and social dynamics, I develop a theoretical framework around the notion of a manic culture, comprised of four aspects: denial; omnipotence; triumphalism; and over-activity. I then apply this to the credit crisis and argue that the events of 2008 were preceded by an incubation period lasting for over two decades during which a culture of mania developed. Then, focusing especially on the Japanese and South East Asia/LTCM crises, I argue that a series of major ruptures in capitalism during this incubation period served not as warnings, but as opportunities for a manic response, thereby dramatically increasing the risks involved. I also argue that this mania was triggered and strengthened by triumphant feelings in the West over the collapse of communism. I suggest therefore that this manic culture played a significant role in creating the conditions for the problems that led to the credit crisis.

Read it at SAGE
A culture of mania: a psychoanalytic view of the incubation of the 2008 credit crisis

by Mark Stein | School of Management, University of Leicester

How's that for "irrational exuberance"?

The paper is a free download in PDF.

John Coates — The Biology of Bubble and Crash

WHAT happens to your body when you take risks? What happens to it when you make or lose money? Economics rarely asks these questions. It tends to view the assessment of financial risk as a purely intellectual affair, involving the calculation of asset returns, probabilities and allocation of capital. It is economics from the neck up.

But to this bloodless account of decision making, I want to add some guts. Advances in neuroscience and physiology have shown that when we take risk, we do a lot more than just think about it. We prepare for it physically.

Read the rest at The New York Times Sunday Review | Opinion Pages
The Biology of Bubble and Crash

by John Coates, a research fellow at Cambridge University and a former derivatives trader. This essay is adapted from his forthcoming book, The Hour Between Dog and Wolf: Risk Taking, Gut Feelings, and the Biology of Boom and Bust.
(ht Mark Thoma)

This report gives "animal spirits" and "irrational exuberance" concrete meaning in physiology and correlated psychology and behavior. These are not just cognitive biases but also physiological conditions.