A Brain-Focused Foundation for Economic Science by Richard B. McKenzie

Author:Richard B. McKenzie
Language: eng
Format: epub, pdf
Publisher: Springer International Publishing, Cham

The Growing Divide in Economics

Clearly, modern economists’ inquiries (especially when behaviorists are included) now cover more areas than when Robbins declared that scarcity in the external world is the discipline’s core unifying concern (especially since Robbins, his contemporaries, and his followers put psychology outside the “economic” domain). As I have noted, Robbins’ observed in the early 1930s, “We all talk about the same things [generalizations], but we have not yet agreed what it is [at the methodological foundation of the discipline] we are talking about.” 48 Today, whether we economists of different methodological stripes are talking about the same thing (or things) is not at all clear. Perhaps we are even talking at cross purposes, engaging in an intellectual struggle among competing methodological factions for professional dominance .

In challenging the rationality premise, many behaviorists have moved into the study of the brain and its decision-making capacity. That arena was largely off-limits, ignored, or overlooked in neoclassical economics —until relatively recently, surely partially in response to behaviorists’ methodological and policy challenges.

However, the behaviorists have largely left behind their neoclassical economic analytics but, at the same time, have retained interest in topics that have economic dimensions, preferring to focus on the brain’s demonstrated limited capacities and foibles. They have not in a formal way considered the brain as an economy unto itself, whose identified limitations and failures in behaviors have evolutionary and economic foundations, grounded in an efficient, rational approach to scarcity both within the brain itself and in the external world. Rather, behaviorists have encircled rational decision-making behind evolved “boundaries” (as in “bounded rationality ”), found to be ever tighter through their growing array of findings from surveys and laboratory experiments . Their proscribed boundaries for human rationality are more or less given, fixed, and exogenous to their analytical methods (although many behaviorists might see the boundaries as growing with their discoveries of new biases, weaknesses, and limitations in decision-making.

In this chapter (and book), I seek to revive Robbins’ quest to find a unifying theme in the ever-expanding breadth of economists’ inquiries. I accept the behaviorists’ position that neoclassical economics (without revisions) is no longer “good enough.” However, in search of a “unified field theory,” by which I mean a conceptual framework that brings coherence among insights developed in neoclassical economics and behavioral economics , I remain dedicated, to the extent that I can, to Robbins’ scarcity paradigm (or his insistence that scarcity , or a form of it, is at the discipline’s core). That is, I seek to retain all the trappings of neoclassical economic analytics, grounded in maximization , optimization, and equilibrium constructs, but with an important adjustment: The scarcity in the external world intrinsic to the worldview of neoclassical economists is no longer the key unifying theme; rather, the ultimate but unheralded scarcity that can potentially unify neoclassical and behavioral economists is the internal scarcity of the human brain .

More directly, I assert that the ultimate scarce resource for economists of all persuasions in the conduct of their

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