Thursday, November 24, 2005

Sociological categories in economics

I left the following comment to this Tom Bozzo post about George Akerlof and Rachel Kranton's essay on identity. Economics has a broader problem with the fact that people are, as one of my professors liked to say, "meaning generating beings," and not just utility machines (and, I would maintain, meaning cannot be reduced to utility however clever you are).

I'm working my way through "An Economic Theorist's Book of Tales" and the more severe limitation of his models attempting to incorporate "sociolological" phenomena is a philosophical one: by sticking identity in the utility function, you assume that it can be traded off against other things at some price. For example, he writes (in chapter 5, "A Theory of Social Custom of which unemployment is one consequence") that someone doesn't want to be just rich, they want to be rich and famous. But they want to be famous only insofar as this can be translated into a wealth equivalent (that is, more money would make them just as happy as less money and more fame). Yet to the average person, to claim that someone wants to be rich and famous means that there is something about widespread recognition that is not understandable in purely monetary forms. A sociologist would, I think, claim that fame cannot be purely traded off against money. The assumption of comparability is one I'm comfortable with when arguing with sociology majors, less comfortable with when arguing with economics majors.

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