Sumitra Shah wrote: >----------------- HES POSTING ----------------- >Apropos of the lengthy discussion generated by the Krugman essay on Milton >Friedman, here is an interesting summary by David Warsh of the AEA >proceedings and George Akerlof's presidential address. I believe the >address was mentioned in one of the posts. Below are couple of quotes and >the link to the article. Akerlof makes an argument for broadening the >field of vision of economic actors. > >http://www.economicprincipals.com/issues/07.01.07.html > >"Personal preferences as characterized by economists heretofore have been >excessively narrow, he argued. Taking account of individuals' feelings >about how they should and should not behave in particular circumstances >might make the landscape begin to resemble the one roughly sketched >three-quarters of a century ago by Keynes." > >I would think that this can be traced all the way back to Adam Smith's >view of how socialized individuals act in general and how even their >self-interested 'economic' behavior assumes a degree of reciprocity which >is crucial to his model of the market economy. > >"Economists first had to take norms as given before they could begin to >spin models of how they might change in response to changing economic >conditions." > >This is profoundly important to those who believe not only that norms >influence individual choices, but they also severely constrain the choices >available to many individuals. > I yield to few in my admiration for Akerlof's work generally, but I found this paper under-whelming. Akerlof models norms comsequentially - observing a norm increases one's utility. Sen put his finger on the problems with this approach long ago, in "Rational Choice" - it cannot capture the the "counter-preferential" choices that many norms commit us to. Observing a norm is often an example of Senian "commitment." We sacrifice some utility to act in line with a norm - we choose counter-preferentially. Kevin Quinn