Metaeconomics for Dummies

 

We know our Readers are not Dummies, but you know the drill: The "Books for Dummies" series published by Wiley, available on virtually any topic, is a winner due to working at going to the core of a subject quickly and simply.  A great example is  "Behavioral Economics  for Dummies" by Altman (2012), which is also helpful in  seeing where Metaeconomics fits withing the larger arena of Behavioral Economics.  Another  recommended book in this regard is "Advanced Introduction to Behavioral Economics" by Tomer (2017), which points to how Dual Interest Theory (the analytical tool within Metaeconomics) is a core idea for the Humanistic Branch of Behavioral Economics.

 

The Dummies books are an easy read, favoring Twitter-style 140 character sentences,  rather than the style of academic journal articles and books.  We try this style in the following list.  Also, we understand the risk of appearing to SHOUT by using capital letters.  This is not the intent, but rather this helps in highlighting the key words and phrases that are being defined and refined. So, here we go on a Twitter trip with "It" referring to METAECONOMICS.

Every day examples of how METAECONOMICS adds new insights, and solves many mysteries about HUMAN ECONOMIC choice:

  • It brings the VIRTUES, the MORAL DIMENSION, back into view within economic and business thinking

  • It sees economics and business are most fundamentally about the VIRTUE of PRUDENCE...SELF-INTEREST in profit used to pursue happiness... but the HAPPINESS cannot be attained unless PRUDENCE is conditioned by the OTHER VIRTUES (in shared OTHER-INTEREST) of TEMPERANCE, FORTITUDE, JUSTICE, FAITH, HOPE, and CHARITY

  • It easily explains the mystery in political economy as represented in  VOTING BEHAVIOR which produces little in the payoff to SELF-INTEREST. So, why do people vote? Strange.  That is, there are high costs to studying candidates, attending political rallies, supporting campaigns with door to door efforts, spending lots of time at the polls, all of which produces costs that far exceed benefits to the individual.  Yet, people vote, due to the payoff in the domain of OTHER(shared with others in the political party; voting as a shared duty of liberty and freedom in a democracy)-INTEREST. People maximize OWN-INTEREST not SELF-INTEREST

  • It easily explains why people do not BOWL ALONE which is about SELF-INTEREST ONLY, in that they enjoy the payoff of OTHER(shared with others)-INTEREST when they bowl on a TEAM

  • It explains why individuals join clubs, churches, political parties and connect with other fans of their favorite sport, joining with their "tribes" of various kinds, which is all about joining into the OTHER-INTEREST shared with other people, with payoff always joint, as in SELF&OTHER-INTEREST

  • It easily explains why COACHES ask for attention to the OTHER(shared among team members, work as a TEAM)-INTEREST... individuals need to TEMPER their more primal drive to SELF-INTEREST only (make the most baskets, make the most touchdowns, make the most goals) and work for balance in the SELF&OTHER-INTEREST which is what wins GAMES 

  • It explains why someone would risk Own-life from running into a burning building, potentially foregoing all future payoffs from SELF-INTEREST, while gaining in the domain of OTHER(saving someone else, the right thing to do)-INTEREST

  • It explains why people go into military service, and especially risking their life in war, with the payoff in OTHER(shared interest with other patriots, connecting with country, flag, saving democracy, freedom for all)-INTEREST, while huge sacrifices in SELF-INTEREST can occur, especially at the point of death

  • It keeps us away from the empirically untenable argument from standard Microeconomics that an individual maximizes SELF-INTEREST at the point of death as the result of working to help someone else, perhaps a complete stranger out of a burning building or dying in war

  • It points to how dying in a burning building while helping someone, or dying in a war, is all about maximizing OWN-INTEREST which is composed only of shared OTHER-INTEREST at the point of death.  SELF-INTEREST dies at death, while  OTHER(shared in the memories of others)-INTEREST lives on as a hero and patriot is honored by OTHERS

  • It acknowledges it is HUMAN nature for individuals to feel RESENTMENT in cases of  EXTREME INEQUALITY, while also seeing the essential need for REASONABLE INEQUALITY 

  • It sees the OTHER(shared widely)-INTEREST in REASONABLE INEQUALITY as essential to MAKING WEALTH in a GOOD CAPITALISM

  • It points to the need for balance in SELF&OTHER-INTEREST while maximizing OWN-INTEREST which produces MORE WEALTH

  • It points to how we can avoid the TRAGEDY of the COMMONS as represented in over fishing the ocean; releasing too much greenhouse gas to the atmosphere; killing off the species we depend upon for survival as Humans; it is about forming an OTHER(shared with others, in living on a sustainable Spaceship Earth)-INTEREST that ensures we are even here to express any SELF-INTEREST

