Economics

Free riding — to an economist — is a rather opportunistic and consequentially rational behavior humans show in situations where they can reap private benefits from not participating in an action while still enjoying the public benefits of other’s participation. If, of course, everyone wants to enjoy the private benefits and nobody contributes there are no public benefits, and in the end, if everyone just behaves opportunistically, they may be worse off than if everyone, or at least a substantial number of people, contributed.

Richard Tuck poses the question whether this can indeed be rational behavior — again, to an economist, rational behavior is just behavior that is logically consistent with a person’s preferences that, in turn, need to conform to only a few innocuous axioms. (Ok, I am understating.) He argues that if an action is in some way efficacious and therefore causal for the ultimate result, it has to be rational to perform the action. He presents a rather long winded argument about negligibility that in my opinion ultimately does not necessarily support his conclusions. And it seems, this is not just my opinion…

In brief, I do not agree with Tuck. At all. And this is not because I just do not like some of his implications. Still, his book is a rather nice historical account of the notion of rationality of cooperation in public good and competitive scenarios in philosophy, political science and economics.

While Michael Tomasello cannot give an ultimate answer to the question on why we cooperate his book is an interesting contribution to the ongoing discussion. And thus his book’s form is also more styled as an discussion. In the first part he presents his own research on primates and young human children and his own conclusions. In the second part some additional prominent scientists from the fields of developmental psychology, anthropology, and philosophy are allowed to respond with their opposing views on his interpretations based on their own research.

It is clear that the different authors do not agree on the details but there seems to be some overlap. All in all it is a nice cooperative effort. By allowing opposing views to be voiced the whole endeavor becomes more balanced and the reader gains a more comprehensive picture of the research on human cooperative behavior.

Though I was already more or less aware of the various approaches there was something I did not consciously know so far. Tomasello distinguishes three domains of altruism: goods, services, and information that translate to the actions sharing, helping, and informing. As Tomasello points out, these domains entail different costs and benefits. Therefore I am inclined to adopt this categorization for my own research.

Experimental philosophy is not as young an academic field as it might seem. Not only do I know philosophers that already relied on (economic) experiments far longer than wikipedia dates the birth of the field, Appiah quite correctly points to a number of ancient and classical philosophers who relied on empirical research. And he points to a number of empirical scientist in psychology, sociology, and economics who without hesitation can be classified as philosophers as well. Indeed, I am quite convinced that all these academic disciplines not only share some of their objectives but have a substantial overlap.

Appiah’s Experiments in Ethics is a remarkable historical and methodological account of morality from the philosopher’s perspective. He offers a balanced view, he never sugarcoats problems with the philosophical methodology and does not shy away from picking to pieces what he thinks is a futile exercise in thought experiments. He advocates a joint approach of the different disciplines to “sustain what’s good in our lives.” He never entertains the illusion that there is a simple answer. In contrast, he candidly admits the complexity of research on morality, what constitutes goodness.

Even though the book – as seems typical for a philosophical treatise – poses more questions than it offers answers I rather enjoyed reading it…

In the end, one of the most important insights that Appiah is offering his readers is in my opinion: “In life, the challenge is not so much to figure out how best to play the game; the challenge is to figure out what game you’re playing.”

Reading statistics or econometrics textbooks cover to cover is certainly not something any “normal” person would do. So, I am not normal. And so ain’t Mostly Harmless Econometrics by Angrist and Pischke.

You cannot learn econometrics just by reading this book, you would need another textbook for the basic econometric theory. Yet, MHE offers something often not found in your standard textbook: an applied perspective. It addresses issues that may arise from empirical work in labor and micro-economics focusing on identification of causal effects, illustrating the methods and pitfalls using empirical field studies that either rely on natural experiments (happenstance data) or field experiments.

Their brief chapter on nonstandard (i.e. nonstandard according to the theoretical ideal, the real world looks different) standard errors is, for instance, astonishingly accessible and almost makes me revise my standpoint on modelling the error structure (using multilevel designs) vs adjusting standard errors.

I do not know whether science geeks are still attracted by Adams’ Hitchhiker’s Guide to the Galaxy. Angrist and Pischke, sure, are. Not only is the title of their textbook an obvious reference to Adams’ work, they start every chapter with a little Adams quote. Something I did, too, when I was still in graduate school. This gives their book a slightly brighter, less earnest tone. All in all, it is certainly not as dry as many other econometrics textbooks.

As an additional added value, Angrist and Pischke set up a companion website to their companion where they post corrections (there are already quite a number of erratas) and comments to MHE.

Jon Elster’s inaugural lecture at the College de France is an instructive essay on reason, emotions and their link to rationality. In contrast to most of his other books that are quite heavy tomes (in volume and content), Reason and Rationality is a nice little book that really invites the reader to open it.

I wonder whether his presentation was as well delivered as this little book was written. Maybe I will finally dare to start reading his other contributions that are waiting on my book shelf – some already for several years.

Dan Friedman’s Morals and Markets is a nice complement to the multidisciplinary collection Moral Markets that I read earlier. Friedman provides an historical account of the interdependence of well functioning markets and moral sentiments and thus an evolutionary perspective that is not limited to economics as he also discusses the respective impact on societal structures and vice versa.

Friedman offers a rather balanced discussion of the benefits and perils of a moral society, when markets need morals and when markets are choked by them. Solely the joint discussion of terrorist and religious groups may seem a bit controversial.

Morals and Markets is not an academic textbook. It tells a coherent story by a sequence of (true) anecdotes that is easily accessible to anyone. In fact, it is quite entertaining while still being instructive.

In the end, Friedman argues convincingly that the major challenge will be to realign morals and markets such that they work together and thus help to improve our society.