Tagged: public choice

Who would benefit from a “Council of Psychological Advisors?”

Barry Schwartz is proposing that the federal government assemble a council of psychological advisors, modeled after the Council of Economic Advisors.

Economics has a long history of fetishizing central planning, and economic advisors often get pulled into political games of chess, but psychology has rarely been so directly linked to government policy.

What is something like this supposed to accomplish? An institution like this certainly isn’t meant to distill the latest psychological evidence into optimal policy recommendations; the purpose of the institution would be to gather the language of science to justify whatever policies governments would want to enact.

Barry Schwartz is arguing that because economic assumptions of perfect rationality are overused in policy prescriptions, we need a council of psychological advisors to counteract the Council of Economic Advisors. It’s an oversimplification for political purposes, and a straw man. The argument posits that free markets only work when agents are perfectly rational, and since people aren’t perfectly rational, we can’t have free markets, and should instead rely on a team of trained psychologists to function as central planners.

Free enterprise isn’t superior to central planning only when agents are rational. Free enterprise is superior because knowledge is so distributed in an economy, that absent the price mechanism, central planners have no way of assessing tradeoffs and planning for different individuals’ subjective values and preferences.

There’s a crop of trendy academics, like Sunstein and Thaler, well versed in Kahneman and Tversky’s heuristics and biases program, who just assume that because humans suffer from systematic biases, their choices should be restricted and their decisions be made by the elites who know better. Unfortunately, those most familiar with systemic biases are in no way less vulnerable from such biases.

Beware of politics masquerading as science.