  • It easily explains the traditional UNITY CANDLE in wedding ceremonies;  Each SELF brings their CANDLE into a light that is forever more to be jointly shared, represented in the OTHER(UNITY WITH)-INTEREST CANDLE, forming  a unique SELF&OTHER(shared with the new mate)-INTEREST for each person

  • It points to how people are HAPPIER, overall, with balance in SELF&OTHER-INTEREST, than with a narrow focus on either interest alone

If you now have a feel for what METAECONOMICS does, you can stop here, and go to the BLOG where we illustrate how it works  in making better sense of day-to-day News, continuing Problems that do not ever seem to get resolved (like ever recurring Recessions and Depressions, which are due largely to NOT TEMPERING GREED; WE KEEP "LETTING IT OUT AGAIN" )! 

 

If you are intrigued with the more technical side of METAECONOMICS, read on:

  • It explains how maximizing an individuals OWN-INTEREST means sacrificing a bit in each of the domains of SELF-INTEREST and OTHER-INTEREST

  • It gives new, more substantive meaning to the notion of ALTRUISM which now means sacrificing a bit in each of the domains of SELF-INTEREST and OTHER-INTEREST while still maximizing OWN-INTEREST

  • It works to bring the MORAL DIMENSION, the MORAL COMMUNITY back into economic consideration through the notion of an OTHER(norms, morals, ethics shared with others)-INTEREST

  • It clarifies that good balance in SELF&OTHER-INTEREST holds the potential to produce outcomes where the SUM-IS-GREATER-THAN-THE-SUM-OF-THE-PARTS (not understood by CPAs, and some Economists, who see zero-sum, someone has to lose before another can gain!.... Not reality.... but often forced on people by the CPA frame)

  • It brings the VIRTUES back into economics:  Prudence is represented in SELF-INTEREST.  Temperance, Justice, Courage, Faith, Hope and Love are represented in the OTHER(shared with others, yet internal to own-self)-INTEREST

  • It sees the INVISIBLE HAND representing the MORAL DIMENSION

  • It sees the INVISIBLE HAND representing all of the VIRTUES, not just Prudence

  • It opens the INVISIBLE HAND of the MARKET to dialogue about the MORAL COMMUNITY, and thus makes it a VISIBLE HAND

  • It proposes to make the INVISIBLE HAND a technical aspect of economic consideration

  • It points to the MORAL CONTENT of market  PRICES and COSTS

  • It sees ECONOMIC CHOICE in a competitive MARKET to mean finding BALANCE in SELF&OTHER-INTEREST

  • It sees individuals seeking to MAXIMIZE OWN-INTEREST, with this interest composed of a balanced SELF&OTHER-INTEREST

  • It sees SELF-INTEREST mainly expressed in the MARKET FORUM

  • It sees OTHER-INTEREST mainly expressed through what each individual shares with others, to some extent represented in the MARKET FORUM, but mainly expressed through OTHER FORUMS in COMMUNITY and in GOVERNMENT

  • It sees OTHER-INTEREST best expressed through individual liberty and freedom to choose

  • It sees that in case of failures in SELF-DISCIPLINE and SELF-CONTROL  that sometimes OTHER-INTEREST is best expressed through OTHER FORUMS in GOVERNMENT

  • It sees the essential role of GOVERNMENT in ensuring LIBERTY and FREEDOM for the INDIVIDUAL

  • It sees GOVERNMENT may have to be involved in NUDGING better choices when the OTHER-INTEREST fails due to failure in SELF-CONTROL

  • It sees GOVERNMENT involved in CONTROL when NUDGING fails

  • It sees SELF-INTEREST as more PRIMAL

  • It sees a failure to act on an EMPATHY BASED OTHER-INTEREST as a failure in SELF-CONTROL

  • It sees expression of SELF&OTHER-INTEREST in good BALANCE in MARKET&GOVERNMENT

  • It recognizes the possibility of INCOMMENSURABILITY in VALUES, with INSTRUMENTAL VALUE expressed in OTHER FORUMS, generally in GOVERNMENT, often influencing, and, also superseding, PRICE VALUE in the MARKET

  • It sees good BALANCE in MARKET&GOVERNMENT as essential to GOOD CAPITALISM

  • It posits an evolutionary, biological evolution in HUMANS as the source of both  EGOISTIC (self-interest) and EMPATHIC (other-interest) tendencies that are in constant tension and oft times  in conflict both within the individual and with others.

