The Cultural Foundations of Economics

Here is a new paper on culture and economics, destined for the Journal of Economic Perspectives, hat tip to the New Economist blog.

Imagine economics is no longer built around the dual of preferences and constraints.  We would instead have the following starting points:

1. Priors.  Without differing Bayesian priors, there is neither trade nor disagreement.  Your priors depend on your cultural background.

2. Beliefs. What model of the economy — and more importantly of yourself — lurks in your mind?

3. Peers. Which people do you accept as your relevant peer group?  This often determines the working model for your beliefs.

4. Stories. What stories do you tell yourself about who you are?

Arguably these analytical categories are more fundamental to human behavior than utility maximization.  Combine them with evolutionary biology, and a bit of neuroscience, a marriage with sociology and social psychology, and we have the foundations for a revolution in economic science.  Fifty years or so from now, that is.


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