  • It sees the COEVOLUTION of EGO&EMPATHY, and SELF-DISCIPLINE leading to SELF-CONTROL, the latter reflecting THE WILL 

  • It posits the COEVOLUTION of the INDIVIDUAL and the COMMUNITY along with the rest of the natural, physical and ECOSYSTEM

  • It recognizes both ECONOMY&SOCIETY embedded within the systems of SPACESHIP EARTH

  • It proposes that the pursuit of an OTHER-INTEREST is also a force in building SOCIAL CAPITAL

  • It suggests that both the SELF-INTEREST and OTHER-INTEREST drive SOCIAL CAPITAL

  • It also sees SOCIAL CAPITAL as transformative and helping lead to the DISTINCT STATE of a balanced SELF&OTHER-INTEREST

  • It incorporates the OTHER-INTEREST  into standard economic analysis by introducing a set of OTHER-INTEREST ISOCURVES

  • It produces two sets of OVERLAPPING ISOCURVES CURVES for both the PRODUCER and the CONSUMER  (See What is Dual Interest Theory

  • It suggests PRODUCERS and CONSUMERS are INTERDEPENDENT

  • It suggests the JOINTNESS of the SELF&OTHER-INTEREST  arises from , NONALLOCABLE INPUTS in PRODUCTION and NONALLOCABLE GOODS in CONSUMPTION

  • It proposes INTERDEPENDENT SUPPLY and DEMAND, which gives a  SUBJECTIVE  character to these relationships 

  • It posits  the ENDOGENOUS, SYMBIOTIC character of the SELF&OTHER-INTEREST

  • It proposes that the MORAL DIMENSION can be subjected to  BENEFIT-COST analysis and is an especially key part of MULTIPLE OBJECTIVE analysis

  • It sees that operating in the MORAL DIMENSION (POETRY) necessitates SACRIFICE in SELF-INTEREST 

  • It sees that operating in the MATERIAL DIMENSION (PUSHPINS) necessitates SACRIFICE in the OTHER-INTEREST

  • It allows for INCOMMENSURABILITY as between PUSHPINS&POETRY, MATERIAL&MORAL without simple tradeoffs being possible 

  • It sees the INDIVIDUAL as arriving on an alternative plain as a DISTINCT ENTITY.

  • It focuses on the INDIVIDUAL, the DISTINCT ENTITY, as the wellspring of action

  • It sees the position of a DISTINCT ENTITY as representing the I-THOU state of existence

  • It is a COMMAND and SELF-CONTROL  theory in contrast to a CHOICE theory.

  • It suggests the individual takes COMMAND over the DUAL INTERESTS, and thus finds the PEACE OF MIND that comes with resolving the tension, and the conflict.

  • It shifts attention to the POSITIVE FREEDOMS and OPPORTUNITIES, and away from the NEGATIVE FREEDOMS and CONSTRAINTS.

  • It expands RATIONAL CHOICE to include the COMMAND and INDIVIDUAL CONTROL over CHOICES 

  • It recognizes that TRANSACTIONS COSTS increase rapidly as the OTHER-INTEREST diverges among economic entities in the trade, and approach zero as the OTHER-INTEREST converges

  • It points to BEST PRICES reflecting the joint pursuit of SELF&OTHER-INTEREST

  • It suggests PRICES and COSTS are subjective measures of value due to the joint expression of the EMPATHIC and EGOISTIC tendencies. 

  • It posits  the  jointness, non-separability of ECONOMIC EFFICIENCY&SOCIAL EFFICIENCY 

  • It suggests that the TRUE WEALTH of a nation only comes from achieving joint ECONOMICEFFICIENCY&SOCIAL EFFICIENCY

  • It recognizes that at any point in time we may be largely in an I-IT, or I-HE/SHE state, a null (amoralist) or perhaps even an asocial (immoral) state of existence, rather than the preferred state of the  I-THOU 

  • It sees achieving the I-THOU state with BALANCE in  SELF&OTHER-INTEREST within  large numbers of individuals for a significant part of the time is both the CAUSE and the NATURE of the  TRUE WEALTH of a NATION

  • It sees achieving BALANCE in SELF&OTHER-INTEREST as essential to achieving TRUE WEALTH for all TRAVELERS on SPACESHIP EARTH

Altman, M. Behavioral Economics for Dummies. Mississauga, ON: John Wiley and Sons Canada, Ltd., 2012.

Tomer, J.F. Advanced Introduction to Behavioral Economics. North Hampton, MA: Elgar, 2017.

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